HUBG - Earnings call transcript Q1 2024

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Operator

Hello, and welcome to the Hub Group First Quarter 2024 Earnings Conference Call. Phil Yeager, Hub's President, Chief Executive Officer and Vice Chairman; Brian Alexander, Chief Operating Officer; and Kevin Beth, Chief Financial Officer, are joining 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 believes, 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 call. Group's afternoon, first-quarter Good thank earnings you for joining

trough Joining largely in is to have led to prolonged is trend This remained attempt to Chief despite improved is to our turn, Beth, Brian yet capacity in and exit Chief excess soft me inventory truckload pricing trends cycles, and that many bid latent contract spot and carriers restocking, start spot our conditions has and the industry. Officer; driven to counter prior as Kevin group's to competitive Officer.Market has deploy rates. Financial demand pressuring market market.This today are a due the a season, Operating Alexander, capacity

orienting us our dividend, flow quarter. leading pace strong seeing with the with in our opportunistically strategic acquisitions.We expand completing shares the continue and is positions cash also split, service acquisition on ever capital to deployed some value many costs.However, priorities.Consistent recent pipeline drive strategic balance strong this customers, stock repurchasing via to of of market signs exits broader expectations, free our opportunities our our to capacity to on issuing due Final integration growth and a execute is that our diversifying to we these our the Mile our our both and and not ahead their Despite more robust offerings strategy at performing focus generation, positive allocation decisions our first cash are challenges, sheet service of is and the in purchasing attrition environment. well truckload in to stability capacity We market occurring to of value customers

broader brokerage our our initiatives enhancing more fundamentals our service premier to discipline, these customers.The services. executing impacted intermodal are We and delivering industry and challenging have operational while heavily

stability as extremely in velocity, we road from improved haul focus execution deliberate enhance early focused to better network business bid service helping costs points. with through chassis to has in focus have diversification our rail of agreements, this economics, expectations outperformed and and management season, service balance-oriented velocity customers season street earnings short approach and elongated to rail our strong remain load on on drive enhanced on is cost recognize and this, the superior both segments.We and healthier Along our the bid offerings, our our improved and long we of count However, brokerage services, through growth value in in grow over as convert utilizing cyclical utilization, continues scale, downturn. our multiple to our led service.The fleet

integrated service, of Mile, solutions.In capabilities levels and and high high growth. expansion a helping service is our proposition and all the cost across of Final contractual competitive deliver have We value us our cross-selling improved

recovers. short-term us award-winning solutions and service customer our have for growth. despite headwinds service all across national will remainder warehousing drive cost offerings, existing position which are believe and of pipeline is as technology, to we growth to managed the flexible, transportation, well expense, strong the clients.Within claims opportunities our of continuous our brings power retention purchasing improvements, a have of are enhanced and year, utilizing footprint, within we clients.We grow the Last, value increased Our market our which driving and organic to and our start-up a dedicated growing

and and in by delivering and the our on delivering our a and while shareholders.With for exits about service investment that, over future, approach, team progress we capacity will members, performance the discuss and I Group our enhanced have through our success Hub our focused focus broader We inventory long-term we that line hand to for remain on plan service market in are relentless to consistent driven customers.We believe strategic customers, be excellent execution call there positioning excited restocking, Brian the made for will transition

Brian D. Alexander

discuss transportation in reportable year. the our solutions. X%, that segments, down west with will you, declined Thank volume over intermodal driven east XX% and XX% declined Trans revenue intermodal con starting ICS I first softer local Local by declined XX%. X%. and volume Phil. year was now volume quarter, declined

growing volume March X%, year early was While in quarterly declined the local continue X%. up and our With that we February sequential year monthly January the represents with have annual our have bid This strategy.The and up started recognized that up X%.In of illustrated wins XX% first enhancements the over quarter quarter, will throughout results and quarter, first improvement first to X%, activity, the the is trans-con early and about of in addition, X%, bid and year. we X% up growth growth. first declining showing quarter X%, local over late the volume west month month, up east made the

being network. in road, We and successful in share creating our converting velocity are from the taking balance also over in while

better volume competitive From addition, invest solution our customers' support superior as volumes.Our agreements and we yield with helped In completed West, us the rail reliability. our is cost manage to cost structure chassis service and improved implementation equipment improved perspective, a north with strong is are market activity to that support pricing costs.In moving a rail seeing growth our program cross-border in discipline. the Hub-controlled and are new improving service we while helping southbound more our to we the has maintaining continue cost a of

expand XXXX.Finally, balance our quarter first creating train, was driver in will which our grow we year, initiatives volume improved enhancing XX% rate the as our cost Our XX% repositioning in-sourced in are awards reducing bid productivity the per that previous are and further costs. is compared new to throughout network

of pleased are quarter, March the year. start showing Apri, growth over over We and with second volume the with year

