HUBG - Earnings call transcript Q2 2024

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

Operator

Hello, and welcome to the Hub Group Second Quarter 2024 Earnings Conference Call. Phil Yeager, Hub 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 believe, expect, anticipate, and project and variations of these words. Please review the cautionary statements in the release.

In addition, you should refer to the disclosures in the company's Form 10-K and other SEC filings regarding factors that could cause actual results to differ materially from those projected in these forward-looking statements.

conference recorded. this reminder, a is being As It over to my pleasure the call to turn your is now host, Phil Yeager.

begin. now may You

Phillip Yeager

Good wanted are for call. be you serving Kevin Beth, Chief market America afternoon, of members Group's their Financial and by and hard earnings Officer. thanking and Chief second-quarter to of I to Operating across joining has dedication grade Officer; domestic North With start Alexander, demand, Brian Hub for today our Hub with to Group's competitive me our team capacity. thank highly The our and customers. balanced a bid challenged continued work all season, supply excess

anticipate to seen market the West would this stabilized remainder We our a seen some some with import well through performance solid time. inventory along the of season but wins volume recent more as in year. which and trend labor Coast disruption, as at We've Coast strong the a potential attrition East sustainable support due have tightness, environment nothing peak demand of and incremental should signs denote capacity that

and year-over-year while of which volume financial highlights grew of leading In product East supporting best-in-class Our have growth XX% our X% that and in strong are selecting the continued volumes. cost-competitive growth full returns. are are we A options and believe them the out in a with which XX%; record service, up position improvements and TransCon services, to portfolio in growth along with we intermodal, to sales Mexico, their customers stand we second cost in in quarter, service as quarter. also few the was local well our our providers, in to continue as providing lead will we

load reductions empty to focused network growth, margin is our enabling Our better-balanced in lowering repositioning is bid cost costs. which plan day drays per leading and

demand position and momentum In this through onboarded remain and costs new future. we us Dedicated, customers. for ongoing us are our reducing existing We to initiatives top-line in environment these to win focused allowing of drive on fluctuations see as for to All customers in continue servicing the sites we their growth.

impacted servicing through performance search. will invested in support in the our investment, we growth retention customer as customers we in This the their of term. quarter base However, was additional long spring opportunities and our earnings believe,

of are performance team we volume truckload continues broader brokerage first value LTL of offset drive the environment. near acquisition in challenges bid integration logistics our Our to customers, strong, consistent have team Final in which of our will In and starting services, decline is growth we our and with to the leading strategy, to confident from Despite in contractual quarters, we are to our seen the in be completing margins the year. last have term. several that the diversification proposition strong been wins our Mile our our

with winning helping best-in-class supply of are onboard Final efforts customers costs new In cost second and offering half are will and full chain. them to Mile LTL which their wins, and of outsources year. Transportation, new Managed optimization leading during reduce enhance management, the Our and control service the we

service network, and improve our are to on our months improvements network we in consolidation focusing ahead. Finally, within and optimizing our the costs anticipate

to take to action We Group's position Hub continue success.

operational drive service shareholder recovery successfully will for best-in-class and position while on navigating investment challenging our to providing we We market this are maintaining disciplined us the approach strong customers, believe which our market returns. through well our focus

and across we successfully are Our while manage diversification margin us has strategy customers costs organization. to our our deepen stabilizing our value helped to the our continuing profile,

and via ample cash will dividend I while in we to a with free our With it and financial continue acquisition our share Brian that, net over ongoing and phenomenal returning grow in to repurchases. through are operational flow while strong conditions, hand results. broader market shareholders business liquidity to to capital position invest debt, discuss our to results been have Finally, generation, challenged given little

Brian D. Alexander

an Thank ICS, Global On was volume volume the up momentum year-over-year. intermodal challenged a our with X% increased region, quarter, expenses By revenue and of network. growth In X% we grew subsequential from demand tractor you, Phil. contractual second-quarter business implementation our contracts. volume new highlighting as per and increase and customers' our focus with first over our on improved believe basis, positioned costs, declined was delivered XX% strong lease improve year-over-year. and volume top-line helping grew market our was driver peak XX% costs are seeing productivity We upturn. The per repositioning as we XX% dedicated new we is and strategy, in volume we in reduced continued balance wins this empty controlling in the are eventual drove frameworks, on year-over-year by to brought quarter well and growth for customers. we needs X%. local our With aligning driver XX%. support West in productivity new The nearly Transcon day network and growth efficiencies to support profitability to the

to turning Logistics Now our segment.

