Hub (HUBG) 26 Oct 232023 Q3 Earnings call transcript

Company Profile

Participants

Phillip Yeager	executive
Brian D. Alexander	executive
Geoffrey DeMartino	executive
Scott Group	analyst
Jonathan Chappell	analyst
Jason Seidl	analyst
Brian Ossenbeck	analyst
Bascome Majors	analyst
Justin Long	analyst
J. Bruce Chan	analyst
Thomas Wadewitz	analyst
David Zazula	analyst

Call transcript

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Operator

Hello, and welcome to the Hub Group Third Quarter 2023 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. Please review the cautionary statements in the release.In addition, you should refer to the disclosures in the company's Form 10-K and other SEC filings regarding factors that could cause actual results to differ materially from those projected in these forward-looking statements.As a reminder, this conference is being recorded. pleasure Yeager. the my your over now Phil host, is to call turn to It

now may You begin.

Phillip Yeager

and Hub Earnings Group's afternoon, Third Good thank Quarter Call. you for joining

created technology Group's Geoff Joining of well provide forecast Operating of have and years, service are to in organic of long-term I'm and net operations.In and to clear the acquisition. and a highlighted a a improved is will core lot be have significant with existing our resilient challenging cash company's our scale we best-in-class an our shareholders performance as deployment earnings, target mind cycle benefit equity we which this that business strategy. best our Officer.Over well Alexander, of Logistics, flow are managed potential enhancements X.XXx in our as asset-intensive to leverage me full few as efficient X.XX business, our model website.First, on dedicated Hub model as as This proven investment and In our company and expect which in transformed resulted has built capital that results, and today the the that experience have customer presentation, operating through are debt/EBITDA. free leading being cash extensive provides past we a with year and technology. announce into Officer; in freight our efficiency the end-to-end that value, excited DeMartino, changes Board have non-asset-based Hub industry-leading while strategy returns reassess we from we we available and have with analysts, becoming to service have year Group we and our solution while our generation.Our establishing effective Chief profile capital Financial for second investor Brian a evolution deployment the feedback also diversified taken likely through opportunity a drayage through XX-year history.With Chief customers accretive of enhancing ITS, free through more more our

to on that of return to allows the consistency greater opportunity earlier will the quarter has described in in to next in outlook. not our annually authorized million capital dividend, are will support do to these value a of authorization and business, with a continue equal repurchase share to transformation and received to and in this execute $XX in while balance provided ample share $XXX return will which a stock we long-term which for remaining. results of methodically that acquisition and to invest program to grow demonstrates early and retiring dividend enhance current returning continue we'll we which us the quarterly new our target, we larger Hub had core see our flow initiatives, our so this a We our effectuated commitment split shareholders.Second, core as we and I new strategy.Now cash our liquidity Group.Third, XXXX share on our provide share quarterly via our year, in Board Board per implement rush our profile allocation capital cap.The regarding through free share first to and and shareholders $X.XX long-term be the cash achieve business from sheet business believe that has allowing begin investments.Last, X-for-X us We acquisition believe X to plan to invest in million capital program a while capital paying turning authorization our we have

would quarter we felt call, the come third we challenging, that to on fruition. and last As most our [ ] be discussed our it did though

the for replenishment. However, Coast, improvement and tightness in demand the a indicating increased inventory West throughout some quarter we in need saw

However, the August peak remained September to Intermodal. haul and anticipate quarter.Demand season diluted through and business has in in fourth volumes wins day strong, in we in and leading executed July soft volume was declines inflection do onboarding Rail per improved a market. not sharp services while we in demand shorter

our team. on We the on continue of the our focus to serve to improving cost efficiency operations street, maximizing and reducing

fluidity believe have in the is we we growth. opportunity there to Intermodal still and organization bid made Although is operational costs.We considerable focused upcoming season, have conversion to significant returning opportunity on our commercial progress, improve reduce and

our new driving of strong providing proposition, and Logistics reductions combination resiliency the Managed emission will value and Our remained gains gains velocity service the and share to leading committed in rail well, over partners to service services. well network.Our business brokerage while performed model. and product, our organic wins that expansion cost again our quality and our truck warehousing, improved service, benefits to gas share lead greenhouse illustrating once Transportation of We from a great road create to Mile the in and in balance have due and Final we believe executed versus

season drive and are Logistics Intermodal, pipeline leveraging we demand, the time we focused excellent experiencing conversion on of structure that some maintained remains our returning execution Dedicated to strong, is be for for cost focused bid service to customers.While With Our are truckload. growth and and approaching, opportunities length improvement unclear. our from strong remain very on will we in in

those position business review providing excellent I focus team, on that, attrition realization and a award while to low to increases, and on executing due investment long-term world-class Brian rates demand As plan.With support available bid maintain be efficiently our in improved, our turn over will solutions rates our created our operating accelerates service it results. will capacity.We will given operating our customer and to to capacity opportunities spot strong we