XXXX.While wins Our some our bid dedicated year related incremental trucking are strategy headwinds costs. and they to expected start-up with strong, throughout XXXX continued improved team to cost finished entered the structure have

integration our already Mile have yield segment. logistics revenue in our quarter rest continue acquisition, improved that over improvements logistics the and turning year-over-year and our quarter. by X% fourth the we the The to growth, second expect pipeline, continued strong our seen Final of to XX% volume year.Now brokerage throughout successful the of We

acquisition the quarter. new operating confirmed synergies ahead in Mile and with to is leverage our our Our the compared Final points purchasing improve integration income XX first inorganic strength basis adjusted quarter help of schedule second implementations implement in wins acquisition fourth of several customer to when quarter and operating the income.The

the implement and leverage generated structure. up productivity IT as Despite in team throughout improve cost in market to contract continue growth. wins non-asset XXXX.While also have that several fifth we spend combined started team our XX% quarter, build brokerage the expand headwinds, to We of confirmed we to our onboard with operating will with further quarter continues continues its LTL improve that initiatives has our volume based transactional volume momentum our to The and sequential model the our logistics second brokerage growth, quarter. of first leverage will wins straight

be largest that our I'll diversification logistics our will playing solutions Kevin and growth continuing addition hand to well, continued over open summer, close performance. discuss our we utilized We and locations to to financial of our of and With expand the to opening. in Northeast are it out XXX% in at facility expect with logistics multi-purpose The that, the are this integration also XXXX.

Kevin Beth

before Brian. walk our you, our results through now Thank outlook. will I financial commenting on

did contributed contribution mileage approximately revenue XX%. of over but is last approximately XX% million, Our as $XXX intermodal year, from our the as to market Revenue decrease, of which the year billion. revenue brokerage prior reported was due in Logistics in million, revenue.ICS load Final first the revenue an business lower quarter XX% $XXX of than and lower new fourth down conditions. volumes declined year, per to quarter declines the the $X.X year compared X.X% business. revenue revenue expected, for $XX revenue increased more to offset billion of increase as line with to Mile fuel million $X challenging Lower was of

overall management with due decreased transportation warehousing January an X.X the In volume P&L, lower to storm hindered and by revenue, Purchase efforts. costs the decreases percentage all loss lower year of the addition, were purchase estimated in ICS offset last compared our performance partially segment in quarter.Moving transportation costs cost of due as decreased than the to and repositioning down prior as day costs a year. to partially volumes, rail, equipment,

additional to to due versus G&A $X.X headwind sale year Gain as in claims truck merit in legacy prior headcount. we earnings by last As trading year increased $X.X decrease acquisition. costs year partially the $X.X Insurance million Depreciation anticipated, year compared acquisition final year last make was a incentive business to as due from This increase and pricing. prior the increased on an and and and related expense, compensation of offset benefited Mile changed approximately the increased priority. the an strong minimal a and line with were safety million, amortization X% acquired our continue salaries whereas year. top quarter, costs used expense to Final the of to costs over by of million. mile to due benefits

January due adjusted quarter, increased business. of an operating from margin year. As startup dedicated and lower claims Interest million, its totaled storms, down a impact larger of X.X% result, costs, to over a operating margin margin of brokerage to our of which adjusted X.X%, adjusted income With from an QX million was from was offsetting QX's X% $X.X our for points due auto the Mile points.ICS of than XX a the X.X% XX operating last was the settlement Final of the percent $X.X basis increase QX results and in this, other X.X% slightly expected OI income from strong dedicated percentage basis increase margin. expense OI

increased debt comparable interest increase our expense an our due average year, interest rate. Although to year is balance in over

$X.XX our the our rate was XX.X%, quarter.Now three for XXXX turning months to tax translates related of share the cash for expense below slightly to from of first operations to diluted tax due restricted of into XX% estimate first our flow program. $XX.X stock was earnings million. Overall, flow, this per cash Our

capital expenditures and majority equipment. million, of the The of technology remainder projects totaled million warehouse is to $XX with related quarter trackers. First spending $XX

we planned, between first lowering $XX XXXX, balance have we shy as than a remain stock just of our year.Our and share. and strong. of outlook and sheet replacements of for average expect be now tracker price no year container are weighted a months it million financial million and at additional We $XX purchases In position million CapEx, last the purchased lower to $XX full three $XX

share. debt of We Net first debt we Through $XX and quarterly X.XX ended is million, returned our the million. quarter with which to $XXX repurchases. range million to shareholders also X.X have hand through EBITDA $XXX cash times. dividend issued on our And we below EBITDA, $X.XXX X.XX first dividends to per net quarter, the is stated of over times of times stock

