HUBG - Earnings call 4 2023

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Operator

Hello, and welcome to the Hub Group Fourth Quarter 2023 Earnings Conference Call. Phil Yeager, Hub's President and CEO, Brian Alexander, Hub's Chief Operating Officer, and Kevin Beth 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.

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

You may now begin.

Phillip Yeager

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

demand. Officer.I'm Beth, second proud best Alexander, Hub the Group's fundamentals Operating that led our today Chief executed more year. me with Kevin Financial challenging in XXXX market to organization transactional customers financial a are are conditions service Brian performance import in higher our the while inventory history capacity Joining This our also and in of another Officer, way faced excess difficult Chief support company's delivering challenging We and levels, life. to one our slowing and

years strategy structure. with strategic us year productivity, and However, costs. world a expanded come. through diversification our drive dividends and record for reach manage deepen improved We controlled service results.We flexibility priorities years Retrieved our service investing execution this of drayage, to completed providing of that conditions enabled our and several enhancing to taxi level class and challenging our improved deliver of last key and our over past discipline will cost our agreements, enabling pay our to of offerings us our of equipment technology share while maintaining customers, to service, those successfully to delivering in and value strong several cost the rail

big our year executing scale and while in year. are believe allocation investment that of plan, of disruption year the and team an for mile are strategy, us that current strong strategy. last believe global this of we returns-oriented to an accretive the have we we improvements that diversification the long-term well initiatives finally, a helps These to to delivering deal and this We we the the we in as leveraging us our enhanced lead our capital supply and imports, build which lead bulky We along acquisition clear and success.We as a momentum end of with in levels and in on prioritizing our our positioning fundamentals.In for And shipping industry space. many continued will partnership, we growth will season the a executed XXXX. to accelerated wet providing position are just customers exits will delivered final completed in excellent closing and savings normalization great capabilities stress deliver demand while volume growth and few past capacity be strategic We chain customers, which deliver service versus at again shareholders inventory with track. service significant increased productivity, as improved our goods this progressively a momentum ITS,

proposition our value are and dedicated the will scale. wins with new productivity and about excited acquisition on of We our the on as season. onboarding and service, ITS progresses.In integrating will in year quality balanced process improved and based results. recent segment in believe our driven results Mile initial enhanced we the Final factors also lead velocity the and we to these our this performance existing initial growth our logistics, have of are We've shown incremental continue Our customers quality focus throughout

with improvement us a to We seeing in we the volume lead accelerate signs where along to that improved business.In performance. cross-selling, some count, will our are cross-selling high-quality taking are enhancements synergies best-of after in a brokerage, service which, and total we continued productivity approach finding cost significant year of allow strong and increased the growth market, will

technology new resonating we XXXX.Despite of challenging transportation support our proposition value that savings executed and growth continued solid consolidation, strategy is long-term of are onboardings pipeline backdrop, within with a and will we success. on industry our Finally, and in positioned managed service, our have customers, a for and

focused will will maintaining year This position deepening over conditions results. us call for hand segment are on We provider long that, shift.With the our I service, discuss market clients. accelerate profitable value discipline great the as XXXX as having and through and choice our focus our growth best-in-class the to through a delivering our in cost a in to business term, investing of customers will our to Brian

Brian D. Alexander

Phil. declined X% XX% I flat. Transportation that XX.X%. revenue softer discuss driven quarter, reportable starting ITS volume segments, intermodal you, will and in was declined and our volumes Solutions. declined now to the Intermodal volume Local Thank fourth XX%. Transcon West by close declined East the with local

shorter transcon in While momentum of is quarter, volume fourth East good growth. and back year-over-year This local volume of volume intermodal. a early in to indicator sequential declined we haul length drove truckload the converting

the the operating structure ITS improvement that and fees. sequential to drove the addition, enhancements disciplined transcon growth.We in acquisition-related improve basis on focus day our excluding In we a that in XX have of East sequential showing improvement early our local per margin will point is drive continue results to to that income, continue cost the load made

maintaining to West, new our better cost quarter first are we're with improved rail our the the chassis that agreements control continue From manage has a our cost that in program XXXX will service us us improve perspective, a of In rail and accelerate while and compete will better cost market position and service XXXX several reliability. moving new helped implement hub costs. equipment implementing yield We to disciplines. controls the in

destocking XX% have growth in XX% in a trucking and XXXX which disciplined import improve a adjustment year already held have bid our to increased approach returning strong activity, season seeing on year, focused slow velocity this We growth truckload year. improved with confident conversions be focus a and we by intermodal, balance for in in ramp our our network inventory normalization, driven Our regaining capability wins and finished to intermodal year feel in start are will transload the steady trade to in the QX impacted Coast events early are bid late seeing volume, timing to will yield per with as the the XXXX.We're grow on QX.Our team volume we and and initiatives, our in in-sourced expansion. back but weather realization. trade the January productivity driver and to previous with approach bid and And compared at improved throughout we that West and story further QX great incremental our to dedicated cost

with strong pipeline growth customer and further for well-positioned XXXX entering opportunities. of new are a organic We

of our Mile Hub well our near-term The turning and to profitability.Now the Logistics our are us levels deliver impacted Group. integration high actions to final the customers position ITS for by by will existing with that our mile for into While low sustainable growth Segment. new I results underway. start our Final is we to team volume, welcoming are service confident wanted operations