Brian D. Alexander

which growth reportable environment I XX%, Intermodal declining will XX%. leading segments, driven dedication with third a executing mentioned X%, with XX% operating was by cost and we and that freight declined our to Intermodal lower and for Thank our well softer quarter, long to you, the in declined volume. impacted too going the improved Phil. line on soft year, led through elevated have the for bid we the I'd east Transportation declined has in XXXX, capacity customers. & XX%.Continued quarter discuss the held for our start upcoming third and an Solutions.As west local starting and like revenue import and changing positioned softer ITS team structure Transcon local we truckload retrospect, into our declined our by with revenue us our volume, and season. of positioning in price now decline which talented oversupply Phil challenging In a volume ITS income.Throughout anticipated, inventories feel our volume seasonal efforts volumes thanking in their generated accessorial and

are and bid the process changes that previous disciplined Intermodal and in quarter with growth on improving the our be our approach structural appropriate in with XXXX.As for feel scheduled and throughout have fourth of a the have to strong structure velocity cost We onboard the expansion, season.We yield trucking been our and continue of in balancing confirmed our first to I calls, XXXX the made and quarter year. our early mentioned pipeline and pleased wins have we focused along network, in regaining timing confident Dedicated

market with base us for helped improvements manage our Our new and to costs. service our compelling the provide us rail rail are agreements that helping better volume move equipment customer

XX% trade.We trade fixed costs third-party the from execute reductions. increasing economics our purchase improve and On last to year lowered we our have to of and and cost continue through trade have ], our see by our street opportunity [ improvements improve in-sourced continued additional to XX% planning to street regional cost

our continue up set success. will defend to incumbency us wins have We incremental and for long-term will that

will invest our rail already from wins expand expansion cross-border these addition, In XXXX.We'll to and improved solutions support investments, long confident new the have will help Intermodal. Intermodal rail term further the with recent to our service, generated in for over-the-road that in business continue along are of conversions that

customers we that sustainable Logistics are actions turning confident impacted While the and will our results our position low to deliver levels our near-term for us segment. for with are by growth service high of profitability.Now volume,

up our diversification to supporting customers out X%, gains again operating points. end-to-end stand we as income our led an Despite continued the supply quarter.Our was share were continues challenging quarter percent and approach new basis our freight by chain, our value a environment, with the our with integrated deepen once onboarding. continue third revenue growing by with brokerage of customers expanded to volume we As customer brokerage XX throughout and our existing with Logistics successful strategy margin team to volume in expanding

strong pipeline the and confirmed XXXX. a in onboarding experienced Our the quarter, XX% with third but of a decline revenue fourth overall of has segment in wins quarter start Logistics of

acquisitions.While addition, to continue cross-selling growth, costs. leverage cost growth continue our our and synergies we drive establish harvest our we Logistics to with to lower new also Logistics our we multipurpose as we improving In to ability locations Logistics support are our recent most non-asset

inbound heading As we locations solutions e-commerce into of and to network mentioned and Mile of to in quarter, our previous in growth chain in expect multimodal our benefits freight the growth they and strategic Final service customers' support as LTL LTL, supporting west and hub earnings regions supply our these solutions locations our needs.We XXXX. calls, success are of third the central volume to hub new this the the outbound enable and accelerate saw these of the continued

and to and will ] remains improved we service continue larger customers new deal and close Final driving sizes also with invest [ build to margin performance.Our offering as continue ratios. onboard more density, lLgistics non-asset-based pipeline We stronger Mile strong enhanced in our

position future our are Logistics Our Geoff organic to performance. to it trajectory that, growth and well, is strategy our over acquisitions.With to playing a and to non-asset-based discuss continue continue integrate in out great profitable I'll of we hand financial growth

Geoffrey DeMartino

operating of $X Thank conditions, quarter market we an income of the margin billion you, freight recessionary for Brian. and generated revenue over X.X%. Despite

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

purchased our we $XX XXX,XXX quarter, of for million. the During shares stock

of warehousing in a our from slightly percentage. as year, costs freight and on and as a focus and percentage transportation management.Salaries count enabled yield benefits the we increase which year prior our as rose large revenue compared XX%, the purchase in-source cost our driver reflecting prior expanded by costs Our to has declined containment

to as benefited million increased to office in prior revenue the strong by prior year. quarter. expenses head was costs XX due well XX% addition, technology a used segment by was over quarter on prior to inclusion In lower expense by to compensation as minimal year. for was X% very down pricing.Logistics expense as truck as Logistics this costs prior quarter, equipment XX% increase basis and employee added X.X% offset of and incentive investments the from use $XXX Segment $XX as due to improvement impairment and as office the This year, and from year in $XX Depreciation second revenue, prior our compared lower was year.G&A full of acquisition. of count of prior whereas charge the Gain growth-oriented million sale year tax operating the $X lower year. legal income a point the from million compared but prior of compared and the lease million declined expense decreased from TAGG a amortization the increased

we impacted volume experienced Mile quarter. are strategy was which fulfillment as from by in of nearly over load brokerage acquisition headwind our offset operating benefit and of total. a productivity in XX% While was XX%, Managed with quarter compared of income business.The long-term for conditions initiatives down consolidation X% accounting profitability Logistics in growth showing XX% revenue businesses up full the as This well was Final and per in by profitability the results, our to our in Transportation, our results cross-selling XXXX, as grew our strong and segment

over $XXX year as recent pipeline in Our which per Operating Logistics in into offset large revenue primarily the as our wins of team in performed a XXXX.ITS demand basis Intermodal soft impact down the and $X.X conditions more on course the offering within margin was and XXX and decline charges reducing Intermodal capacity controllable efficiency, and income expenses. operating the million flexible reduction increase drayage a our provider sales due has and and X.X% accessorial and provides every of our revenue profitability point with yields significantly XX% price, are funding annually a drayage, supply in service we profitable cost stream strong reflecting benefits earnings with XX% improved drive than segment improved benefits rail leveraging of will and in to a worth price from broad costs.While saw of improvements prior of volume solutions XXXX, lower Dedicated declined approximately of and load. declines driving to rail million the equipment in-sourcing operating stable weighed improves more several a a contracts.We well cycle.Profitability new line realizing costs positioning chain

year, we updated ] per [ for decline and expect per conditions our between in Thanksgiving XXXX and of the seasonality the remainder following more guidance with EPS of Our holiday generate service diluted assumes contractual throughout market to more stability brokerage services $X.XX with the share. lines.For XXXX, in softness our Intermodal typical $X.XX