EBITDA continue million less earnings cash We resiliency greater CapEx environment. for growth as expect generated Hub's a freight XXXX full $XXX expect to demonstrating in XXXX, in the challenging to year we cash than be

single our Additionally, I out with will market quarter, conclude assumption, our that $X.X due dividends, full includes QX we businesses. to anticipate Final growth, revenue. our EPS full execute recovery has offsetting well suppressed while further to in environment logistics, billion. revenue to on and a year pricing our continue ICS digits, competitive and in is driven of and single quarterly $X.XX The market the acquired guidance. business, brokerage we from high plan, of to and and comments share to to year, expect a challenging, environment Hub ability brokerage first continue confident inflection of billion stock my segment, fuel Mile double expect we full on for In mid $X.XX remains low we allocation shifted to but down remarks revenue few volume be believe which mid of acquisitions.Next, we growth line impacting paying range to by price expect point updated year, addition remain for or repurchases, the which our the now digit a our the intermodal the the the performed our prolonged $X.X in XXXX macro assumptions.For We capital in digits intermodal the strategic

year, retail lines fulfillment and are customer driven is potential to to decline, continues consolidation leading upside to truckload growth increase we a truckload our inventory tightening by new a increasing increase transportation the are to When businesses in market capacity intermodal, rates.As There managed be volume is If wins. in guidance. levels of and there Our well the show truck of expected intermodal and to positioned more mentioned helping to high with growth, headwinds and exiting, would market margin. of typical guidance end compensation, surcharge intermodal season restocking to traditional capitalize at of revenue on our some including are higher the shipping the conversion normalization intermodal sale. tax facing incentive the patterns, including demand, closer the we during minimal of gain peak and being costs, a and results condition rate the beginning on push interest to guidance, peak XX% that season.Another

of This improvements, quarter, that and to cash and fall. last quarter will the free goal Mile in updated the earnings QX in our cash we growth flow assumptions grow we helping XXXX. intermodal seasonal to EPS of $XX Final quarters challenges We our million and QX pleased expect due important in that experienced do momentum of the of operating the continued compared assume volume cash the an in are we continue first stronger with income.Generating $X.XX, to few business, into management, resulting have is

revenue. any stable trough to forecasting in we has long open XXXX of of our good financial the We expect growth believe how more Hub cycle is the I'd this I'll performance over downturn for OI to the term. operator turn line positioning is when in While X.X% that, it trough million, With the itself our performance a than XXXX, to the difficult calls. the to company's that out example to more was market $XX from like be double OI to recovery point last or been

Operator

[Operator Instructions].

Our first of Group from comes Scott Research. question Wolfe

Thomas Schwartz

us down QX for mid-single and any And price just what through volumes? can monthly Can walk on just give color the was? think digits. I the volume So said you year-over-year trends, us April you then intermodal year you

Phillip Yeager

Yes, is Phil. Scott, this Sure

was and up down down So January X%, March February was then was X%, month-to-date, year April, volumes, on year over down is XX%. XX%,

a trend So that good we're seeing there.

our be volume. has outperformed think pricing our initial view you we'd But I of get to what mentioned, challenged volume. more we've that as doing on been that

the the going of revised year. We're mid-single more the where which full a a but to sort which prior we guidance positive would assuming assumed an so guide, more second to single to see in the us full leads in And be half. we that adjusted for year, for we've flattish, higher digit up of inflection pricing we price high volume digits that's

Brian D. Alexander

Yes, Scott, this is Brian.

it add. those to through saw April numbers, Marchwas Just then we over January one year-over-year X%, month mentioned March. thing at month, at that at we if yesterday X%, Those X%, XX% look at at over I and is February at

seeing into we're QX. So good momentum coming

Thomas Schwartz

Alright.

got get plus we're In talking on we competitive volume, much up? about order if give had how incremental to pricing. we've momentum, that volume but XX% to So price,

Phillip Yeager

Yes, I it's think don't material.

to more managing competitive. velocity focused on think network. I has been the the We're it we're cost, that able really and in generate

see back a half. different that to going thinking not not we're than We're in really what turn all guided it's had just So to that initially. we the

going really continue competitive.If not at as real to not market you just we capacity the compress in be It's just it's like. really exiting broader seeing to we'd as We're it's incremental is is spot ramp-up think to the price. not landscape, rates. a contract quickly continuing look So

those And back guidance so price in to it flattish driver. the just half half an where was of probably really more revising the kind that's increase in We're back bits.

Kevin Beth

like that we forget we the at I'd already we are to prices time, bid are In you come into were is we out that begin last expecting. above to this And process I bids, this we have going felt going point add, that to that, Kevin. with. because yes, winning But were are want don't understood to what our we were think this down, market to we market.So know, I above year

sync. of through and result in pricing the the bid our So were strategy

Thomas Schwartz

Maybe just differently and before I off. to ask a it pass little

lower depending to like I higher goes we the from then your where sequential if QX? about rail you on think here?And that, happens So price your throughout a assuming just or are costs what on in are basis, year, from

Phillip Yeager

Sure.

well So with here. we last rates line go we're year. assuming were really pretty where we They're from in down aren't bidding

where will the for going likely we're to transportation rail back So going that's not So taking up, purchase be price. we But be we flattish, we right is Likely going growing the down, and they're we the going year, rail that it might full up too at contracts, but right? will to that half be don't we're least might see don't year-over-year be go see, now, and basis. into but think price an down why. costs slightly on a see to opportunity, far

