Hub (HUBG) 2 Feb 232022 Q4 Earnings call transcript

Company Profile

Participants

Phillip Yeager	President and CEO
Brian Alexander	Chief Operating Officer
Geoff DeMartino	CFO
Todd Fowler	KeyBanc
Jon Chappell	Evercore
Jason Seidl	Cowen and Company
Brian Ossenbeck	JPMorgan
Bascome Majors	Susquehanna
Scott Group	Wolfe Research
Christopher Kuhn	Benchmark
Allison Poliniak	Wells Fargo
Bruce Chan	Stifel
Thomas Wadewitz	UBS
Ravi Shanker	Morgan Stanley
Justin Long	Stephens

Call transcript

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Operator

Hello, and welcome to the Hub Group Fourth Quarter 2022 Earnings Conference Call. Phil Yeager, Hub's President and CEO; Brian Alexander, Hub's 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 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

reminder, conference this a being recorded. As is

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

You may now begin.

Phillip Yeager

Chief Geoff today participating quarter earnings Good our fourth are Alexander, Officer. afternoon, Group's Brian and and in thank Hub Operating Hub Chief Financial Group's you DeMartino, With me Officer; for call.

honored able in I'm but in to as Hub of wanted and history. to Board for and goals XX organization. who support, integrity, continuing XX-year their phenomenal CEO been a particular, Executive to Chief our serve Directors privileged vision, with deliver to humility. for our thank long-term Executive be for Group's to Chairman, our and I Yeager, him third has on company's I forward determination leader years our work the the look to He was with Dave

to thank supporting their on our commitment of a continued also all team focus for customers evolving members environment. and in constantly our wanted I

$X revenue billion in of and Our record to profitability, all XXXX. in billion the year first our for brokerage in organization, $X and both eclipsing service intermodal an We're team grow reaching while revenue in lines logistics able in a delivered both as time revenue.

maintaining deliver capital sheet, invest delivered cash world-class to We organic returning our to and strategy, acquisition-driven our through to balance continue generating flow business our that while service and strategy on phenomenal free and diversifying offerings shareholders. We and while service execute on strong core in technology, a growth.

loosened. has this XXXX, Inventories ahead the last capacity and we freight to year. look have we changed seen from economy have elevated time As

of on for XXXX in and anticipate demand half consumer we year another continued need inventory stronger a based restocking. second However, with strength variations of a

business well is Hub have environment over past in challenges, positioned create improvements the this we may our Group backdrop believe given short-term this years. the to to several While we that many grow made

we anticipate a more costs products agreement consistent supply over rail percentage, reduce from our increasing outside and costs and into road improved driving customers an efficiency Intermodal, service In to lower their that rail will help resulting increased along improved rapidly from straight conversion sustainability in with and rail chain. the our while drayage

levels is profitable year will Our and believe another we processes improved leadership deliver by help dedicated strong, have growth, our of and team, solutions. which and us engineered high service driven pipeline our we

revenue XX% to our non-asset-based, continued streams enabling more annual be to now with diverse In enhanced drive efficiency have provided is also service purchasing, alternatives improved our levels, we technology which and which have and increase represents wins our offering revenues. more that We brokerage, customers. capacity cross-selling scale of are our

logistics business Logistics. as our to with into investments premier TAGG in continues like technology chain the provider and as Our acquisitions develop solutions well end-to-end people supply

execution while our benefits We transportation money experience fruition continuous customer are and analytical, helping able providing that to improvement, a the of our for customers our through pay is clients. technological bring world-class managed to

our to us grow allow and profitability business enhancements these All maintaining while model to strong continue to returns. will

reward authorization and consistently that can to continue as help both will into more business cycles, capacity our to to capital deliver of in we well invest through our us financial shareholders. maintaining a position order in investments acquisitions and environments buyback as value, the while We our through ensure our variety utilizing support technology strong customers and

we focused Our are efficiency, performance. another on as to team strong excellent we in position strategy year another our a as and on feel is XXXX. in delivering deliver focused with aligned And execution well

service line it I that, our hand to Brian over With to discuss will performance.

Brian Alexander

Thank you, Phil.

delivering for I a service I vision also team now a performance, will want service growth, as line customers also discuss record our they with our best-in-class support for starting experience. providing our year to our while thank entire Intermodal.

increase revenue Intermodal in as unit growth well In the continued by per revenue quarter, X%, fourth ITS dedicated driven trucking. as a in increased XX%

lack With traditional season, the XX% X% the Local the declined and in X% with volumes in a quarter, of XX% Local in the peak the Intermodal East. West, in Transcon, decline decline of fourth decline

margin basis XXX sales Gross decreased as of a points year-over-year. percent

quarter are from in rail lower costs an several increase and XX%, trade, improved in year-over-year margin actively decline with in offsetting agreements, outside XX% improvements. operating this We drayage in-source up to other cost fourth

rail which volume to and improvements improvements volume have efficiency conversion experience discipline. Intermodal to maintain and drive help in box In in improve positioned our our These margin efficiency operating service, us started addition, will grow we've well with already turns.