$X.X will revenue expect We be approximately for XXXX. billion

and which reflect costs year decline revenue, accessorial operating will prices efficiency.We by impact lower to a For tax expect full forecasting lower for and mid-teens double-digits will The the Intermodal, be will year. purchase the the we're improved offset and less of lower of for transportation partially year. rate approximately surcharge of remainder XX% the volume

changes asset acquisitions expense Our in unchanged several our more capital profitability is over in to expenditure to past and have $XXX has yield the including important at and also several our we million. generate expenditures years, range earnings. we Logistics to offering out made Based would to capital which management, business, completed strategic build our this million and improved expect focus on our on less of significantly $XXX EBITDA utilization guidance, drive returns.We've efficiency, million stability XXXX.Over $XXX operating

flow short cyclical $XXX to a demand driven million positioned I'll to our [ to margin both and have operating growing in results, strong trough from step ] actions XXXX. to with operator questions. While success free million horizons time XXXX an improvement as X% a in these open cash strategic over with line the and and Hub we changes environment.With Group in the compared to in along long-term $XX in marketplace, for change compete today, trough over X% the turn have it soft in to to that, in These

Operator

Instructions] [Operator first of Group from is Scott Research. question Our Wolfe

Scott Group

history like margin. to this the was lot a ago want try -- year in prior on focus and troughs, of to have we but a looked what I XX% don't And So, it in know ITS it QX.

about. another rail contracts we're more step we've here. the It seeing the implies of benefits take Now And like doesn't guide flexibility it's like down X%. like feel QX or different from talked it looks margins

all So, margin? you why in we here? on we are why that from the guess, about go not -- think aren't stuff talked I where do seeing the And we benefits of margin you've

Phillip Yeager

Sure, start. I'll Yes. Scott.

think executed I out. have well on we So cost

quarter look you dropped XX% cost saw year-over-year. at dray If we the per year-over-year,

offset Our rail us pricing contract some help actually of did the pressure.

prior as came somewhat year high were when also think which accessorial as I out. looking you're the well numbers, revenue at on inflated sale those with gains

I back. we an up opportunity overall that spreads losing that have degradation asset you're think count see wound over aggressive anticipated. We good than And I first normalize somewhat more so.We a going of And we're his significant pricing we it Brian I a to pattern.Obviously, you of share necessarily do seeing, been not in quickly which the higher of remarks time have -- didn't pricing is if would job consistent So enough some road. on moving, move in out we some calling garner given margins. year, did to of in this to the that last portion prepared a some are think today. have opportunity now when bid you And more the earnings a season to those, has think seeing we have

goal through our the then to network contracts. back the those bid rail And start get I think so upcoming you'll velocity really and of benefits into to season, the is see

Scott Group

order do think hard regain of to from bid but an also approach price? improve I would think? you here but to does think opportunity you lower And do there's that? guys share. so if go Or you Do in to want to what sounds that's -- to recapture get we both, like share price it you to some curious as need need season, --

Phillip Yeager

Sure.

performed address with then, prepared to some share changes think And working, well this have won't in the Once -- and we in initially some our losses wins we've remarks. much actually actually again, Brian our made lower. of methodology his some quite really since So we some is structural group some go and nice to pricing in particular, I have shorter-haul in seen truck pricing markets.So come season. the that online, we following current feel of

between we're think in OTR mid-XXs look minimal and that It's seeing at rates. now ] the the up I spreads point. right also you at this [ contract

with and that spot capacity market we're think Intermodal will higher products, service combination some in like, prices there that. of significant capture on uncertainty the planning look is and for we So truckload fuel strong a and what focus to the around really opportunity conversion,

Scott Group

And closer then maybe, the we in right, about in about should those this that's X.X% to margins Geoff, next are if lastly, ITS guidance year? thinking implies like that think And right segment we just so margin how into QX?

Geoffrey DeMartino

No, would a we pretty consistent to be today say low. it's with it margin where percent. that wouldn't from going are I be

I brokerage the of towards year the the some think end going side. see on are to pressure we

to I perspective.We asset well very do, Intermodal level side. in think we as companies some that QX, starting equipment often. we operations most fixed have would see like performed and the from of is costs within you know, our model, light say I are an on business

that's increase profit. worth with on is impactful. a very think XXX contribution margin basis X% volume those the flat profile on financial area in price is nearly operating in teens price. are points today's from A And you incremental upper if very, price perspective, about Obviously, numbers So margin. contribution the just

focused are network we from into then returning on will be pricing incremental upside So the and there. fluidity

Operator

Chappell Our from Evercore of is next ISI. question Jon

Jonathan Chappell

among you you once price and well, Is on bottom race Phil, share, speak in just as or Intermodal the whole the you that to you long get as too to your that commentary to mentioned Brian's with the you'll bottom stabilizes, determine the how holding of Intermodal the the your think, answer bit can before on to capacity truckload floor? you is we to driving and that along over-the-road. competitive it feel lost Intermodal that a what's bouncing over try competitors? can industry long, landscape be that pricing, But