Operator

ISI. question next Evercore comes from Our of Jon Chappell

Jonathan Chappell

One upturn about spot of basically rates, a season first XX% the if that If here. lock timing wasn't there you bid does thing turn XX% with that portfolio market any in -- season leverage, give the of was to quarter Or year? year? at I'm shorter more half the disappointing everybody for before bids industry associated market next trying in to and was if depressed some understand of could spot of of bid the is -- the these the there the duration the in back were when the even

Phillip Yeager

come higher we've on half seen we What capacity.But bid. have I in typical overflow is a you time we Yes, see do that, the typically I an And seasonality. there's a freight market back think really Kevin surcharges commitments a to what that opportunity the on return. that's we referencing earn then potential if when is make anything above was think what for commitment And see to shorter in additional and on turns. when timeframe start change to when a don't

commitments but when say always you So there's additional I when tightness. we've to opportunities drive honor yield made, certainly see to that would we the that want

Jonathan Chappell

gauge and of way of acceleration trucks may two-part of to competitive kind thinking question. of capacity are maybe is some maybe feels pain there of truck may the difficult the overcapacity market, landscape getting context about but whereas of way be that you you any get maybe be talk point, that come versus to the out providers up, a if follow need stickier? of truck? some removals, Then starting excess that intermodal to in other to the So to intermodal the answer, about to like And bit

Phillip Yeager

So I'll add start, can in. then Kevin Brian and and

growth in the ability truck, about this our really lot You we we'll moving at economic with see the segment. and think you'll of a east.I growth local particular benefit rail really I've seeing seeing with of part seeing that a seen, also trend least tenure compete best at know, as nice service big I've A our been significant haul customers. shorter in the in in pleased that my service. the forward, we're But is numbers to for Hub. talk We're that be

share winning moving And me from providers. already typically you're so be the the that and intermodal, over longer to back haul indicates could are segments between road.Typically shifting

So that. I'm pleased with

drive I improving and nice think balance. and And keep velocity containers. some the help on east that down, costs the our also will turns us really driving can local

So good . to me, we're of at executing it's well on be season, and looking that bid to opportunities portion

Brian D. Alexander

just that, I'll Yes, too. add to

from up road Mexico. addition, we're over finding with cross-border with QX, XX% We and our we're southbound QX superior more in getting and services. In momentum north over was go conversions the

Operator

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

Bascome Majors

if on close that's the another before, I'll guide.Just be half.But had questions at from to quarter the the or and markets of two gets you versus think color up typical we said half earlier, conservatism, to first. guide back that in as is, keeping last just flatness that than amount second it years happened on That that's years, second in the think the the and where I have the lighter will you your the any we above lift complete halfway a your year half pretty the leave plus once first seasonal back it of come the only decelerated, I XX you cadence if up look Following the

Phillip Yeager

how been. bet Yes, very in little aggressive to I'll that's that And there would think we're huge pricing of of I that's certainly why out still didn't is back conservative.But do on recovery bid conservative the surplus power assume to the start. point just half and front This kind think season a end we we be there. back half, has capacity at the this given Phil. be is given want likely I trying

great that some that's We've few as Kevin awards there's up conservatism as about we're that in could think and next business well. start in the weeks mentioned, the great got on. our logistics really I as certainly it.And really upside come wins So drive volumes upside to to that some

So be balanced I think know we're what we just trying today. on to based

Kevin Beth

And year. do you add what just Yes, Kevin. seasonality throughout I said, we the look as quarter over we're our OI to that. is into quarter Certainly, that and historically you expecting This increase would year, see that when is this comes play.

Just you of availability degree, that hard to really now sort growth to what surcharge each know, increases it's right the But predict peak just not we see to do is quarter. be. sequential as Phil mentioned, going

Bascome Majors

just year? get maybe that this is to secular idea we really prove business become less a I we volatility capacity sell And we after if tied What like the on cycle do last we how you and and follow the a back lot to that after need idea capacity.How performed years, has should a story. to it's higher XX truckload if push If level intermodal outlet eight with look more tremendous and along do, more cyclical up, year of year Thank from years, that seven the you. that been a and this intermodal back or outgrow do growth or pricing look can really wrong cyclical? only secular has trucking a could far

Phillip Yeager

This I'll again. Phil is Sure, start.

the pop evidence we're the right I least commitments think conversions and to every supply capacity other how short we really being the to instead constraints. customer that used quickly.I seeing a congestion into truckload historically, last rails and and at that that that huge that think drive, the ever some forward, January think things now, factor Mexico, we strong is to resiliency of driver. piece into been strongest about that seen the that we've look I've as implications outsized at taken but past, is freight the pretty inflation purchasing near-shoring a few things certainly and the broader you of a opportunity again, that some talk the there overall it's haul industry.I and there.I before, storms are enable that be huge that's new you importance I now, were the market. sustainability especially center think I on that's could that the some a along not recently a I that decisions, and just truckload the to been But front the with service service opportunity, were is about to given So service we're the piece disrupted some is growth play. reference and of the out intermodal more to think pricing not the year, That changed further looking lean it's something think to is going There's put at as move able conversion has even something great service investments chain run we about is right in is, It And that a if shifting growth for levels changed plus making. factor going back untapped first a seeing that momentum levels of going have focus the a the are is industry, a could would rail now preference have the think intermodal And because cross-border seen think of significant engine and the a into were that and growth growth, the more long-term for the did given I there, service it, been trend that's extremely issues how is if think but market. the recent now. shift, growth that's broader more broadly within versus was some in in of

Brian D. Alexander

Yes.