Now Logistics. quarter Logistics X% through as end-to-end to we to chain our deepen revenue continue supporting value turning to the our in approach their needs. our increased customers integrated to supply

advantage taking has We that wins. already several positioned and TAGG transportation consolidation growth have our which us, of are large and well warehousing for brought fulfillment enabled capabilities business, in

Gross that of yield growth. margin on we a management drive our discipline, percent organic as focus maintained customer increased and as XXX points basis operational sales continuous improvements

chain a have onboardings new we solutions. more as size of field our offer ratio and integrated great pipeline have We close improved in Logistics supply

our to the business Logistics has other contributes grow volume support of that multimodal to capacity. our addition, offering In lines to continued

of in are our enhancements, growth. position profitable these we a trajectory continue great to With

And now with I'll Brokerage. conclude

decline Brokerage gross customers XX a We and points, an year-over-year. on capacity. and the in but sales basis market as We a competitive increase in are focused price quarter. they in of well X% remain challenging generated This leading was conditions with quarter our revenue very proud XX% to an fourth of a as against service in performed team percent of our fourth year-over-year margin volume increase

growth offerings. Choptank our as and in helped Our acquisition cross-selling of our drive in LTL purchasing dry well as discipline

purchasing. throughout Transactional and moves our while XX% volume we expansion the provided our contract of as represented consistent quarter, business volumes margin improve

and including reefer, our our growth and drop high levels LTL through continue trailer. integrated our approach positioned and types, customers, our well We to capacity to dry, are expertise service

that, Geoff over discuss to hand With I'll financial it performance. to our

Geoff DeMartino

Thank Brian. you,

over XX% each billion billion billion revenue XXXX Brokerage to Our QX. a $X revenue with and $X.X with $X.X at grew Logistics $X.X business billion. had over to ITS very and up strong in

diversification led focus QX of income operating operating of for to gross transportation management cost year. X.X% for and full Our with in containment, of efficiency, year margin yield XX.X% and revenue XX.X% on the and margin the

gains operating year to compensation for incremental which offset XXXX. gross equipment, in We year, the of sale from continue Operating revenue equal expenses to of expense. last less increased in by TAGG leverage dollars to X.X% our against due expenses, from the down X.X% lower from expense margin were QX from and

million earnings diluted generated cash and of EBITDA quarter $XXX the in share per Our for was quarter with We $XXX the ended hand. on of $X.XX. million

We retailer conditions softened guidance XXXX. second inventory introducing macroeconomic for in half and the rising due levels. are of Demand XXXX factors to

of to the first half a but improvement half. persist conditions in these anticipating expect for slight We demand XXXX, in second are the

to For of the share. year, per generate expect $X.XX $X.XX diluted and EPS between we

We $X.X billion $X.X will billion. expect range revenue to from

partially lower pricing of in For by forecasting anticipate Intermodal, and as we're margin the the revenue, year, by transportation and softer second costs. growth of strength driven percent for purchase for gross a low year, to offset surcharge less XX.X% accessorial XX.X% revenue the single-digit We half. volume with

sale. For million, of year $XXX to on due expect increasing a TAGG from $XXX we less full XXXX and the to year, gain costs and of million expenses

invest We XXXX $XXX business trackers, will expenditures million, investments in continue to $XXX targeted of containers, in and million capital our technology. with for to warehouse

profile would changing important our of we enter thought to recognize we the it As into be year, a new business.

through organic the such Over us businesses in five fulfillment, Intermodal top business. years, last and over areas business in XX%, growth transportation, in our final asset-based have as mile as consolidation, as grown acquisitions well our our non-asset new our to refrigerated adding we while line scale through also have brought capabilities both that by

to X% operating to several relative continue in large expanded valuation this, income a at invested we did return lower to today we a large with our similar We've ago valuation our improvement our than gap trade Despite years peers. nearly X% and margin a capital. on traded from

to take in authorization of inefficiency balance use in pristine and the to market. flexibility through equity to the our the our have also advantage business While and we this we expenditures capital sheet intend from Board acquisitions, invest

turn open the to line over the call to to any I'll questions. the that, operator With

Operator

first question the line Instructions] comes Our from Todd [Operator of Fowler KeyBanc. of

Your question please, Todd.