includes our as positioned customers' to appliance with These placed bring providers the feet, strategically one our now now chain diverse are network mile that locations locations. offering a XX We in of larger XX service top supply million Hub now locations network to deliveries needs. final in a square of

while opportunities pipeline a volume a QX.Our of year that be that grew have brokerage standup freight and industry strong member materializing quickly launch team through as will to We are they productivity. in challenging improving wins cross-selling into continues early an thrive team

enhance further start signs to our have purpose. we for set XXXX and brokerage, good brokerage we Hub seeing We while yield smart true to is off innovating IT and well-planned out to are stay initiatives of with our volumes support a in that pricing technology will values inflation a early of roll to XXXX expansion.

our to customers $X which billion a continue Hub team helped fourth leverage in and LTL as our we to to of XXXX.While volume. our cross-sell, improving in brokerage in increase also This for tail we drive power density our XX% improves we're long costs quarter under support the close logistics continue are growth we management. growth, creates consolidations, profitable LTL our to excited buying With LTL leverage our

also solutions to to support final supporting volume logistics our service to mile, continuing also warehouse customers' locations that, multimodal needs. discuss enable Kevin performance. continued our our of while LTL, e-commerce our multipurpose chain and it supply We growth are over With our hub hand inbound financial to and outbound I'll to

Kevin Beth

Thank you, Brian.

that freight the market, after EPS the Hub just continuing a Before are quarter. of stock the split. the challenging billion year presented with amounts and the start for $X.X million $X quick generated a I Despite revenue reminder for results, X-for-X

and the full for Our for GAAP operating year income the X% quarter. X.X% was margin

was transportation year compensation decreased quarter million by expenses. $XX to for year. based projects the We revenue the during we cost year truck in benefited was allocated million or million as this million amount to containers, as mentioned used incentive balance claims prior the quarter, for strong capital million quarter due minimal was presented $X.XX sale expenditures efforts. on acquisition-related $X.X costs increased expenses, from technology in our the nondriver $X.X lower share and year. Segment investments and XX%, with costs earnings X.X%. ITS allocation. for and for due claims million and The increased quarter and acquisition-related we over tractors prior and improved were Adjusting of acquisition acquisitions. year and compared expenses. had was to expense, management compared X.X%.Our technology was whereas capital Without by the quarter costs Fourth expense $X.X on prior the growth-oriented by decreased decreased million of per our In $X.XX with sheet the to less and surface $X million. equipment. was and quarter, $X.XX share the $XX our headcount During $X Salaries Insurance to to warehouse the amortization year full X.X% diluted corporate quarter, costs margin and related the segments year remaining to and expenses, due of acquisition-related previously G&A experiences. both EPS from fourth $X.XX benefits expenses. totaled acquisition-related to and the due $X.XX purchased acquisition-related as the margin $X incurred the quarter, expense.Depreciation Gain warehousing Without the with standard focus equipment decreased the $XXX prior a well pricing.Turning volumes million a our of Logistics operating along to post-split for as

expect planned and million and we have For to expenditures container as XXXX, additional lower capital no between million replacements. $XX we be purchases $XX tractor

XXXX.During of be capital continued expecting to cash as CapEx $XX per to our operating technology weighted the buyback our range. be flow generating we price million in spend cash $XXX quarter, the and deploying similar of typical in strong We acquisitions a XXXX anticipate for the We are at an additional strategic $XX share. average on of million $XX a while within business Mile Final range stock million

price million average full the share. year, had of the at year, of we on For of weighted approximately $XX a the million. we a stock $XXX cash hand purchased $XXX end of At

is net Our which EBITDA. debt million, $XXX is X.Xx

net range stated less X.XXx growth Hub's our expenditures challenging the shows expect $XXX a in in and greater X.XX This earnings below debt-to-EBITDA cash cash environment. are be we resiliency expect as to EBITDA million cash in to generated than trade of XXXX. XXXX We

dividend which in our attention XXXX. includes second EPS, we to our are stock plan, M&A.After this allocation annual we quarter, Hub's to later ability repurchasing be continuing to confident Additionally, first active execute in paying more highest our our on and turn capital

in contractual guidance continued to things rates to demand but to increases with year $X a including inventory capacity season. restocking our is Our share repricing we the is more $X.X as into XXXX. of of Pricing surcharge as curve. the traditional double intermodal year $X typical OTR and half is third during and as leading of season a revenue of billion. of in the of few and come zoom patterns, to the upside $X.XX the in occur. second middle on the the billion truckload guidance out There occur peak if strong revenue based then A exits potential decline, first ITS and EPS guidance retail volume shipping half note rebounding single-digit low quarter lower to down the peak assumes The low of growth conversions range rail XXXX digits

growth intermodal to our low Segment, Another continued market assuming brokerage wins customer condition to and that would driven the growth is push of conversions end Final high our Mile increased Logistics the demand, for based are volume business, to well driven and guidance service new results level appliance by mid-single-digit growth businesses. as growth due OTR consolidation we and mid-double-digit sustained improvements.In the by on as in addition fulfillment managed transportation and of

would versus expense. upside a incentive are of resulting assuming annual intermodal with guidance the had guidance, of we includes truckload Additional and tightening The in XX% result an tax exiting In capacity increase of market compensation a XXXX, XXXX from rates.For normalized truckload rate in the the tax lower normalized rate Hub incentive more very compensation minimal guidance XX%. expense. XXXX XXXX the

headwind assumed in sale. XXXX. on gain assumed the gains in Another guidance is minimal We