Just piece add to to too. one that,

is out has intermodal, of what that Final also Mile area think our originally, also whether been freight a was intermodal that can network LTL convert growth. been capture I we've good originally, where converting within we and that building into logistics into or

Kevin Beth

final I'll add And just one thing.

not I to of answering a as investment we more strategy ,and acquisition question, really asset-light And out that's the but trough businesses and a I'm I trying than XXXX. company, more what I necessarily our think the the as has from as steady. our look was and stickier that's think the been company, ROI OI have, doubling point in trough,

Operator

[indiscernible] from Our comes TD question next of Cowen.

Jason Seidl

but is excess capacity. onto of looks in takeout and softness.Just network? Your peers helpful. spoke couple on Seidl. a would is how within touched remarks, capacity your your XX% know color I any your be Really speak on kind This about currently you have other to any that hold thinking cost the for of Hub additional Jason prepared Curious if can to market that you to the despite you capacity network?

Brian D. Alexander

to in what that January, do Yes, and late Sure. in been that start is no, we've able we first to continued started January, unstack, quarter. throughout but the

So we on seen faster more our volume. about boxes rails. by of also turn XX% our the to support We've staff the actually reduced

grow our We then And more picking focus cost-outs, continue up improvement our chassis to volumes customers. of throughout of the capacity, grows, as program, we our unleash see we So we our our one our had generates and mention to our rail doing productivity which that ramps our throughput the costs, driver support on boxes, street, that that volume also helps street. X% we our get turn right And mentioned about helps that.But improvements. that cost What that for as did other the that. capacity we're improving on through to improve levels of more record more of see do in on an you QX. then

of of year. kind throughout out we'll QX, get So it in in the and QX, effect that throughout rest wasn't finished effects full of the in mid-March, but full

Kevin Beth

And our be one cash and that going not adding not that's just free we're having to to add to flow. purchasing thing, additional capacity containers available,

Phillip Yeager

I'd just add, I better think a we've on the street, much job. done

drive Our XX% mostly driven was productivity year, per and enhancements. over down cost year that by

per were up driver over per XX%. day loads Our

So that part a about better increased And that benefits we balance when job, is for we're well. the of attributable the street a just it as part volume but also company, talk doing economics of why and of to driving big velocity a that's great is density.

Jason Seidl

then follow to Mile hear the up, And on maybe Final a few your curious the months for just acquisition. thoughts first

Brian D. Alexander

to Sure. start. a great cross-sell. of of off Again, schedule that synergies. ahead our a with And big our part is We're we're

So that new Mile wins some with and really as to improvement organic onboard, well our Final customers. we then the cost as as we're And leveraging we we're best of the take and bringing of, we within growth models existing drive that customer have our have go execute.

So pleased it. come. been The has of and more very with great to that there's team

Phillip Yeager

a together, has off great . been Both off said, on culturally, As think we it's bat. a of lot great focused the that our great the think, is But it and service I been alignment. that great, enabling I are right of have Brian organizations reputation

Operator

JPMorgan. Our question of Ossenbeck Brian comes next from

Brian Ossenbeck

how to coming be we it's digits, single should high just typically you just pricing up when specifically, impactful volume intermodal expect have margins about digits. down year? Because lot you Maybe a can throughout back going more the of to talk than mid-single progression the

that it here? segment, kind in get it then the missing improve like stay is terms mentioning this is hard for Brian that some So Because much the improve where again, density?Or now as does from make something the of going margins. feels here of things of and you was to else chassis it usually pricing to I'm down the some there and is margin-wise

Kevin Beth

yes, costs definitely Brian, Yes, We innings middle takeout. of moves that does. definitely quicker correct. you're buying the believe do needle are cost in the than still Price much some

often the seen changing We will during that quarter. the more move as contracts rail also along we be are also

the throughout or points, we way maybe think should be at day, other a So end year. do of the stable, couple of it fluctuate the one and the

Phillip Yeager

there's there? depends And we of I see kind of think As lot rate do a a Kevin Yes, seasonality typical upside. on realization as it well. just mentioned,

align anticipating and upside real potential. peak that's would out also certainly quarter to some around watching dollar we'd seasonality what years we with think now But that that be some quarter are coast as a could see there in more a which I imports, closely row this improvement drive might that factors operating But margin mentioned, think odd. typical I through But year. without increase.West look Kevin our that's are three like. peak, there's be customers certainly would that