Phillip Yeager

Yes.

it's think in the I market. the overcapacity mostly truckload

We It that lately. in brought are seeing bid reprice as in total some really over wins the overall on And nice know, the will first we've just was our bid season. our later XX% of quarter you business. calendar

from on as rates over-the-road.So so they're strong we We're showing line contract our a out expanding. there questions last where returns are price, between And service product, we going rail how lot year that they're very and inventories to how great we believe on that's though product. where to -- hold felt that product. that replenish and move that service went of of and didn't up and customers to have spread they lot a a displaying are try to We're demand going share that the we there overall need to the as fuel that's prices a are

conversations So conversion. a lot we our to strong having great have and to a think on value we bring of customers very proposition

Jonathan Chappell

now think so about a then we And bit. you've transitioned if little

giving through we're recall I where but will October loss. quarter went help don't you maybe we stem as maybe Intermodal with there? the you ] now, mostly the monthly third of hopefully the through So and stand the breakdown you [ share that volumes,

Phillip Yeager

Yes. Sure.

on October came a July August I saw to was thing sequential was then we is think So down XX%. far X%. XX%. July, increase down worth We X% July X% and August, an Hurricane September saw August was thus is our August of ramp. of in June we down the XX% back decline think the out One is and that QX, Hillary. was I highlighting X was us, half down when a to actually September, demand. points occurred for really to X% of to portion we it What think, very percentage volume in And cost which total very August impactful and in obviously, to was X quarter impactful Western then the network.

to And volumes so specifically, as quarter. reference we call that it's out was the we I think important but for something about think didn't the

Operator

Jason with Seidl & Our next Cowen question is Company. from

Jason Seidl

year. Want just about next conceptually to talk

announced dividend going don't that a companies pending here. announcement You have out guys is new put dividend Most think they out if business you a the south.

earnings costs dray? of XX%, your sort how on about think rail XQ, we in your the of in an due with coming and of for potential should improving business side So call of percentage backdrop internal it, the an increase your growth

Phillip Yeager

think No, think great in. And a Sure. Geoff and question. Brian I I it's and I'll let start fill

give little too it early to of concrete. budgeting I is our up. kind I'll think We're What to process. it's a anything frame do try in

line. I more think form some As more Inventories we a capacity are in look we're of at see market, great. We're exits back seeing in the is which to balanced starting spot peak season, coming market.

I prices think referenced good conversion. a from thing normally increasing Intermodal, I is fuel for

levels targeting is even contract service mentioned are think to XX% up layer and some growth. per count if efficient. next M&A accretive I And barring well, when year. more have versus increasing earnings and cost capital at dray. spread.I I you Intermodal you down year-over-year. recession, of revenue lower going we're we're Head sequential going very going mentioned far with far allocation We're Hub, into look to Our our I expenditures the sort be and some holding OTR capital that plan, volumes consumer in think

the on quarter thing that and timing let is remains the Brian recovery in. but the we'll fourth certainly think and fill Geoff demand, I'll specifics of for unclear have I but obviously more call, only you

Brian D. Alexander

we next talked to and this Jason, year inventory off about inventories we the into think what Yes. a about has year, No, Sure. it more bit little seasonally. burn that lot I too going a earlier see of and

full off. just inventories bloated cycle took while was So a seasonal burn some earlier this there to year,

to called to kind really the the X the going a Logistics see demand as into earlier and of enter And we that, mentioned the we that's we do spring, season We the be as right, Transportation, new the good of a with table bring out buildings. replenished.And volumes as Final brokerage, then our holiday and working adding headwinds, well continue position and to the really going going Midwest really for services, well.And that, see that year, Intermodal We're adding grow. growth in year in as we Logistics this be X% a a we Despite and all with left stood to strong see these our which our our in out all to well our push growth services they going consolidation east our next what reset into with is so with to that into year investing marketplace. I've Managed the standout continued West working we're fulfillment Mile. X and locations our and in through we'll XXXX.As market finish that out into we're

So we our really great win with service customers. and proven that and non-asset-based And on in offering. for awards Mile Mile Final growing Final bringing new has logos to diversifying We're flexing model continue our from customers customer in our base. our be to

that's focused eligible of a marketplace previous truckload delivering as and the growth on for conversions in into that a And question. is in areas the focus.Phil to XX see so continued on million But we're that that and the over-the-road invest lot those big Intermodal are going volume over-the-road there the There's mentioned we the it right from perspective. we'll yes, out success growth that we're cost to converting in over highly continue structure. still conversions,

Jason Seidl

about talk about credit that, because some service your not seen see haven't rail we giving How really should think it but improved obviously There's partners? volume. to we with happy much as the improved rail been improved I'm service. rail I'm

if So will your do see that you to come in 'XX point partners volumes handle be able some how guys increase? rail back we at confident are that

Phillip Yeager

Yes.

show in a I ] and agree test seeing [ to good the test move hoping resourcing which has a customers continues in now seeing sequential you're ]. to I with to that. same the pretty hiring some think time, prolonged is to this and right [ We're continue you're handle I been short increase I forward. our we that more have But think commitment you, at think that with volume demand. order, good

that And going and in for believe to be growth it's all in are so massive we conversations point I And our position. of this us partners. a time. related to we are our rail And at opportunity know