Our our fleet range optimal cycle. which replacement is tractor is within our current lower of age average years, of X.X the

As be previous such, tractors than we will replacing years. less

older in improvement market. used tractor expect the seeing not tractors. gains replace Thus, we are we minimal we as Additionally,

QX earnings quarters mention down be we seasonality of tax gain tax truckload want normalized and normal continued that seasonality, the quarterly the on XXXX earnings our resulting to in to the flat on QX challenges QX incentive tax to The the expect to in XXXX and we QX XXXX we normalizing tax return sequential we to of impact to the rate in $X.XX a growth.We from second compensation continuing few midrange our expect tax anticipate have rate. In assumptions, step with intermodal change slightly pricing rate, XXXX. do a these the had low the I normal back from expect and add XXXX. QX return during of the will pressure XX%. half due the and to would guidance, last and have growing equipment of expense approximately X.X in in EPS experienced half the first to year, approximately With but QX sale as largest the rate rate that in

than earnings as $X.XX in our EPS XXXX and incentive to our respectively. year XXXX and grow expect Hub's compensation our looking effect grow.Finally, $X.XX We flow. the during at cash the higher was EPS cash GAAP

We expect in XXXX. this grow spread to to continue

management, over noting for cash generating of cash to goal to This our highlight any we the As the change is going line the With operator earnings not will that, is results basis EPS important open power. guidance Hub's I'll an it questions. to forward. but to be cash turn

Operator

Group [Operator of Instructions] Our Research. first of question Wolfe line comes from Scott the

Scott Group

just get to expectations, year. earnings more color the I the on of think cadence sort near-term like about a So, throughout just little want the I mean

in there. identify So and tax then you're a I Any take step XXs QX, build QX, saying or color the from to from not? and seasonality should adjust it guess, we down for about the on rate get how think the normal to then and sequential something just

Kevin Beth

a for quickly going normalized have Sure. quarter. the the a first here X.X definitely, Thanks, that into run tax couple Scott, to XX%. we'll definitely rate of One you question. the in the is headwinds Yes, from

Additionally, acquisition. have we're million $XXX spending after interest the going regarding income to the less

biggest X that first control. management quarter really aren't I the think, certainly are those things, the So in

see me. as have the we the We're pre-adjusted return start expecting some price addition during increases well the to we'll or then, increase the those at to be to sequentially to and will And year. get as seeing least margins that offsetting. as that, year increases numbers, volume post-adjusted In EPS excuse grows, will

Phillip Yeager

acquisition here kind consistent big the percentage the in call some some then being with of are add, we up We anticipating tax really from volumes. out. things bit basis in a issues. adjusted headwind just QX revenue to improvement January the But there's December margin point, in basis. weather a We're a Kevin's operating on saw just of to the think despite relatively and Scott, that tailwind I'd intermodal from I show obviously, completed sequential

Scott Group

Okay.

you're ITS QX. So the margin that to adjusted take saying think -- you of fairly hold intermodal steady margin X.X% QX and from

Phillip Yeager

Yes, yes. Right.

Scott Group

Okay. a a price, tailwind price rail for your expecting cost you the for what or about And an contracts you're as intermodal think is and is year, headwind? aggregate

Phillip Yeager

would a Yes. Phil. This I say is tailwind. it's

helped in the It that's a seen structure we've environment moves has of this call bit obviously through I out. to Our market. some up challenges the certainly lagging with more new have challenging and a effect, and does us with of the think structure down, that important

more see inflection as positive, Hub. you'll an broader we see for as stabilized in as well more flow-through So pricing the market

doing really the I things think Brian mentioned other we're some implementing on good program of cost in in side the new chassis West. our

drayage think basis. costs a in drayage XX% on I cost QX, per we saw down

focused structure job doing we're down our layering And then we're very in nice that there. growth So well. cost a will really really as help on drive

Scott Group

last question. just maybe And

bigger want I So at business guidance. you you now, a guess a help used Gap]going OpEx trying us shot us give about[Audio it's to think quarterly guys take forward? to to but

Phillip Yeager

using -- prepared and we looking individual first to of then at similar not growth back amounts segment. I more again, into of the a quarter, going like after increases do to with the We're year. half I little the be say, But said, bit standard, would would that second up the adjusted to

Brian D. Alexander

relatively We're merit in Yes. a And will be as little a sale increase in QX will case I well. QX think similar. compensation to have some in and to then headcount bit QX stay gain headwind obviously increases, incentive going of on

Operator

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

Jonathan Chappell

guidance the big higher number street on substantially revenue is year expectations. So than ranges, the

But So actually the EPS a fair amount there. of upside is lower.

markets? the entire this structural before Or intermodal I'm more you're ramp? the curious at just growth start your especially diversifying on margin in weakness strictly this to of logistics year. the for So businesses, the just Is a as year the lower in margin there enterprise half is cadence pricing for first the things of with