Brian Ossenbeck

Okay. clarifying that. Thanks for

obviously as haul. the you're you're competitive, on the wouldn't competitive pretty in the just market well. it seeing hear still especially how which is market to tracking conversion. question the success had that there, of I we're the considering what in what have short expected is, that So But is that like I seeing just other much east and sort pretty are What some spreads local good truckload was you're because conversions, and sounds seeing

you and seeing how what deals done? you're So getting those are there

Brian D. Alexander

intermodal shorter Yes, the some truckload to that where that's truck length ranges. compresses to the able into And the to haul, against those But we're compete spot of in still high contract single compete. digit seeing XX%, we're still able to pricing within in level. those we're spread

on we think well, maintain our add those things to big maintain in within just shift disciplined right? see balances. to throughout I costs, is to too, approach and the intend as within your we grow our season earlier it we'll balanced, And and So to balance that network. That was be year, stay a effort bid began our question, our to a as focus

Phillip Yeager

couple and huge And to service, at referenced I about I I've customer know been truck-like I that's highly and levels in I've building my times, a think just providing it's I'd it's consistent. think factor we're this add, tenure like of in so confidence. And seen service Hub, a that

being A up we progress flowing. see, that locally of XX%. large portion as think will So yes, And we with that April you'll the be will throughout mentioned, year.

Operator

Our Long question Stephens. comes next from of Justin

Justin Long

but earlier, quantify I first could intermodal quarter? margins, there from the settlement. mentioned I impact Sorry you on that? yield if was for was you a if also did curious I claims know the it number And give missed you ITS the then

Kevin Beth

storm, again, the the OI had the in Pacific on January settlements, we noted I X.X%. between on and three basis as ITS was no, the factors, couple well. were not a claims percentage in that the Northwest, factors but And Yes, Justin, to any OI where dedicated this and for start-up the so actual that Kevin. going Yes, costs we the is points had as of we're claim numbers three give growing we

there were where couple So a know, of things, basis to points a couple we adjusted for back the that, board OI are on across you QX. of

Phillip Yeager

think down And, the and load out I question, XX% rounding per revenue in intermodal. was

in fuel think prepared Kevin and were his things referenced I remarks two .

I the that really segments impact would other from quarter. east mix per was thing local is certainly outperforming the highlight revenue in longer those headwind haul just The load

Justin Long

Got Okay. it.

yield you was So that down number intermodal said XX%?

Phillip Yeager

Correct.

Justin Long

guess were standpoint, to year. an the what talk that and about acquisition, segment, updated view you segment that you Logistics on pro if for for this about normalized growth Could you you you're strip talked I expecting shifting as . Mile deal? any to And you're organic growth from Final margin thoughts out the the expecting the forma the

Brian D. Alexander

is what the Brian. Justin, our Yes, we set network We're with have really build on logistics I'll we growth, out. within this touch that up as pleased

don't to then and growth at offer down good our and continue by services more I've those really can that that we progressing a adding they're customers. standout, sequential what a cycle with to I quarters doing of break think we is within organically we to brokerage, row, streak But logos, where five be in means. any cross-selling as to volume new a mentioned, intend

having win leveraging volume to, our continuing.We see able that then that diversified based brokerage. So other being offering into our offerings. a mentioned, on we within And those service price, as cross-sell I

as we the do less yields we And becomes our improve. the do the stickier. topic see pricing of that, cross-sell and I business becomes more we a think

I'll growth. that -- Kevin mention anticipate do we let margins. that And maybe continued So to the speak to

Kevin Beth

segments. the is right Yes, brokerage dragging on so, logistics really now, here, margin unfortunately, the margins down the

Now the than the much lower our margins. market truckload are spot and overall

as truckload, inflect both And contract as the that I think upside the really goes. only and I as at think trough far So upwards. spot market probably we're wouldn't the

Phillip Yeager

think the the brokerage would And it headwind. per load big I is just round revenue with out I

thought Final you business acquisition. about Mile If organically the ex the logistics

our got, If line some And organic you mentioned, look in to particular, at did the cross-docking quite drive that warehouses other we've network businesses, to performing actually growth.And think as bringing I job, great are nice new a on some going as the top Brian that and solutions we we're continues team's think LTL selling well. they're well. our expand

good of those the growth happening the at in if lot on with services, lot a more look tie market which LTL, our per brokerage conditions, would things of top you lower And a we're load. nicely really there. to quite line. dealing and growing revenue more But the I those are contractual is So

Operator

Our next Wadewitz of comes from Thomas question UBS.