Todd Fowler

Todd KeyBanc. for at assuming question. Fowler taking Thanks everybody. Hi, it's for the I'm

than So what to. for the you volatile wide maybe wider with guide a this $X.XX guidance, to start I understand is certainly typically pretty environment, a $X.XX to that XXXX that but range

much is mostly I guess here kind and and around of the pieces end the on is at underlying just of to some bids the put of just versus low some talk you the maybe can the range moving the it what how end range range in, high come the where is the would environment of dependent start? you to thoughts

Geoff DeMartino

DeMartino. is range Geoff wider is usual. This The Todd. than Sure,

I macroeconomic think just conditions. appropriate given the

We tighten the performance. are bottom that the which conditions in the half retailers' few outlook We're We certainly anticipating months to continuing to of of improve elevate the year. off in levels second XXXX, the in inventory really today. will saw see last impacted

levels our to from expecting the they're But down year. hearing inventory we're think what be is customers worked I - throughout

range. increase anticipating and get the the high demand would of what end towards some us to So in the we're of that's really the year end

us followed You've for many years.

up guide. to our beating couple that we of north be this on of not to we're but XX% year, we've pretty the tend at initially the The well sure by do overall be start We conservative going year. our years, ended guidance of in I'm last that quite to conservative tend

Phillip Yeager

Phil. add economic this the be want to on is just Todd, we and to Yes conservative did I wanted outlook. in,

small a really be exactly that make and few a a didn't snapback on that given little early tell large quarters or that out. and call demand I think if will it's to we to want it's

relatively conservative tried outlook. that remain in And so, we to

Todd Fowler

helpful. it. got Okay, Yes, that's

than So the it fourth XX% from my of the and about maybe good this and Brian. be for some the line bit seems quarter, When think volume some pretty got into to that would follow-up, bias sounds be peers decline of we've Intermodal this out the I heard sight industry during on there. little you've data maybe the for is side Maybe a maybe that's upwards. worse what like

local East want know about thinking in I your any or quarter maybe right of share was thoughts a just down now? seems bit. fourth environment you comment Thanks. like share decline you're the the how volume quite here kind on and Maybe the if don't

Phillip Yeager

very is Phil. share this closely. We Todd, our Yes, watch

of Our the account focus longer longer and strategy to take our us customers think into which day, transit which guided on maximizing volume led has decline to especially some been longer load per as I towards really the has business, you haul when margin well.

that XX% on So when it, though actually feel like basis at actually gained down. revenue we and up share revenue look were even per volumes is we - we load a

Our for going focus to capital. the continue highest margin is generates low to days on what on that maximizing be return that's

look we a volumes down sequentially. X% basis, on year-over-year January, but at actually were up As X%

that year. So momentum also about to feel we start good the the have

Todd Fowler

lot. tonight. Okay, time thanks that's the helpful. a Phil Thanks for

Operator

you. Thank

from comes Jon question Evercore. next of the Our line of Chappell

Your line is Jon? open.

Jon Chappell

Good of was December that a to about the you. I it slowing earlier, afternoon. than given know, just kind maybe you also X% weaker don't of was brought some down going function quarter-to-date, inventory I ask ahead of substantially Thank increase up. Phil, The being situations? you the holidays, anticipated, of that those sequential

of just now feel of seeing that that give some service also this start a Or tie bit improvements to little tailwind type to you do be are that have the And year? as of this a you momentum in, continued? views optimistic you significant to it relates you

Phillip Yeager

Jon. Yes,

that made. great that's comments I you I agree would a And question. with think the

lighter we been I seen that was anticipated, the has stronger than I than actually think and anticipated. January December sequentially we improvement think but we've

that customers So about demand. with the that a overall to and wins progress seeing we return feel with very we're good having we're

We're sequentially and import improved actually seeing ordering volumes normalize. patterns seen

momentum seeing sequentially a we're of that February good and carry of signs week improving and January So as really well. that each throughout carried month really into lot with the entire

rail around sustainable. do service though think to big be as feel well. of We that's going piece improvement I is a that as

they very account costs. that promoting associated out that our you well savings the both have take customers but as improvements can the and sustainability when We're into of that service aggressively with around fuel with that, and also cost

back highlighted piece last I of as half customers patterns be chain and think the the capacity look and capacity our will derisking tighter. is to the we we've year supply of their normalization a their lot into ordering a of of that

but all their chain, And some do those we starting factors so into we more to so have good capacity they're supply are by coming here. locking momentum now, play, going be strongly feel in de-risking overall very

Geoff DeMartino

that rail in the to We're Jon. add that too, year. being service confident throughout just sustained I'll

our transit conversion from actually to we've more road our promote to been intermodal volume. looking over So that tightening of and the

Jon Chappell

then And good bit you, sounds half, weaker is front great. on start a little hopefully tale That's a have like Brian your it recovery January so, demand pricing sequentially in second some halves just pretty of in first the least. the is the outlook at to despite two

side, some kind I kind do On was flipped it from have off? when of is almost the pricing market last year tight? pricing incredibly of mean, the legacy you still momentum

get model kind having think go get to truck trying shippers we year in as through does the of tighter? you hand, your But on that for other do competing about how And that lock the it with capacity conversion. on

Phillip Yeager

is this [ph] Seth Yes Phil.

a on we it's different bid bit the but environment and intermodal this been time I in you a were outperform a truck it's give we margin. determination season, do But feel little color. of by strong think this a pretty Obviously, can historical than will last has year. early as that little norm for I though a

strong focus is margin account our and that take customers to going towards be especially you fuel into on We to truck, savings of day. are continuing our maximization load show per when

a network and that repositioning can empty well. our base opportunity have and out significant better take costs create balance density fluidity driver more our with as We to

coming and general I really think for So you're the strong us. have that de-risk is service well sustainable products, conversion chain season we supply - have to focused we in over savings. a And to together all very intermodal. see And we're your on - just bid able road a for to