Phillip Yeager

Sure.

going going little in that and to is going margins think really but of to that that end normalize, market lower some stable. some place but to on there Within think when improve ITS, have occur. lower be more We that within the to brokerage stated the that's we've past didn't loads, shown we and also logistics see want we've to highs we the that more year. are year going fluctuation. bit is also that's what I the upside a throughout relatively exactly think believe currently bet as I We're is So this higher sequentially over the

that conservative and that I market going we're operating some a believe But forward. to wanted don't be structurally have certainly a we're share conditions approach. is navigating more and in authorization, million upside, our we we $XXX margin any could opportunistic repurchases. So include be didn't capital the that One Obviously, through we'll lower deployment. challenging guidance at item which be around in within

Jonathan Chappell

Brian, Okay. maybe think bit ago, you quarter, but maybe like shifted And at on feel said That's there. price quarter, helpful. I X the a little volume, it longer you've probably last expense was line I you the for then last quarters probably held and of

to things help with efficiency, positive the get volume some year sticking of do Is price? the you say same to just kind better try about And of first and expense on bid you're months et volume to that more it purely wins to incremental X season? network at balance the of price? that when cetera, the expect with market-related? have policy You maybe now in for and a Is maybe

Brian D. Alexander

appreciate Sure. Yes. No. John. that, I

to more to the getting get season. the is capture do. wins defend to are incumbency positioned we're needed conversions the that We that share well and we now And we're over-the-road what in early bid our seeing

But a in previous in remarks, bid normalizations has in transcon, look And to demand spot prepared sequential January We December, XX% over us it's and needed of the And a that's saw to saw at XX% we transcon target the in there. we that us of from the realization December, helped East. local and those capture really And the in lot that's over-the-road conversions. of we drive forecast. inventory mentioned same saw we to In As momentum and I saw some some load think more sequential inflation conversions. adjustments that velocity. we seeing make those in the calls, day mentioned margin the I balance that at growth over growth focusing and January that getting per sequential improvement and local in on there about thing some I plan consistent when that structurally seeing start over-the-road East. more of

So we it timed -- think we that well. we're

live those have it and QX, time in We QX QX. our go to XX% and in about of positioned of we then XX% bids another right live going in

velocity lot And cover so, disciplined to that's us drive the more staying expenses on fixed and going volume that margins. a helps of also but that

Operator

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

Jason Seidl

questions of me. couple here quick for A

tell in to the at be you You Can pause mentioned Can year. is fleet talk that controls to a the that the some and and right maybe going now you you fleet versus as expect to container the also big in purchases. us you're on container the part? use cost that some move there's details more side, going more And we about show to any of accelerate said give where P&L? us actually basically you through where up is us what percent

Phillip Yeager

Yes. This Phil. is

a signs from significant that's So the perspective, have actually we've some couple currently and momentum some process January, next stacked. weeks. Brian seen XX% as start-ups seen of around in unstacking the we've have over to of that here. of We're mentioned December actually positive pre some that's we container the we

think drive well utilization to some there's generation additional given the So this that quarter. amount don't stacked to the for containers kind significant improvement of drive, we see the we obviously in add any at throughout as free that it's down some going that'll sequentially pretty cash year. need the We come point, as we can But unstacking. flow and have any

Brian Kevin let nice I'll job We've overhead and jump in done side, really expenses. our and managing here. on a cost the On

our done current for be returning job the environment. around sure is And want there, make to basis. to and down but thoughtful structure hiring as I very year-over-year we've headcount a diligent growth resetting Our a that in we cost XX% we'll nice on remain

quarter get in really the start per down kind as around drivers, improving West, drayage, that's a job was And be going the up we've mentioned rolled also cost It that out of we'll Brian only helpful as show we in-source our see productivity second the mentioned chassis fourth be to our drayage that very diligent a very from margin be costs. radically throughout that the around really quarter. to last nice more perspective. quarter. to first then through think and see more will some I in of cost. not likely we're as to start into agreement piece We'll would continue, going our sequentially to we well new done XX% also in just third-party but show up out I benefits the see trend there. as And And QX purchasing. is reducing continue We'll and rail highlight head I well QX. year-over-year as also

Brian D. Alexander

done. We've team that further enhance their road got I'll cost. the what Yes. their productivity to piece there, that. help out the are standout of a that But they've within and roll with brokerage will that to and proud specific good improved on to year add really they've just a productivity that our IT a throughout industry really initiatives volume brokerage. control We're it's productivity. We've also seen set grow and map of

Jason Seidl

what in you can have that down. going good come QX your of color. Phil, the and That's you see Or XX% Should of that? here end live like it said to should XX%? the we should that to -- below If go on bids see go number said stacked With XQ by be you and QX, I that XX%? back, XX% XX% expect it down in could number to

Phillip Yeager

measure. XX% would we're I I is at to right point. That's I fits trying exactly balance know And the on a get our and unclear goal think network. win same at little focusing that right? don't to improved good business probably is our really the to utilization a this say me. But time, so

unstack we tough And we might so say decision make because to going or temporary me we costs a for think exactly. some increase the little volume longer to imbalances be where repositioning We there have to term. is

on a So I but difficult perspective, maybe under little are you're bit but likely to little or about talking we're weighing tactical those things more say a would say, XX% a that.