Jason Seidl

ago? what One it being Phil, M&A. accretive maybe up And update look over mentioned somebody think for seeing final year a us you I else. you turn the lot one you Are give I'll and still market? X to an stuff say, sale? the Can on do M&A put multiples of like, compared to

Brian D. Alexander

let I'll go in. start Sure. Geoff I'll and

the up rates coming some in haven't and for seen many just of broader increasing. companies interest challenges given market the sale as obviously, We

a working out to where opportunities closing And is and we But been now, in strong we've So been on pipeline -- go value. continue there's near term. disconnect a I do very off-market towards the certainly we're have and right we think and overall interesting what exciting able and hope find somewhat of something to

Geoffrey DeMartino

key of in the just of today I'll strategic add. We plan. a It's plan. allocation context highlighted overall the capital part our growth that

evaluating. had we've think good in that we're a market. on good continuously have we're buyer again, outreaches and we more we've And this I and think generated we pipeline those success a

Operator

from is of JPMorgan. question next Ossenbeck Our Brian

Brian Ossenbeck

to Intermodal to the just competition So side. on back come maybe

little a price might to spread back? of talk give terms really just you Maybe of before? versus rail had over-the-road the on Or play mean, as good where you is with Is you're is and is about much bit think can of So really in I this more going a what context conversion. network poor you more density left some here? wanted this service? you is after service the And of things more that getting not really get of some history? you this that can enough this have as

Phillip Yeager

Sure.

you marketplace. we're imagine, think and seeing, it's customers expenses total conditions are I our given rate. competitive costs, savvy that could I fuel obviously think the very So But what focusing a including on market

in so Intermodal it's are back XX mid-XXs. right and in from now, over-the-road both the of teens of of length think closer aggregate, XX%. right to But hauls.When haul, service to we're cycles conversions near in nice the about shorter you And some haul, the longer and of that it's the shorter In outside length bid some we spread percentile. getting those the product seeing and seeing between of really up contract high now taking improved Intermodal, advantage in

that's go both to them as customers, advance the we're highlight in as what so of and levels. that and differential during RFP events to service strong And our trying well

that getting So, significant, -- haul, for opportunity is we conversion the and short longer we're in the focused but that on very and both think back.

Brian D. Alexander

Yes. to continue We'll too. target cross-border. We've started the I'll focus that just add on and already. process that

and confirmed going year. expect some We have we expand wins, those to into next

offerings the our transit We diversified have product superior well on there and there, too. rail also with as partners service and a on

target So XXXX. as we into that that's to something grow we'll continue

Brian Ossenbeck

got but And this in effectively and year? investment more the here You've guess, back, investment of the rail to And I then terms terms in does deck? there terms of service slide into on CapEx viewpoint, do boxes translate year longer-term of capacity are in rest storage? of more how and the color next boxes, that the and how you there, what could your view you out doing comes be as

Brian D. Alexander

boxes we've now. Yes -- stacked have Brian, we got Sure.

muted now. down We our as how discipline returns, a about manage year network finish certainly, But to as to year. stack.We manage we lot of able the the industry improves, targeting be this we've started evaluate as that mentioned and of in we'll that need. bringing our We'll as that we'll actually that and I enter started little the out we does the that volume be unstack a think evaluate to as getting around peak. utilization And bit handle we what balance right we through most equipment. out

that? want about talk we a go year, CapEx you next maybe Geoff, As little plan on into our to bit

Geoffrey DeMartino

million $XXX -- this to $XXX million. Sure. We'd year is expect guidance for our

thoughts reduction year preliminary Our be in next that. would pretty for a big

add the we have replacement probably year. to side. cycle on be then we a fleet think next side, on would tractor do the the And smaller looking container to I

something impact flow. our a big ] which certainly free stock have of So million cash $XXX would pretty year, on [ next

Phillip Yeager

the XX% Well, seen that other improve to QX would we've highlight thing I by utilization that is only from sequentially QX.

we So have the but progress key see our that still equipment. to getting of ways very it is metric. to on are go, more out good We existing

Brian Ossenbeck

follow-up quick the balance sheet one Just and leverage. on

near market. and we But can you the in if you thoughts talked there's pencil being in here terms how anything hurry that the get of process? through should some give new looking Board about to not sort buybacks of in just so maybe you term? at that And to in a And are for going

Phillip Yeager

Sure.

very So we're going be thoughtful to around that.

we As some acquisition opportunities at. look we're interesting we mentioned, to have very that continuing

we are laid the take going [ get and you I will -- ] on anything? the assuming us add that be to that X it same certainly very think don't did new didn't we it, we forecast. out we approach, be to model. have think But want plan, time, there's the leverage anything effectively. execute the out. we and think of opportunistic the will on do strong to with utilize it But to would the into Geoff, sheet I build repurchase we as roll at balance the I likely target that in our thoughtful to middle We

Geoffrey DeMartino

Yes.

of the be -- it outlook authorization I ] tempered CapEx will acquisitions. [ and think both by our we'll be -- the will for again, use

Operator

next Our Group. Financial Susquehanna from Bascome Majors is of question

Bascome Majors

at earnings rate. so and guidance XQ $X run XQ, you for If or you're results the and at look

the less first in second You the than half in do do half. you seasonally typically

to the kind So help growth next happen super today? earnings expectations rather walk set February? got us half. you've in And of until now level lot first that you waiting year of seasonal preliminarily us barring deliver are place from just Can the half next some second hoped other what outcome you thoughts year has of for to next year, we for the any catch-up than to starting through in the do to a