Brian Alexander

to is I for a prepared possible substantial curve that QX, we some a hit Yes, every I'll in few cost disciplines that but really XX% mentioned that too, and them, cost but I we're big a of to the in in piece add way. dray Jon. those in mentioned down also was of And bending putting improvement. remarks insource which us

on improves, gets set cost network as of out. much as overall into But XX% taking well that go our I And the as cost a better as dray perspective have fluidity then we XXXX, our third-party that well. as service from

Jon Chappell

All Thanks, right, Thanks, Brian. Phil. that's super helpful.

Phillip Yeager

Thank you.

Operator

Thank you.

Company. from Our comes of of Cowen next question line the and Jason Seidl

Jason. question please, Your

Jason Seidl

they was large another of forward, you? things Thank going one, Two think a to Hey, mentioned now gentlemen, you, they are that operator. there's how going and quick market smaller with West from two, seize. would it I agree mid-sized be to I talking IMC and you lot going share items have would about the one, occur and sort I East and follow-up Coast. And now? statement a why you of Coast, forward that think mean taken would

get So to long first and chance the I'll one. of second the one

Phillip Yeager

our but to share players also I overall Phil. feel around from take to We is that are asset very the this capacity, an based network Yes, better on access based to both continue IMC service their think just feel strongly. based their strongly product integration non-asset going better And service asset rail and we carrier economics. drayage players. based with a and overall partners around an technology perhaps building product are

So continue. I that's think going to

I couple a around years lot based and the weakness think particularly last of shown the availability. in IMC of capacity model the driver have availability non-asset

would I with So yes, that assumption. agree

Jason Seidl

the guys would the to the or it flow rather a, that shift certain to year West large agnostic problem went traffic Coast? West. on a Coast the container of back percentage lot East. sense. percentage going you of, have Coast a the or you as probably ports West Are on had flow East of And to be on Makes thinking sort to that, There's the that lot of about a last saw

Phillip Yeager

is per We this higher it move. typically Yes, Phil. Coast margin West day is because see typically load off Transcon the a

you. I higher see Coast West is Coast also higher to typically us, and be off agree We the West profitability. for and with better volumes business transload going so

I their from think kind annual of basis. on we ordering typically shippers see switch patterns coast-to-coast our

the of on that to to that getting and so, create hope, and year to Coast, believe And see back growth strong peak West the off we'll a we West Coast. the a labor season, seeing we we're strong volumes continue some put that with will issues rest get

So us. that's beneficial very to

Jason Seidl

fingers our as crossed time, the guys. too. Appreciate have We'll always,

Phillip Yeager

Thank you.

Operator

Thank you.

Please from Ossenbeck line comes JPMorgan. ahead, Brian. question next Our the of go Brian of

Brian Ossenbeck

Hey good evening, time. thanks for the

mentioned So Geoff, valuation you peers. stock the big the with disconnect and the versus

the was fourth there active You're on activity the with the quarter. in quarter, like didn't it look but buyback third any

can going thoughts the the authorization? some still rest you on with the recent us you deploy capital of some extra maybe on expect throughout remainder the So the of how forward give program year to

Geoff DeMartino

Sure.

tractor for always first nice container We've about business, the a the and on really average from in benefit invest upgrades. CapEx. investment foremost, a priorities our X.X economy. really from better lower four taken cycle had through now been to of fleet nice fuel been M&R Our We've and X% XX% to We've that deployment age and a capital terms years in have the year. growing return down years

that at warehouse, up they operating take offering which So nice that. the with really a with with good together and allowing and with Those CaseStack out experience then and our do, few great really we'll acquisitions is offering do we to inside there. TAGG, really too. companies put what transportation We've expanding that, ago, and most what saw for is costs with do, some which years and recent offering, a the this really we one, are - the customer our we a had continue marry improving managing

recent our acquisitions. with came very and several cross-sell - the the and that ability So of with pleased that abilities

accelerate has path. of pipeline deal good some - now, We'd working one looking that We've averaging we're year. probably have and that. good to We So a out there think a our of do like for growth we to been XXXX. on we're that. part M&A been more

pursue repurchase we fourth that's out in some quarter as wanted invest as - So kind the to in in well as didn't of why of we of the the M&A run pipeline share CapEx. kind opportunities

financial the But last zero. a much for we've performance pretty is given really net debt that the strong two years, sheet got balance

three we'll channels capital And in that deploy of all certainly in so, XXXX. probably to look those

Brian Ossenbeck

appreciate I Okay, that.

follow-up in just maybe embedded on what's also So the to guidance.

how Can talked the how get benefit can flexibility reflected a rail time contracts. this of in you with the bit You about full is in about different those? lot of the a guide talk of that little you terms is much