Operator

question Bruce the Next line comes of from Chan Stifel. of

J. Bruce Chan

we Maybe I'm think the missed the on volume pretty healthy follow-up the I of load to just sounds versus side. kind How about you're of on through like Is not in if side in kind bit how and idea upside intermodal there? revenue a we're commentary maybe off cadence as year? the half pricing of that the back growth the revenue I maybe the some of on here the it and proceeds on growth start year move volume of for sure side. some pricing the should little it, year higher that's growth the accelerates So a but year. a through growth just

Phillip Yeager

yes. Yes,

be then be accelerate to I QX year-over-year ITS, QX is going QX, up in down and but also again we both and have volume new think at QX. as on, in likely when coming mentioned, look comparables As lower Kevin you wins in

you'd there's QX, certainly certainly upside coming our be hope that's getting coming we're would in would projection. in been we if certainly, surcharge think XX% that's see be price QX of sort incremental. seasonality some around I positive kind to as QX, in would which we that any revenue hope and then in as that out to well And bid well, normal revenue that of there that

Final acquisition piece is to, adding other as Logistics Segment the is good as visibility that well. our some Mile the have built is well within think in we as revenue onboarding I significant there that

you'd together add. So really those Brian, guide. are components or leading to the Kevin revenue anything

Kevin Beth

priced this comparables. this started to ITS. I And as thing an went see the have going bids up some definitely a at high increase those about start as year that one really think year it. with with. point And were opposed agree in the as second flip price out, to year is I'd exact with to back come year-over-year Phil, with we're off build the of amounts in we'll as to begin we sort to we revenue Yes, half year starting amount looking to where in those of later high that last lower bids that Bruce, We're at

J. Bruce Chan

as Okay. what comments And helpful. of follow-up to some the you're Any That's unstuck. boxes And a got really quick maybe I here. you've competitiveness marketplace? know just around in in seeing terms

peers to your unstack. of have boxes some Some

maybe pricing built year? So pricing a your standpoint into assumptions what just in competitive for from assumptions are this

Phillip Yeager

wins business Sure. focused what on as but I'd shorter be a at competitive of to really think balance. say velocity that converting revenue needs length it's the progresses. productivity and a and and negative the majority it's and That's I seeing But of probably the mix the very for impact actually time, which same our from might our and year driving haul, we're load velocity per we're market, the road. over network positive our a the

going on that. utilization So running while to that containers the we're not unstack our And be. get go it's to to return a still we we're fleet competitive, a have they and long unless levels at way getting to should optimally

that that well. customers available have today, the to also make make to capacity ample we're support on onboarding, we but want are seamless appropriately as we there's those street our and even capacity serving sure So sure new

Operator

line comes [Operator the Instructions] of Our of Ossenbeck from Brian JPMorgan. next question

Brian Ossenbeck

the like this pricing to recovery the Just little point? too comps market points cadence you maybe hoping go and contract same you're understood holding turn I earlier at hard Or wanted renewals? back is And positive for Like on where are sounds price? seeing bit on sure at recover make a to were maybe line and it time. down that and Now at you again.

and kind walk So maybe you can again. that just of through there me start

Phillip Yeager

I slightly with would trying growth is focusing our down that say. little seeing we Sure. fixed we're network getting that are is and incumbency, costs renewals, drive needs that balance, what ensure And our a we're on really help bit to help spread then do costs really effectively. more And reduce our consistent that

Kevin Beth

better a we'll mentioned long. due and the look going that's contracts at in we come to too we part the are you here price able the that year, time. winning And when second half, have Brian, it's that be that price latter those where of and volume more at little And to held

Brian Ossenbeck

Right.

in in understood now just and hard year. flip So Obviously time long the some lose you'd and just assuming lose a then, this between on [indiscernible] wanted other half midpoint. year to price on more last then and happen of I'm it lot some I I make back sure volume? way, up were I more too outlook the with coming the focused the can on but in a Wouldn't -- guess you get what having

Phillip Yeager

would as on that we QX, volumes growing hopeful we be is it So slightly and down in that at here Maybe to is of half, seeing I assumed And that's XX% first bring then renewals. XX% process, current It's assumed the and QX. now. what slightly bid are Yes. we currently the are try again. that And we right? during in on, on are all would -- bids, which up can right that the hope we take what price we those those we

to incremental we're bid, you in has thus assist about -- adding a currently want spot in significant as in at XX% but which, been through want the we're us. that's If the we approach We we flow to you market talk is are know, some there And level, that stabilization Obviously, for volume, the slightly see us. -- incumbency market. far. that the our down seeing then locking is

is solidify, flow for price translate a upwards. see rate going large seen enables rates we'll well. after that yet. haven't the contract be as us to We we're as you as move through be we But to certainly And market us, hopeful necessarily start the market and know, certainly into really

Brian D. Alexander

Yes.

upside really potential some think the That the back. coming mention on for is surcharges this one and -- the thing of [indiscernible] is we I muted. was guidance Kevin, is didn't

In fact, in there was experienced no surcharge revenue that we XXXX.