Phillip Yeager

Sure.

the need bids. some do That season. perform we seeing peak a priority. key think I to are upcoming So is We in

to the I and exit think capacity spot market balanced. staying continuing relatively

onboard pieces All wins having are get the to that. think a those lot the earnings support It's that fleet staying again.We're successfully of of and our we growth. certainly consumer to moving Logistics resilient. is a need I to we going stack. have, We need Intermodal significant portion optimal not for

see plan growth. acquisition be portion and of you. do to an frame that in by drive in position us increase then spring excellent hope year. strategy, the executing up in with we agree and -- if And we think earnings the would latter capital to we're I It do out should see execution driven execute. go [ help on I demand in that will think likely in that. to ] some layer you the allocation the We

Brian D. Alexander

of look I'll from that too, now. just cross-selling we of we've right is tail as item a really add a are perspective, it or services that, look into as at customer to using using service. customers those Hub one only we revenue of one at created long But And count, we revenue count that XX% our X XX% ours. is is of customer more

big our we accelerate cross-sell a going of and it's plan as underway year. to into been that's growth that's next to part go continuing is So

Bascome Majors

back not has your It that earlier in big maybe happen just missed your is Intermodal and what from attractive, to the reality for I compliance very but the with you your What is And update is case converting. change if discussion conversations Can holding it's just view? to that on economic us I are And earlier. how these is? that customers? that seems going where apologize anecdotally,

Brian D. Alexander

that, year starting did those them as the And last of seasonality to XX%. realize was out their seen we've the starts bit the at compliance, lot year more the service tactful at, that, about into over-the-road compliance In We inventory. was to We that our lot that balance at we've to from that the Sure. back And around to is the a confident talked the want about investments started of exiting is going service there. that at regards rail.And ensure XX% that, A year, where to QX is and partners going be to that big where too, about. that their been to have continued a their come that that they improve we conversations And with see that going in needs mentioned, service. from finished is be And to we've to demand there as a of going rail know was be. be the -- Phil finishing be shippers throughout think to assurance XX%. little we compliance. capacity in to rebuild, they

have So in go our one over-the-road.Yes. that those question, confidence we've submitted transit just And that too. well times very a piece next competing and the improved bids those more into against before on we we lot

customers well. into that for and our well. Logistics to next as us we I think in into -- consolidate departure that regards customers, in as network been network We one, that year also to customers them those of for convert capacity piece our we've exit yellow. going And Intermodal too, growing for providing LTL with through then our and our but that, saw solutions successful, really see the protecting with

Operator

Our of next Justin is Long question Stephens. from

Justin Long

Geoff could guidance. for based one And about you bit It the the that. be for being on the talked maybe start gave the on lower guidance fourth today, rate mid-teens. than with in quarter, tax quarter I'll it the Last little like a you looks

just down So And an income was in take to XQ. the could XQ provide decline there? update rate, step just seems it the to also probably will wondering a tax imply from I that if given you operating

may but missing So that? I to sure margins make wanted was comment you Logistics wasn't anything could wondering sounds bit, on be I if I else. driving like what's It down a

Geoffrey DeMartino

correct. Sure. That's think And your all driven is by will on rate around apportionment, the a we've change be year. we a tax state QX project in math XX%. in working Yes, been

QX To usually operational the So file in going point off, half be will on is the your low earnings, file in tax of the does as of October to we're expecting fall returns. seasonal QX. the XXXX strength it as we side latter

is brokerage of segment. are And Logistics side. expecting We brokerage more some course, our on in the softness

about. volume So overcome it's are based really into onboarded profitability performance our wins Logistics and some will our the of to business but not that X continue off pieces the of the parts Intermodal tailing volume, we recent in think, transactional talked of to between other segment, on being QX.The rest perform brokerage enough we

Phillip Yeager

upside on -- demand the Thanksgiving given the will remain just we be in to that upside. wanted certainly right if it we continue right? that to up the holiday, we And that certainly somewhat see through is does be to there's certainly unclear, conservative Yes, approach what volumes think and

we we'll so -- as with though felt And the should but be guidance, conservative.

Justin Long

maybe Brian. And for as a follow-up

that there year? about wanted top get onboardings and growth how sense next fourth onboardings I way and segment collective to You the a these to up talked just the in about think you're potential the quarter for Is in line? next to some logistics set early for as year. a could move if into have impact we

Brian D. Alexander

I that it to of continue we But Justin, a of there of see create a Logistics lot love great wins to One, we and our and is question. lines other appreciate for of that lot wins network out reasons. Logistics that get within And freight. No, Yes. Sure. the our see business it's overall what helps win. Hub

Final So able as of the the leverage we're middle win assets management mile we to for in that. Mile, our

we leveraging do sensitive, these more to solutions continues to cross-sell the long customers as I've on that onboard provide demand. tail stand some of that grow we inbound From to We've we're again outbound continue add headwinds, with and and continues the to we in strong As sticky They we sizes for that just of more a it the manage new into pipeline, against and customers. of deeper Dedicated. buildings that all but seen our our less become mention deal then get and product up. out transportation.And modes Dedicated contract mentioned, assets across price our our also continued win to I'll retention become our they continues the Logistics.And perspective go also

seen the we've them. are ratios highest win Our

the before set going onboard really up will Dedicated the win next year right calendar well of the turn year. largest us of and Our into