It aren't little bit did it seem will different have partners. time, like maybe linear take you these a obviously, really of

So could wanted be there get see 'XX to how to if more most XXXX? as benefit of I of as to be you'd bit us expect. in truck just much a market a even soft if continues And expect in the

Geoff DeMartino

Sure.

seen of us, rail think with work to great both know which have We them intermodal really doing. last We've you the seen you've partners deciding what channel investing partners, fleets. years, embrace their few them in follow and I they're you over like

[ph] of seen we've a the to invested we've road. then a terms last really in terminals convert million embrace - equipment. $XXX seen I them and new drive year us us way is and off freight think for And think I economics growth UP for better

in past. more - those There flexibility there And built is reset. to your the into contracts so, a way there is that's bit lag is of the we've a little than point, had

XXXX. carry will So beyond through that

Phillip Yeager

in be are add And Brian efficient there more more insourcing costs. our network, think, balance us for more think our creating reducing just third-party I also, well opportunities, as to I mentioned, drayage, I'd as

think back cost high-velocity getting well. a as So can reduce more we by network, there we to of

conservative earlier, think I mentioned Geoff are our guidance. we in

to it's also your probably point some kind a think a want significant I but others maybe of in that that we're so perhaps build conservative, don't being bullwhip right, economic we have. And little

we're trying outlook. sure so to that And on conservative make just we stay economic

Brian Ossenbeck

All right, time, appreciate for thanks the it.

Operator

Thank you.

line next of Susquehanna. from of Our the Majors question comes Bascome

line Bascome. Your open is

Bascome Majors

feel things a is a the the negative year line and in of rail of and be kind about anything on period really or When up, the quarter just or there cadence, of things maximum - visibility some the where - couple you the into. pain increase, like we think you're roll-off it or the a even where going guidance pricing of accessorials part have to based the

plays I think out? Thank set be as we the that you. expectations how year for would helpful

Phillip Yeager

XXXX. Yes, be to a great we be tailwind together. nice our the when of price going bid in little of thought coming putting question, half. year will volume to first balanced. the going out a with in XX% about About something were we We're reprice entering strong guidance a It's season

second pricing we'll volume. the but half, a see stronger we're first expecting stronger accessorials, So, half, pickup the in in

accessorials quite roll and fluidity The anticipating off XXXX. as probably we're not see as be in will - we more strong price

start a will we So bit probably off little the year stronger.

end is really to had years that half more strong of gone That - upper of come there year, second with on the our really year. come throughout in the And the upside, went extent season tightened peak case tightening we the think of that two I is surcharges with has would but would would though. away. expect realized, kind We've which really surcharge. of a a the

Bascome Majors

question, to the you Thank follow-up understand dire conservatism. to on about an of towards mind? below? the out or case how What is to higher you've $X to you. and to Just want dire kind end play talked has your get us pushed in scenario And earlier

Geoff DeMartino

if don't up, with severe is Yes, retailer to that respect no second and intermodal, pick recession impact consumer half. we back would inventory kind low impact the stay of think in or volumes the certainly levels there's spending

longer be but do business lines We other in more to much our tend less that term about cyclical volume and talked XX% revenue, price that kind we of haven't and driven of nature. for account of less it, and our have

cushion. that's XX% up are our XX% if those it of And revenue ago. about will of back from - provide history, our things you businesses years that's changed at does That's today. look of a the five one more That non-asset-based

Bascome Majors

midpoint Thank a cash you. get outlook to? sort item, flow housekeeping the range what does your free As of of

Geoff DeMartino

EBITDA cash little taxes. CapEx around of and so and it's million, bit Yes, a $XXX

Geoff DeMartino

you. Thank

Operator

you. Thank

Research. Our of comes Wolfe Group Scott the from next question of line

Your question please, Scott.

Scott Group

guys. afternoon thanks Hey

Just better half do following What second What in from last you of person up or you like earnings given better on half second like the some first cadence about even quarters half. sort the of question or it volume however it? us mean think that the the sounds think color. first pricing directional past, you've does sometimes earnings half,

Geoff DeMartino

Yes, to one this I'd as of it's our we this with say little but stronger looks at the and a say, point, in more balanced But two those what first best probably the at another, obviously, maybe we'll year rest offsetting point, pretty year have the like. bit half, get that's further into guess. the

Scott Group

And then X% have about the Okay. talked you gone margins X%. margin - from to the operating

trying the is I that to I to report margins this at now? other don't think that look to relative are big I know level. intermodal, margins margin, the you double-digit intermodal at want these When low sustainability right where we but of understand guys

Geoff DeMartino

if higher. that it level, probably I We would the don't same not as suggest we're them bring in to down but range of kind

in Our - is us, that a price business benefit tends strong we certainly driver the of for and saw XXXX. pretty

Phillip Yeager

think stress was as remarks it's a to I less his trying Geoff also model is what well. prepared capital-intensive that far And in

business. margins back can a very flow and of strong So, put we without the the into lot we're we free intensity, capital have cash generating that