So to if can surcharge back the we think year revenue in some half we be a the able second get of we'd as standard to well. get environment,

Kevin Beth

retail around we of would discussions our challenges that be I the I base And we some are typically East concerns customers just Coast on labor season. is peak as may having highlight, think a existing enter shipping what with who lot

see do I bit you'll ports. West more so little think diversification Coast And to a back

Brian Ossenbeck

like current from strong, pretty Okay. I up are sounds just maybe actually January. to relatively December follow on conditions. And things market appreciate It that. into speaking, all the

it commit to strength early seeing back spot too volume it are then wait just strong looking I that conversion as of really maybe you gives market in think are truckload you specifically, Phil, of that is meaningful Is And out likely say just Brian service, sort and there's rail Or shippers mentioned, we've the some half some but talk recovery? of turned to that? and signs now just kind confidence corner? what see? mentioned for not willing clearly you since you on as to about

Brian D. Alexander

Brian. better sure. bids Sure, of the having we're our have I'll the the view Yes, a mentioned getting, dialogues and normalized much with the we're shippers. with what of quality inventories with Phil start that They are what to comes helps demands each to price of in to align with to, be balance what lanes our it. some and That seasonality network. execute going to, to that the how their us with of some that

really are the so the quality of out well. bids And coming

when of in bid the but our of already just January. so also We've I have that signs we here. some brokerage. some intermodal, not that mentioned started look early And we've we growth materialize sequential the in that to wins the of at in early seen seen, mentioned season

see price it see X% and to like quarter. So did of that to and sequential and some go as think We'd we road continue through some we as April. March we X% of think more we And see the that are will those year-over-year. within over restocking start piece spot over into inflation. spring the we up indicators. January through and some December And up And good that brokerage was that

of So I it. think a that's part big

throughout we've year. Brian, and services, respond to this that's we they more to addition they're disruptions, rail improvements continuous And seen the the very say also go, our service quicker to rail whether consistency over saw the fourth as be nimble both continuing seeing partners. quick. far They're improvement in compounding them we and into that rail that the very quarter-over-quarter in we're quarter of As -- place. weather, recover service, I'd from it XXXX, at good a be

more and those So shippers as conversions. in well becoming confident are noticing that

Phillip Yeager

Yes.

and in customers. how as using a was most our customers want And that's the as at for guidance, not many well will that very will recent seeing rebound into capacity hopeful our point there now really an that. positive we're don't they lot service that proof in think we're certainly the likely as some point quick I thinking disruption our this of weather we're I of a about a but year. calling right winter that market, think is I anybody and built inflection to think are change a in the that to trends be lead lock

Operator

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

Bascome Majors

what Intermodal second nice us? It of spread. positive cost slightly could low outlook like pricing, pricing expecting do price your cost of the neutral the that's more favorable in I'm half hold, you're still second sounds slightly for think half, the there, spread kind gives breakeven comes curious if for for guidance cost if with a end the the you

Phillip Yeager

improvement build not this did We large mind. absolutely. Yes, in a market with guidance

don't to as structure. cost As improve well we repurchases. levers stabilize, share I market see continue we in pull And can have some if overall to our certainly, the there around factors we there's mentioned, upside

So absolutely.

Kevin Beth

Yes.

be cost, for as have and help think agreement end of in-sourcing allow should guidance. will low we the well of that our the all new chassis outcome, for able hitting both I as that rail the the dynamic that drayage help contracts to allow the

Bascome Majors

Do remarks, recent in be purchase will prepared gap $X.XX up allocation higher you acquisition than reported a cash call it, price in year. of EPS EPS. your And about the have sense being, with this what in clearly that preliminary years you talked And goes that XXXX?

Kevin Beth

probably end quarter. be amortization. and done is But Certainly Yes. of won't that's additional not We yet till the our done that's preliminary. the the think probably yes, preliminary low teens

Bascome Majors

I'm mean $X.XX like do to you sorry, teens, or or $X.XX XX% $X.XX. low

Kevin Beth

No, dollars. speaking sorry. I was actually Yes, in actual

about $XX million, expense $XX amortization, million yes, the So from acquisition. amortization of additional

Operator

question of of comes line from Lierz next Brady Our the Stephens.

Brady Lierz

segment I This you margins maybe in through if could Justin. we year. for share any guidance that ask is kind you in logistics. is then share on and wanted could assuming of Brady on what of XQ the your And margins for if color cadence move in the to just as

Phillip Yeager

Sure, Brady.

similar of with what also on contractual about think It's well increase is that expecting than the upside that as And just we're due brokerage it transactional we've to to of as we would a final volume. The truck our off little battle. going lower tough happens, help there the and ITS. improve. the But I actually a lower DOI right pricing like segment. as mile the to certainly integration lot market start to we been to a to with now headwind talking rates have the market logistics spot

Phillip Yeager

Yes.

adjusted QX, anticipate So from I is to improving. about percent sequentially we operating then think as QX relatively would margin it probably and would flattish

Brady Lierz

Okay. margin on organic a And on Great. logistics. for talk Very updated just you that view you're maybe about helpful. And any then acquisition. basis assuming recent an could what the in normalized kind as including thoughts the maybe of you the growth segment,

Brian D. Alexander

bit I'll Brian. talk is this Yes, about little a Sure. that.