Operator

Our of is Stifel. Bruce from next question Chan

J. Bruce Chan

longer. side for of any lower And just grinding be if there, market count maybe going a have case, for It Just look something else? whether things I assuming technology-related bit like seems to you minute brokerage related that's it's the or head opportunities cost here. the more a at a want the is rightsizing for to see or

Brian D. Alexander

my with No, I at that investments a we Yes. guiding say Sure. that And purpose, our Bruce, question. favorite a innovate IT of Hub in we we right, And is one the appreciate that principles here focuses and team way direct we and our those productivity called Geoff saw. our And growth. what brokerage. our meaningful carriers drive profitable on we've out seen some that of in exactly members that's our that customers, that gains

saw sure we that volume grow some with the sense and the We scaled quarter. efficiency softer cost more feel that appropriated positioned grow, that, profitable to we'll of see we handle investments fourth those. operations.So driving But a again, on we While in base appropriately well our growth. make towards volume, we're in are drive that overall do top headwinds of and did coming our some lower more

Geoffrey DeMartino

volumes, not lean our is with XX% that more in additional add seen obviously in and our allowed additional incentivizes just off around and head we -- year-over-year count really gross become commission growth very our profit operation saw and growth to efficient.And remain but we highlighting thing really volume volume growth one dollars, of pay model actually have brokerage. also handling was believe that productivity we've in we around that program about I us and more the has aggregate to improvement our and I incentivize

and keep And as as to we'll improvement but significant to but come that long will we there. really so, share to well. need growth, have focusing does, go a the on return still way taking market And

J. Bruce Chan

of to it fair from volume some And in I Or more was just with going market? say tied that related programs? disruption is that was yellow incentive LTL to to to ask those X% that the growth, was

Brian D. Alexander

volume customers But bit I that. protected growth in customers a pick up saw of there. we from lot We and from little logo we that new exit, we get Like our A did wins. said, our both. yellow of also

month. add anything Our XX to brokerage more new customers teams XXX from a

do brokerage as we we subset those. our into modes also of offers as that, then well. so diversified cross-sell And a And

our of our we acquisition temperature-controlled that really sub that just well rates meaningful LTL out, other flatbed the bring nice outside table, become as as offering very top tank built to modes customers. driving So to a and our

growth. a balance So of overall it's good

J. Bruce Chan

I a week. just final over. then space in We high-profile follow-up And it last turn before fairly had that competitor exit a

and whether you to want market anticipate your Just on get major in that result? take as any changes the a

Geoffrey DeMartino

Sure. wouldn't any major changes. reference I

how it's We and to we've our of continuing products. an services, are bring think brokerage a in utilize. of just works a market and to key challenging that something can you the and I invest part of as capability tried that indication the customers can model I be having we to think as think, very suite full brokerage is important

So feel positioning good term there. our the long about for

Operator

Thomas Our Wadewitz is question of UBS. from next

Thomas Wadewitz

next year half? the kind is wanted rates think third the season you Is Or you kind potential of of perspective being to ITS a more a know well? kind Just improvement that lever just for get in operating in more timing how of about think quarter? I volume. more and should and as really some for improvement? of improvement level bit margin it a lever Wanted volume about on the see being you've little ask wait talked levers about the the winning and second aggressive the drives key and with bids we of the appropriate pricing potential to about in what to improvement to in bid potential and

Geoffrey DeMartino

Sure.

have think some season seen have the positioned I while point latter opportunities. wins, for market and good feel ourselves out a even this in we've portion as I some mentioned, at we market this of the of nice and

currently marks -- that our referenced, that the last over fully opportunity to volume at What I shares look pricing don't cost, see lost baked. around we service road. as taking is is the And think contract frame of some of I is some QX.That the is I opportunity effective about XX% we in disparity time where deeper and well So think, lower, pricing the freight that garner and a year, opportunity, presents think prices which we're rates as the it's in this and have a to market rates customers of strong back. had leverage an fuel taking aggregate question I given spot we've significant

Thomas Wadewitz

margin a get that that could XQ, you lever, XQ, So you you think than meaningful that? volume it's or further the think back out in be if

Geoffrey DeMartino

the driving the Getting and a in more efficiencies the through help with count the Yes. fixed We we've really unstacked velocity -- and head gained and line. will to better reduce drives the bottom us fleet flow cost network container

Thomas Wadewitz

good, the guess mean, it's growth side, tough in And X% the I very then volume in brokerage your I market. on results the brokerage -- looked

So to and going terms well is pressure could the to the potentially going in how and are And spot business. contract? brokers from that that go a in impact wanted a time us percent risky you I for profitability you and that. executing kudos to just spot if give that rates cycle happen of sense for the be margin of gross see And up? can the mix of risk eventually, the about think

next how year? first like? look And move what's headwind a much rates split potential in the spot half is So of that up

Brian D. Alexander

that in and was contracted Even our half. with our very year, contracted. well. we year good as our kind carriers we XX% that our this up. also growth have half really recovering that press we're we price.And brokerage as -- that volume of it in feel about but marketplace to level starts focused make with on we leverage can kind the saw and that good the to and really way volume look balance so within year, starts what's -- right off sure those is last that model Sure. while we spot Throughout about customers that a truckload spot capacity keep our But starts XX% purchase that, it and grow, Yes. and our a positioned with really we really to the carriers last to we And to contained, I'll so contain at transportation that good well that moved capacity making sure contracted of we start. around spot and growing as volume, exit and were we