Scott Group

more of going guys bit some And but maybe little new like, as narrower How to be we a the a it's like do that? got margin? tighter margin we've we rail more ultimately capital look you intensive of maybe about range contracts, do those intermodal think a band what lot drainage, our more like, insource if doing we're and of is

Geoff DeMartino

cyclicality an is Yes, where certainly you're capacity a going we've business than improvement strong, historically. XXXX. been and we some reset XXXX and tightened is in like we the we've There think - base level is have obviously of higher result been the it's where when get But past. from demand I at think in to

without the per driver the of see our to really insource that's of pickup ratio to improved able and driver nice to-date really increase insourcing of where is day a of able been through we've drayage improved our lot things truck really lot been to loads capital. per adding we've a nice efficiency and our and better amount without a One capital about

Scott Group

just think point, If earnings like about one that is what any it? to squeeze you of operating margin to means just every XX there I for quantify can more insourcing however points way

Geoff DeMartino

is basis so the million cycle over Yes, $X.X of about pretax. XXX points

Scott Group

basis is but to go something. right goal XX% XX% your XXX like points or? from Is to movement, or that

Geoff DeMartino

demand flex more We're the structure largest that's to insource. see actually Allows to cycles. purchaser high as a good We're and targeting drayage. XX% through We our environment create in have us and important third-party a think still variable lever it's of demand to we up quickly dwindle. service more customers cost

So we XX%. to position want optimal. of that remain in as that for We kind think it's

the Obviously, We're the lower which year start that. great. it's XX% in volumes. range, on focus of is running kind a maintain we'll to And on

full to would be XX see that strong have which on share. continue would to target to that pretty set XX a we But a to year-over-year I number growth you tell need really up good think volumes we I year is we basis. as that pick So a hire some maintain for

Scott Group

you, the Appreciate for Thanks Okay. guys. it. back forth. and Thank

Phillip Yeager

Scott. Thanks

Operator

Thank you.

question of next comes line Our the Benchmark. of from Kuhn Chris

Your question please, Chris.

Christopher Kuhn

hi Yes, just IMCs on that off adds Can your you container good just maybe about Thank that? are for holding container afternoon you. guys. plans about this additions reported what talked wondering your thoughts are on talk some year

Geoff DeMartino

you. thank Yes,

it, the a a X% to CapEx - returns as maintain planning, better I customers fleet. think we have service of and in preliminary good expenditures consistency to fleet really In in at sort our increase maintain us call see our net that level. investment it planned a we to important demand question. very We X% is our into allows it's think support and capital of that levels

remarks. consistency and said prepared our keep to that that we we So, want in

will you container us so, to It year. this But this we add a would fleet. our did net see the be net have add than And some will less that year. we XX%

Christopher Kuhn

great. Thank All you. right,

Operator

Thank you.

Wells of Fargo. question comes Our Allison from next the of Poliniak line

Your Allison. please, question

Allison Poliniak

Hi, good evening.

the multiples there? Just know M&A. there? want you more could talk You that one an being doing active, any you about more did increase our looking handle us M&A, sort pipeline little to of just give to color terms in but talked I maybe on maybe just of in reasonable becoming like than capacity what turn out to thoughts a pipeline is management

Phillip Yeager

years Sure, been yes pretty active year. one around a several last we've of averaging kind the -

feel able and really in good got be disciplines like developed to playbook the we got so, to And we've handle one. place than a we've more

from size of million For $XXX historically. targeted in million anywhere to $XXX us, kind we've deal

with I to the bit if go success we've we'd sense. little a like think had, makes it larger, actually

We're conservative of of and we're maintaining leverage. company appropriate cognizant levels

could or two one larger smaller ones strategy. M&A part we of maybe as So our do one

probably up strong multiples come last think think going and I to in to financing those markets XXXX, in I of years seems like for degree. of buyers And a the the private bid pretty saw two some dried are have sort from equity types transactions.

non-asset nice with was nationwide evaluation. and our had like and It So the success gave fulfillment a that expect us reasonable little good by selling with gave replicate of also we've commerce to TAGG balance level warehousing us we'd of of It win more based cross encouraged asset a we're we improved an types bit really warehousing would space e the and really footprint capability. acquisitions. acquisition a us. of those But for of

Allison Poliniak

CapEx And you are see? or sort given e-commerce? is the great. of logistics, then dispensability of No, just seeing is wait that that business, organic and of in what that And to exposed year it that terms of in this part terms on then into a the model that's tag is just

Brian Alexander

Midwest And two to a $XX adding start in verticals wins CPG has since XXXX. late in August, The have already our million opened new is achieved sells the two quarter. e-commerce retail is. got in second nicely then that and on already in buildings throughout No, fit it We've in and really Brian. into more off the with them year Allison, are TAGG. bringing and absolutely that this the cross in West onboard opening we're really this we've great

partner we balance need that own of have buildings space and when fill well to as very operate but it's with to growth, our assets, important but our to. help us run then feel it's to And drayage and really those our some we XPL XPL to optimize model, as then of deployment similar and partners that there flex digest we also to our

So, more off start a with to great to come.