out is to in continuing our segment we've our what logistics obviously, is and volume. grow think seen, I standing brokerage

volume I that digits that Like in double grow seen to as into said, we this go expect we've low digits, already starting double materialize. year. to We into January the

Hub within final I we've pipeline with ready cross-selling seeing onboard their in our new that Within is brokerage, they're but think to those open what appliance to we've are cross-sell also logistics. and we're logos across our also then adding and Group, throughout of quickly QX. wins ability added logos capabilities, all very seen materializing mile, those cross-sell

higher mentioned about our of as another revenue with is with as feet, will customers. cross-selling logistics rate growth network, indicated that well I've that managed which strong And see our higher network as that a our deliver enable retention and helps less across stream. done square we and XX good price pipelines I've piece think then of them We we do So our million as for sensitive our be solutions we've see those too, also our return of that offerings. a rate trans. we this, being that

Phillip Yeager

February. following trans say I just would be locked-in would rate some growth the starting be we highest the mile incremental given the up actually final there. wins have that because Obviously, are revenues that Yes. in in would managed

about look. more the to just little is then but how some exactly overall know of we amount And muted, we're organic massive Brokerage, growth velocity. that. consolidation, didn't So excited bit a volume growth be in with assume things going we would just given a maybe the said market we don't and

So massive, actually year-over-year. not but anything up

Operator

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

Thomas Wadewitz

at bit momentum? is little you volume we behind what's it better kind more Wanted volume in rail optimism the and about the conversion on service some expensive -- gain intermodal about ask truck? Is about thinking this Or maybe against improvement really where Yes. look Is intermodal on think intermodal 'XX. shippers that volume gives a interested the you the in performance? about the as perspective the Just or players? some the the and better that are just really improved to growth share of backdrop in at are competing of other

Phillip Yeager

This Yes. is Phil.

finding our going again, But growth. fit once we We very on are business on, focused focused network. that's to to right the returning are very yes,

growth, to on is low but positive as that through the One improve mentioned, will the think growth a going back rates As in QX we half. comparables is year. don't be go volume we we year-over-year

incremental the year So that's to receiving time, levels service aspect it. positioning it's their the providing, the And we're at certainly our lot forecast of we're a really around clients wins here. and for actually upswing an we're of and as then advantage well. But take of winning same the with ourselves that awards with market discussions

our the throughout customers their a and then it's of comparables, they so confirmed with adapting see chains supply how discussions mix And around year. wins

Thomas Wadewitz

you versus share players? better the of intermodal competing it's more from other or Do gain some truck think

Phillip Yeager

We're targeting track.

lot a winning we're short-haul think of right now. I business

exactly to main challenging where think our from. comes it I it's truck. tell is more But Sometimes target

Thomas Wadewitz

right. Right,

more. Okay. That makes sense. One

offer. You've built you of a nice portfolio services can

you go might you an hook area bit about little capability. additional want do is a out cross-selling something the is build kind want for the think cross-selling. customer helpful and you What to perhaps talked that You really of when and in with the best they

Phillip Yeager

Yes.

intermodal on based to able open with customer service So we're any really reputation. door capabilities our the and our

what we're be from certainly But that's we transactional a right it in. think consolidation program LTL. as requires, their Brian about -- what come sticky just with market even do solution very finding simple mentioned. supply offering. managing find strong especially when for a or it and can with consolidation We stickier, has our the we we could brokerage service as that to Once capabilities, in LTL to managed something I and there, the full been outsource warehousing their becomes way that in the our chain our it's inflation a transportation given with LTL taking as combine can their anything as place spend that capabilities, managing with

them help on depend within the to we're does customer scale about and really capabilities. drive finding we of now, us will continue fit I specialization and that set growth. specific I that it where So It's right building the their think the have at think and chain. cultural supply right about But when

So core I adding be to us approach M&A, also logistics see our those developed. in to think be very in non-asset we've continue active thoughtful you'll capabilities but that around

Operator

Stanley. question line next of the comes Morgan of Ravi Our Shanker from

Christyne McGarvey

Shanker. on McGarvey Christyne is for This Ravi

to step a Just back little bit. wanted take a

targets some it of approaching You years issued quickly we're seems and long-term guys XXXX. a couple ago now,

as thoughts how and of if talk we So maybe kind that kind looking guys the you against. some of benchmarks confidence benchmark I guys them, of can to And to path next maybe are targets? about are you those long-term about thinking you can, approach

Phillip Yeager

Yes.

on very publish So the we're targets. we're not any new ready set. we've XXXX targets focused to Certainly

the do work some within achieve we'll have range be we guidance and but side, to year is we'll think on margin. shows and our that opportunity the We revenue that the prior I operating consistent the have where and year to think target. this operated We above relatively on

think a is our be market, that guidance we think within I well positive with in the inflection within that. we'll the range, also And obviously.

are of our them, achieving both doable. on focus both So think certainly, and we is

Christyne McGarvey

I in If squeeze more. could Great. one

over-the-road ask out a conversations it's a conversion, than sounds least in been bit inflection talking In the but far hoped your it at for. season, maybe been it the on bid sometimes conversations. to to as those a customer maybe seems about You've call, here market like collectively It thus way. in some it prove slightly harder different there's

is little rail conversion kind alluded priorities there that they're anything terms makes in of what to here? coming You confidence back. or more you else customer of attractive telling over-the-road service But the a

Phillip Yeager

Yes. Yes.

for of inflect. is and looking They're cost to for the savings that does intermodal extend opportunity obviously transits, that. when up I mentioned inventory Intermodal our consistency. more service. solution are And which also available of all a Brian an ensure capacity as And looking they're more there's think those they market I when think stabilize, customers opportunities. to for have earlier, They're opens great looking looking for

So to which of shorter we're all that length leads right seeing of over. now flip start that of some to haul

Operator

comes next line the David from Our question Zazula of of Barclays.