Thomas Wadewitz

anticipate rise think of rates pressure we pressure? amount or So spot don't you should it's if manageable

Brian D. Alexander

It's manageable in model. our

Operator

[Operator is Instructions] Our Morgan Ravi from question Stanley. next Shanker of

Unknown Analyst

on allocation circle to doesn't new the the like wanted announcement, feel calling that's [indiscernible] back is This specifically on guys. super to out Ravi. capital for acquisition for front. It I you

that to just So wondering different for of if going type guys anything transaction pace looking or forward? you you're of forward trying terms transaction going signal of are in

Geoffrey DeMartino

I things working is we've formalizing on. today just think the really been announcement

our So the to fleet M&A offering. in the always We've of growth do in Intermodal strategy, We'll particularly and always our of non-asset been business parts our has expanding Logistics' continue containers to had an tractors. element strategy that invest that.

rigorous signaling we're announcing on more be no more repurchases, think or capital in the you've to today a around I that.So share of we seen us and the return opportunistic pieces. framework change are really

I think of to just more performance framework capital a measure by. our return of

we think acquisition and feel completed pipeline term an acquisition our all here. to I get good short about optimistic in the we're

Unknown Analyst

the kind gears sort insourcing the us drayage just it maybe when initiatives. about could the on of cycle that benefits I one and seeing? cost you it frame guys for back going business squeeze up in on if the And bit switching think are or of incremental comes? that some to Can you how margins improved think little can cost up a be in and next Do the all more at other And you of forward process structurally these? of

Geoffrey DeMartino

Yes.

of stronger may balance costs year felt in Right in now, different pretty focus Within It's those on third-party our right stronger below drift our within count So I we have pretty think head number -- to low. But flow-through we volume, the XX% transportation, a kind structure. costs. able P&L. a that's have to our transportation a our tractors market. a like of the XX% on story fixed part improve just operating are around price that going cost cost a of having on last market. fixed I -- also very as to our in down and efficiency own strong within fleet.As change productivity earlier, with operating and we ], in-sourced our no more An contribution leverage we that on flex in incremental do load incremental our ability to deliver today's of is in-source referenced We margin. like margin are drivers. that [ we the but north

Operator

Our next question of Zazula Barclays. David is from

David Zazula

little horse Sorry bit. brokerage on to just to I beat a the but volumes, want dead understand

guys peak volumes like quarter, X% and You some in but talking in gained fourth quarter. you're it this about pressure said you're the seeing you sounds potentially

I quarter? So basis? brokerage in can a going is mean, brokerage that of customers is factor fourth temporary you volume for Or on driving the the from away talk about what a outlook

Brian D. Alexander

of growing to that's where what we're driving expecting from a and Some the as we're with really continuing we're what off the internally well. volumes. brokerage just in cross-sell of our just softer I see think after overall of tail we'll in Thanksgiving year the decline But

some still as but out up wrap we in the it fourth So year. yes, think marketplace softness that continue we just the the are quarter, stand will of to anticipating in

David Zazula

I if And follow-up. then could just one get

that Dedicated existing mentioned how know your had it have history? wins. to I some some rate retention and Dedicated competitors compares to you You talk customers. you've Can lost

Brian D. Alexander

we've No, -- Yes. [indiscernible].

retention. well with We very our have done

our retained have We customers.

that we're mentioned service. lines model for I our retention is of a so, think multiple as I when offering doing we see higher before,

drive service to service, bid with our our cross helps assets focus it in customers, of efficiencies also can and So them pass retention.But the us customers and really cycle. being but are sure strong we sold we also that and all retain, it's find position our making helps we have but operating we on and management that it and those Dedicated we very that if efficiency, helped to into while operator important along a overall lines that efficiencies that to multiple

we're our competitive. later are and a that really winning because deal well us we've as is seen are wins one And our so new largest organic And our in on And highly setting mentioned sizes for logo next these ones as quarter of up are of will they onboarding higher those rate I be well customers in. year. this growing.

Operator

of question next from Brian is Our JPMorgan. Ossenbeck

Brian Ossenbeck

Just a real quick one.

accessorials mentioned you think were I down.

or been in seen come there's hit see guys a year. big Just some providers sequential wanted they comment a if initially who pretty the year-over-year? and thought earlier think was little to than that took have I out you bit a more

accessorials kind you now? a to are stand right where on So year? rate you of carry do into you And at expect run next

Geoffrey DeMartino

Yes. do as offset We revenue but sequentially, flat. Sequentially, have the we it's cost down step big is well, fee. The year-over-year. have on reducing been the side, to not revenue accessorial which enough

Brian Ossenbeck

I better And fluidity, service? this come did cost more guess, with volume, with out more

Geoffrey DeMartino

would to, expect them we yes. Yes,

Operator

closing like I the now remarks. to Phil turn for conference would back to Yeager

Phillip Yeager

through and Group thank you joining on call Hub evening. our wrap growth for Well, in investing We shareholders our accretive the acquisitions believe with to consistently And and up, focus continuing create long-term is going headwinds organic returns along this long-term service, through returning in investment extremely to and to Great. just operate to despite well is capital drive broader focus growth. believe market, positioned long-term our best-in-class our value. Logistics business we providing to efficiently this and approach,

So always, again Geoff as I our are Brian, questions. want thank joining you and for And any to this for call evening. I available

Operator

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

may disconnect. You now

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