Geoff DeMartino

And - our point We on investments question and all X% in maybe your X%, racking so make some to are to leased. the equipment or on of overall facilities CapEx, your that's CapEx. do

Brian Alexander

is program one CaseStack our when add, of would about customers I think that portion of And great acquisition, I effectively we things those with a e-commerce the had e-commerce serve. lot just a the couldn't

other So warehousing that's we're CaseStack space. multipurpose our cross selling very been very building exciting And existing customer the well I piece we think base. into is are

of feet $XX lot it about for for can be consolidation. strategy we very we e-com for a at square cross that's use look so this to effective million to So storage think be stacking, it. room going as space year a And I ahead. grow going very warehousing fulfillment excited of probably for to with We're

Allison Poliniak

color. for Great thanks the

Operator

you. Thank

of line Chan from comes Our next the Bruce Stifel. of question

Your line open, is Bruce.

Bruce Chan

here. Hi, new good Phil to on want you business the the afternoon fulfillment maybe with I and to stick just congrats role.

I or that then attrition, You mentioned just this to there guess, And And got color that claw post-acquisition you release. you've that. Was exited inflation a mechanisms talked business if any of contract the some roll some back. was maybe little off wondering whether bit there, we're so something those residual cost starting that I'm see about else? point. some maybe at on also in also just

Phillip Yeager

This Phil. is

any insource as are or large programs changes. there. they customer their enough own get footprint, nothing do our but customers some haven't typically We acquired consolidation really to churn warehousing We large have within had material

think I our really on nice some estate setting job of we've XPL the both well done plan with side as a warehousing as a our long-term partners. space real partners of

very continue we look that renewals, and and a tight really going of coming long-term at We're overall view at invest new those. try but and not expanding take want take from we into warehousing footprint. account, perspective, as to to costs. foresee of to out space We don't increases off Obviously, in to also capacity any remains in - a sort levels, historic grow market industrial of but that

like to the very works there. and we feel team that process about have our we far very So feel thus good ability pleased keep a great on with that, growing

expectations selling exceeded the and noted, our start Brian cross As to we've phenomenal has been already.

Brian Alexander

And Bruce, I'll With it's just well. our add to that, that as helped us customers. retain

Phil really us retention just that really that I that But size we've seen deal contract new elaborate So service and customer pipeline. it's strong it offerings and this size is it also contract our mentioned mentioned renewals. to to with existing well increase. in helped it helped before as improve and adding deal and our we're us that

are Our while close diverse focused on improving. sensitive when offerings price, priced, have it less service we shippers offer can them. they're very to ratios we to that And still are

to So see growth we'll continue there.

Bruce Chan

in Okay, if do rates great. on typically comment that what you sort of follow-up And quick, just real to you business that? can renewal see

Brian Alexander

renewable. Yes, of well as think Phil those uncontrollable, items components that typically that acquisition we're more we're seeing but in are that some mentioned that there some mid-XXs. of And mid-XXs there's, for factors that the some may and I be

Bruce Chan

All right. Very Thank good. you.

Operator

you. Thank

Our next of of Wadewitz Thomas question line from UBS. the comes

line Your Thomas. is open,

Thomas Wadewitz

hear the talked good were not month Great. but by missed this, month. I'm December you little I give Yes. Intermodal volumes if Can what a sure us afternoon. didn't quarter? of about I volumes, but kind in you bit by year-over-year Thanks, the

Geoff DeMartino

XX%, down down down and November December Sure. X%, Yes, October XX%.

Thomas Wadewitz

down pushes the down XX%. the When we harder backdrop? kind your about against about dynamic obviously, trying kind can about we just for of approach contract pricing down back to competitive All else in the I the pricing what if and think about I the do pricing XX%, it's where up someone Intermodal Is weak -- down end how to I'm you you then wondering, a think to market. Okay. happens how more. full it's But But -- and that XX% going stay pre got think say, disciplined we with environment XX% it we okay, just of push price, guess, 'XX. the, right. reasonably on think I'm season something for quarter,

Phillip Yeager

that utilize the day on how where maximize that can And we really on going margin market. focused based model. we what's load broader on per in We Yes. that's

load I up was think you Intermodal. in saw that XX% revenue per our

expect very to anything disciplined we're we've different and really to pick what this better before, trying So We're spots the bid competitive seeing disciplined like create we than obviously, seen overall what start network. feel than in environment. more season, to our but staying pretty a not in you'd balance and velocity

we're it focusing volume network, so in where our we ensuring that on And and really winning well. maintain benefits places the benefits as drivers our incumbency

we in lock making incumbency that RFP think well. advance that So benefit events, sure will us which we in we're of really as