David Zazula

the able are I guess intermodal share you to realized real to the yield quarter? quick, you in were able get for

Phillip Yeager

Yes, from down and of revenue reference last it accessorial there couple as had was fuel year. as surcharge headwind well to overlapping was A we over a of million things XX%. $X

quarter going of length to well. think I to haul more as us the we shorter mix that, of business. along on you're mentioned little see impact And bring a with impacted earlier, that bit a continue fourth as obviously I've in So

David Zazula

little had bit to don't understanding a the but just pick us. at scab after, much of Very want Brian too that helpful. I for gone

cost help little or you're you more taking on volume -- prevent you're I pricing was for long, advantage or the pricing thing or perception our side. algorithms market? guess, at upside the of line you aggressive thinking held maybe down, and be way the not maybe enough, you anything moving all pricing not price rapidly looking and changed will on at being a about the that you too from how you On Have on it a

Phillip Yeager

we Absolutely. and adjust Yes, entire to able that. have. philosophy to Yes. We've organization pricing to be our changed

making to been an new We and Officer far. the and we've Marketing winning Chief in win, a what sure job have thus and excellent who that to that's are doing doing is able we market price

the and within organization though as and working. feel approach our made it's changes significant we've yes, to So some

Brian D. Alexander

And what aligns as as as do And within also velocity to well price to too. make operations. we go in the intermodal that also the just we It's to able we've that cost well takeouts targeting sure been that network to it. need where our the with on we're after the across that areas add building balance our

Phillip Yeager

last And Phil. is I'd add, this point just

think of where but the that right? I that, guide the in which launch process last then we growth. now frame year, to in volume capturing QX, to it's right be So that down is in we going are laid year-over-year see we time why the we start were out

David Zazula

then how can positively market side, to advantage you're your to you of contract, yourself on Super get set to the relationships? you thoughts a be up brokerage spot And able and trying helpful. on how on potentially inflecting customer versus there plan handling take

Brian D. Alexander

think side. price later spot we out to that move we pricing into that more our lower parts we're purchase into brokerage give as and the that is we to transportation which And come translate volume. of that low this so touch of the spot buying been that we creates and on that so to of is I'll what able being to contracted, contracted this through our able the on then then of coming and secure take in I pressure cost customers, we the that Yes, the Brian. XX% a volume of When XX% that's we've that Sure. that starts year year, that in back maintain we're lot that. were on do finished volume

well really good and a a structured for balance strategy we're that. So with good

David Zazula

could cleanup. I count? last I get just, if employee then a And a nondriver Could

Kevin Beth

X,XXX end That's a decrease. Yes. at versus is final of Nondriver new without mile XX% last year. XX the

Operator

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

Allison Poliniak-Cusic

there ITS Any near of half? can Is to costs you Could there term if you as how there unstacking cost the would or just and boxes margin be a maybe of? the on to terms any you're talk quantify in impact holding in growth second mindful impact margins that half? the looking in second towards --

Phillip Yeager

a we're it unstacking, looking good No. question. Yes. very Allison, we're returns very perspective. think when at But I from a much

business we on make is want going to helpful that to sure bringing the margin. we're So to be

So increasing. we in more calling or is large it one give bit a shouldn't another worth impact are repositioning you out. likely quarter be anything a might Where little costs

a be would stacking think I costs. driver that than larger

Kevin Beth

close we pretty going Allison, to think of one well deficit. we is do the have we I Yes. things markets the stack to the that are anticipate

boxes allows lot revenue-producing to So to there's cost been us that as And get those a possible. react as of quickly. quickly

Allison Poliniak-Cusic

Got your of terms and future process pipeline the maybe forward And on management just M&A, handle just capacity do to you ability just in of on where little a hit to error the stands M&A, it. of in your then color that, kind the financial that given side. just

Phillip Yeager

Yes. the be want We have we're to on scale No. ] that for specialization logistics kind a successful profile. growth of look We're Still, And non-asset yes, Mile as core bring back in integration successful Final those [ acquisition. do opportunities. to as higher well of strong thoughtful. focused adding priority Obviously getting continuing we and is pipeline. margin yes, a intermodal areas to X in being very

out have looking top for mentioned, to X, capacity as we certainly So those then And you are so. do more. but the significant a

Operator

the conference I like Phil remarks. closing back to would Yager Sir? turn to now for

Phillip Yeager

you this joining thank call Well, evening. our Great. for

we great have you you again. you I And any if have always, questions, Kevin, a are and hope Brian evening. Thank As available.

Operator

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

You may now disconnect.

Hub (HUBG) 1 Feb 242023 Q4 Earnings call transcript