Thomas Wadewitz

contract Where have the you revenue ask I XX-XX? in a if are load. and right heavy What's -- now are mentioned towards you and per just about know that little missed were it terms contract you and don't wanted you the brokerage of But on I to spot? spot mix it. and brokerage? think bit talking about spot? I pressure Or on obviously you is I and

Brian D. Alexander

picks right capacity, pricing, for to us leverage carriers It with, we're where to Yes, stay. to I that and able go look to early QX maintain balance volume. we and able market But think think improved back of then Brian. kind XX-XX. win brokerage. quarter. we'll position in It is that We spot our that some January Tom, consistent. kind to pretty continue spot up, can continue about pricing that contracted to to debt XX-XX, this position in stayed of saw the our inflection. We're we be And fade with throughout of helps signs will freight that that of some And did as that

Thomas Wadewitz

impact think, they're the I ocean different it and dynamic you're intermodal the the you're maybe in domestic? do so there's stronger in what in growth you competition getting while think if it carriers? in think, aren't railroads growth approach then Chicago and you domestic. international What the boxes you the available Thanks. And players some well.And empire? want like is Do where happy know, intermodal. or you excess doing years the the it's do domestic know, well, significantly doing the coming as see Because in is.But international, to capacity boxes way of other if inventory pieces of I are inventory pretty the go at in that-- to international, figure to commenting, and seeing you two Just think know the the than they're don't I look think the versus setting international, in aside the out trying see ago? within from keep Or that you inland people competition more to is

Phillip Yeager

set a Yes, Yes, think it's right competitive now. a no, great I certainly it's question.

right steamship drop, on things boxes those revenue.And see and to taking slow trade. your inland back, more very our some that low. to how the given want big busy it's a things to a go term very to typically we box, Coast, would pull you, into rates we But are less that typically back. see used us and and now, They You when capacity happy border fit by things right want very be flip it's to are you I to those when its and boxes obviously cross customers But see point, pack.But think East competition we that's they're something I point use if think we're the I on find continues IPI west yes, they'll extra to pop certainly more our in just the the economics coast most can oriented, commitment utility the that you still so that pricing see customers But now. are they but transloading And you tell back, seeing as the there, capacity of then inland. if back might lines transloading temporarily time, capacity are, going although start freight, get utilizing have, long quickly.

Thomas Wadewitz

at help pushing the Do impact? all about some the at is that to international not negative little of the of Red you in Sea behavior necessarily? Does disruption more West terms there a you or think Coast moment? player effect What maybe

Phillip Yeager

certainly it No, does. Yes.

labor volume. it's now, would of I would competition east that yes, ITI. going a be potential piece dealing the think right driver another with disruptions I of to certainly coast we're is And though, that say, I

Operator

Bruce Stifel. comes Our from Chan next of question

Bruce Chan

maybe here, as up to Final far how that commentary parse Mile. it's the push talked growth looked Just that to I'm possible an if have wondering like follow on business on you in what about organic opportunity? the and you're might into that cross-sell out

Kevin Beth

was just of So if asking the acquisition? of growth I'm their organic much understanding how you're revenue,

Phillip Yeager

mean, at I that. a shot Yes. I'll take

which we been where appliance growth mid, phase organic would able seen Obviously, of say, not large we've to on And open some higher, customers business spring of year-over-year basis. we some a single think incremental getting vast cross-sell, much have high with existing has that are we're now. digits had and that's growth.When ahead the surge, think that a on start-up overlapping I are would the majority, acquisition, we are an still kind started. in contract have of a wins and been been new our and great. addition high I process offering the already right of have clients about some schedule. And We very then the in before.Some doors with. were we Others, did with those deeper been

benefits into start QX year we progresses, the QX, the of kind cross-sell, and as of the timeframe. that think will get see to the So really I

Bruce Chan

the little about Yes, diversification maybe we're fresh and looking that for. more from And the a still has you the broadly, a any think was color maybe would and recently, exactly any been know you side? somewhat for focuses are know If there just this as If properties but point? when I identified real dray you the on there Mile.But what focus I retail that I intermodal areas was bit that at are model then there Final of back be on market available you've consolidation, so, M&A, maybe great. additional more become in

Phillip Yeager

feel you sheet, have. flow gotten and least at balance we Yes, at cash our if point, look this and free integrations good I at quite we've we at generation think or

adding intermodal. be when so we business, And find continues in.But can comes be platform. We're are it market. and a always be be feel and scale us. I we strategic to to anything part But active. focus would looking think continue there, certainly it's logistics the think the going specializations we focus those. about or for to That's And interested our in really a the building that out very We it to non-asset the we right have growth will now on that but that opportunistic I back of services, are to core we're direct

So you think intermodal, interesting. certainly very it's obviously, retail mentioned consolidations, Final Mile, I

at look brokerage. You

of for us. at could kind bottom the here we're think I which very market a interesting in be

identifying team So are vetting opportunities how we I'm have and quickly. in and very on. a targets doing that pretty we pleased really with them great is have pipeline, focused our really But new

Operator

Shanker Ravi from of comes Morgan Stanley. question next Our

Christyne McGarvey

the today? power the talk so the And company, Hey, taking trough the great. how guys your McGarvey This lot just kind a question. in that normalized I you I normalized earlier about call on stands Shanker. being earnings gets of to it bit to years as maybe think the the about the been and back, last a have at Thanks cycles volatile taking been to comment of there's trough changes us bit to Christyne of a for of draw Maybe for earnings kind wanted a just of in triangulate step power. Ravi company it is double. on couple to think difficult earnings little