Thomas Wadewitz

put together like is in say a digit? and low do decline to you precise? when overly without assume pricing? kind Do Intermodal kind you guess ballpark the you I mid-single-digit $X, you single guide $X So that of being assume of the What's a

Geoff DeMartino

as Yes, I it. would we and of modeled how kind say than not as truckload XXXX strong better is

Thomas Wadewitz

Do you Right. think okay. --

high truckload as view of single So kind I market down digits. that think

truck? mid-single in something something or maybe digits better So what than

Geoff DeMartino

than Yes. truck. better Yes,

Thomas Wadewitz

time. Okay. you All the right. Great. Thank for

Operator

Stanley. of question Instructions] Our Morgan comes of Shanker line from [Operator the Ravi next

question Ravi. Your please,

Ravi Shanker

Good you. evening, everyone. Thank

here half do inflection if going to Is bottom year bounce cycle question right down to revisit we to reasonably an of is into Sorry actual for back sort topic have and expect of way, of real to we macro the get a along if same, what normal it macro are the like in that improve? restock conditions half the 'XX? your remain now back happen I and that but the different inventories Or do were year mid-year that the you they again, whole a ask once back midyear we then in of waiting kind we up going see inflection? the in customers to case telling a the the of

Phillip Yeager

Yes, is Ravi, Phil. this

think I And how an different unknown base peak does down? what is do heard fast myriad that. a the thoughts ordering with our I've from for on season. that's of bleed that customer inventories require

Coast is leads to more we've more transloading West what really down think ordering and far sort and snack bleed probably seen overall to leads I ordering, intermodal in a supports that too inventories, rush growth. and typically historically which of

guidance, so I the ordering, delay extreme the that that, sense. that but of the think also capacity in And we but makes it might tightness, didn't exacerbate into might build our if that increase

Ravi Shanker

year? and to will any of the the you biggest has over-the-road the the up the of service improves. as has that over this shifted back they truck? rail that's follow-up, is And rail confident for your years, you again, unknown hopefully, that couple expect also And it. the agree And customers probably I tend said which restock, helpful. of service next that so Got as you seen that kind out up is happen of kind they understandable of you've kind there. how in No, few That's of look of kind obviously, last are not maybe truck of conversations rail. in conversion cycles, kind Are and But to versus of towards permanently cycle, the when towards in that. last shippers speed looking a kind bias service kind

Phillip Yeager

has for capacity I'll at CapEx years. where Maybe couple start replacement levels past the Sure. I limited truck with been really think of that

to limited. levels, net at add really these and the think also truckload really I market. to to with been And capacity to starting carriers exit ability rates spot see the So has small you're midsized overall starting the market

going looking truckload And we're with which freight. able able make move solutions to it's at lot capacity big a through that be so rail more going which estimation conducive a tighten, box that to move sort of think to to and service, continue intermodal to be I inland really our folks improved to is the of into to will And path freight be West that's transloading are maintained, going to Coast get confident be ports. very

We're as service. pick of on-time need out mid-XXs Brian making sort good volumes our right now, transits a to up, and promoting our investments view. obviously rail really sustain that prove be but continue We that we're So performance. that as would to about mentioned, to as we very partners the feel as tighter well

Ravi Shanker

Thanks guys. helpful. Very

Operator

Thank you.

Long Justin of the line from question Stephens. comes of next Our

question please, Justin. Your

Justin Long

guidance the cadence ask Is percentage. the gross I quarterly curious there Just the on the you're can you're the about first in anything expecting that I share color quarter? where you to year anticipating pressure earlier, margin And about you fourth in accessorial. on of for talked metric? you Thanks. additional can wanted know provide year to versus quarter any the Intermodal start in the price finish but

Phillip Yeager

Sure. would two kind those And go hand in hand. of

finished where a offset with margin Does from revenue, but that -- that probably percent anticipate we -- perspective, a spot to decline pricing volume And to that the would accessorial similar year we'll in the drive I margins with a would XXXX. think start those and we stronger percent second softer dollars. makes sense? that the then increased in less with as half we

Justin Long

buybacks a on Got a into the assuming the then it. modeling clarify just growth container X% for that, basis? wanted X% ads around to year. you're made, then, you Was positive. still guidance something factored that you're And on basis, are a that less I this comment XXXX. like than I increase And guess, but makes net to That sense. earlier sounded Phil. It And

Just wanted to clarify.

Geoff DeMartino

didn't on X% on containers X% that we've basis. have of year. reached net retiring, got this some life We to we've that end but off pursue -- It's That's to held a are we correct. Yes. going that

Phillip Yeager

assume not any does guide the buybacks question, other acquisitions. your then or share And

Justin Long

Thank you. Helpful. Okay.

Operator

closing back you. to to conference Phillip Yeager would turn the remarks. like now Thank I for

Phillip Yeager

Great. us reach there I, on Brian, great have our afternoon. And a feel as joining if for you and Jeff to this always, to Well, or hope are call thank out please evening. you questions, any free

Operator

conference This Thank concludes for participating. call. you today's

disconnect. now may You

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