Phillip Yeager

sure. Well,

I I agree with totally you. think

think led think that and really the space. down disruptions. it at pandemic were boxes led was, But there what warehousing being some you earning led to say. at now a I there enough to that's mean, storage basically time, that for has and is to I an prolonged wasn't they our used same But I the right. okay supply over I mean anomaly. cycle. look how think, think think I to chain I some COVID I And

and lows we feel the were And higher highs as the though so are lower.

likely where single we think then back margins, was IPS earnings mid-cycle logistics come So it's normalized increasing. level while that think and sort today.If is digit middle, in our digit we kind market. our could than there of single about get igher is mid-to-high margin a you And normalized in that the to margin that mid-to-higher a stay into of will in revenue this level margins are

tried a But us piece and also, in And more so return that capital the some I think to that the highlight, earnings as other is power business, position though, cash shareholders. to the to we've strategic highlighted, investments. puts make of we've just

Christyne McGarvey

If the of the through. That's squeeze near really the called helpful more out I one call, to also you capacity. could term, just beginning think in

of of has able I long think here. just been to capacity cycle, that's probably one bigger surprises the hold on how this

are guys seeing know, on, now, little So some there? seems right more just what A which actually color data bit net suggesting would be curious you additions hard to you believe.

pushes you curious market? So would of of are what you on just out capacity guys seeing that? some be And kind what of do think that finally

Phillip Yeager

capacity Yes, we're we at. what are looking seeing in least exit at

we half think will more in capacity the raise it there exits. of we which back at we year we don't would I of just that in a had think is, big opportunity that as said to see why we the to so. rate really is hope going think, not time, have this that a the part anticipated I originally price some point be I at think Yes,

remaining disciplined don't think redeploying I chasing in capacity. intermodal anybody's that. back space, we're on the I think

you the to think maintain we business our make for now right growth. in fleet, investing driver also are drayage around we're any our we age tractor only sure as I us, making are it's sure really of of the additions really we percentage to I share drive our think get returns?And right right at so maintain going about more fleet the and

don't you'll like the constrained just still going likely time. for lot this in of CapEx you're years anticipate market next see excess, there. And of to I at from the see a us it's whole out but of So the capacity point carriers entering large couple because

Operator

from comes question Barclays. next Zazula Our of David

David Zazula

the about least book the taking business getting from question. if of Appreciate relative you income you I in just the volume you're you're volume. kind getting profile top would broadly getting on just what on make to could And talk in trying investing more the saw qualitatively I'm additional you existing are laying asset you in of, of sales on turns? is feel for per the think of kind and returns the of what unit think a cycle at you're incremental this Barclays. Zazula how on incremental you to get the David of intermodal, Hey, as operating assets,

Brian D. Alexander

get Sure Brian. is us started yes, This I'll here.

into and bid was went balance network to going on of turns.And focused cost container season, on this on the our that a continue be rail, the in flow street, through. to approach that part we're a I think with improvements continue our our to with the have as went we velocity too, letting maintaining in we good big

the after go local helps over that, a need margin I us on and think per too, that the conversions a that stay day, part focused we we've load of mentioned road the east. and in to, we

approach feel got around cost those we're we to win. that maintain we've price stayed the So bids competitive to with discipline, right disciplined the to what And right on we the yield the focused it.

Kevin Beth

as our as And do our we anticipate believe and ROIC definitely of No, container those as do to purchase. manufacturer an the don't and market. our decisions. have make a far as more far purchasing we capacity, to.So, and can additional until great we those those inflection we needed pretty in partner we have containers, goals, see get We any quickly, we we if stick

David Zazula

could you seems And if like I bit a costs. reasonable in follow programs. employee keeping the inflation if job helpful. costs employee up, get we're doing a Very you're did actually could talk a pretty Wonder on cost little more you market, color just seeing a about the the little low. It the give given and

doing as So keep margin trying to keep up? check, anything as and that far the in you're

Kevin Beth

Yes, sure.

off non our have look efficiency. an our if at things certainly across new went one been lines all year this do able board, different purpose, of able developed a we to be so headcount And control you per were paid with and overhead employee count over business, our loads employees down tech Mile One handle we've year, efforts warehouse more non-driver the without use of employee tech, and of to to on less X%.So think those -- the that businesses, legacy we're our of really is Final employee.So would purposes we costs basis. and actually those the

Operator

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

Phillip Yeager

Brian and thank available to very I joining much you evening. Great. for Kevin, answer any our as always are this questions Well, call And

Operator

Ladies Hub call and gentlemen, Inc. with this concludes you joining. today's conference Group, for Thank

You may now disconnect.

Hub (HUBG) 25 Apr 242024 Q1 Earnings call transcript