our $XXX challenges several lines the new bottom year. first offset continue both first generated [ We brokerage growth quarter of and our strong the margin more inorganic growth than in a in operating Mile basis business quarter. ] million, in generating growth customer logistics the ClioMile Final point of resulting Revenue implementations the higher to X% with over in profit pleased our XXXX. second top on segment last business, and earnings Logistics with improvement with be of expansion in than half revenue XX the

with to quarter. third to this We in wins the confirmed continue several implement expect

combined operating mode channels. to Our allowing us several is offering to cost improve diverse structure. to our sales leverage our non-asset-based integration across benefit successful model continues from our Brokerage

made improvement XXX per basis the of when strides We spot our market, revenue allowing the between productivity second has more and quarter quarter. to in first market needs. XX-XX comparing than our team sequential roughly flexibility points split Despite have load respond maintained contract the to to resulting customers' headwinds, in

of contract in second growth the generated wins first Another in LTL, in quarter. the transactional XX% spot several bright half XXXX, of is which resulting in volume has

we addition, brokerage as leveraged have cost started our already third several conditions In From lows wins XX% per to the for XXXX. have in of throughout a additional is IT technology that accelerated member implement our improve market will rest perspective, the and improve. onboarding quarter. we've growth have that confirmed team well-positioned by Overall, initiatives

in in We the of network logistics multipurpose at Northeast to of location quarter. also continue start facilities invest largest our national onboarding the the our with third

discuss that it margin opportunities under increased and growth optimizing footprint in solutions XXX of over our to basis that, expect play and million quarter for onboarding of managed warehouse $XX continuing just of in resulting quarter-over-quarter they customers. we the a successfully our customers. to third purchasing our us With our We out performance. financial serve new during this continued freight and in locations, management non-asset-based will improvement in under of The with better diversification improvement logistics our are additional we expand accelerate points are to quarter hand continues service as The and give third expansion transportation network team to our as optimization the utilization, integration grow to I'll Kevin power, XXXX. expect along is well, to

Kevin Beth

through volume not before second walk on over $XXX Thank of Logistics Hub financial first-quarter declined second in will Lower the the revenue our which commenting X% contributed our offset for $XXX and revenue Final is decrease million, to revenue $XXX asset lower of reported Brian. I now results business to of rates, Intermodal Sequentially, quarter million QX. $X year enough line first-quarter of quarter $XXX more second-quarter revenue was million. million. softer year-over-year. you, approximately down compared to X% the was as our X% higher for of as grew million, fuel, year-over-year revenue last outlook. Revenue roughly brokerage the volume revenue from of was and ITS than IPS revenue up Mile fuel with lower contribution million, as and market volume did in $XXX XX% an lower was up prior the X% lower increase offset year revenue revenue. over business. the intermodal was X% was conditions.

the drivers, improvements points basis Moving and to the Insurance year costs were Final points our and lower expenses, warehousing headcount. excludes G&A costs, by of mitigated Final the costs and points basis safety acquisition from and employees acquisition. year million despite manage by the lower by were claims XX increased increased basis XX transportation and in and costs. integration claim partially costs, X%. due on efforts. Purchase offset sale declined Total million increased quarter. associated handling. driven to XX prior cost to $XX due or employees, Gain and Salaries with year, amortization Final $XXX,XXX to acquisition by to in to amortization by continue ongoing Depreciation was third-party headcount, by decreased related we the accessorial which legacy rail benefits P&L. overall Mile the due last claims down $X.X Mile to rising management compared acquisition, to prior intangible lower warehouse Mile which as comparable

from operating we million XX QX's $X.X margin benefited expense a efforts of income $X line ITS X.X% is for was increase quarter, increased OI last first XX and management margin Mile, due margin operating percentage X% lower Interest operating increase was points of expansion X% quarter. OI Final margin. results the and which our points from intermodal result, of from in brokerage in over basis of volume year. X.X% dedicated As and an a the of percentage basis million, income with cost to an as margin offsetting Logistics the strong quarter. QX from growth, X.X%, other totaled

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

slightly our XX.X%. tax XX.X%, of higher was Our QX rate rate than

the sequentially we year the increase Hub earned compensation, expect through tax tax certain matters. for tax move back the our second Overall, quarter. $X.XX of due of rate and timing as We per the to stock-based refunds, of share half closure diluted to

flow. our for to was X flow turning from XXXX first cash million. the operations months of $XXX Now Cash

tractors capital reached first end included replacements of warehouse $XX and purchases, down projects. million and the was expenditures their totaled Second-quarter that XX% CapEx quarter. for have from equipment technology life, spend

CapEx half our first the year, million. $XX the For was of

million to closer between spend full-year and QX be level. spend and expect to to the $XX $XX QX lower continue million with We QX

to $XXX Net below EBITDA, X.Xx to debt of our with million stated a of $XXX million cash debt-to-EBITDA on free with $X.XX was financial balance and we X generated first of In million $XX the We the and payments returned $XX XXXX, repurchases million. months of ended position Our of strong. sheet stock and shareholders million a through dividend cash net million, hand range remains quarter of year-to-date. $XX flow X.XXx. $XX

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

confident our on plan, remain paying quarterly ability which Additionally, to we and in allocation our execute strategic acquisitions. includes dividends, stock repurchases, capital

guidance. comments competitive pricing QX of environment and rest end growth that from I top-line few a range. further and XXXX, conclude second expectations our remains my well of on intermodal the lines believe outperformed with with as our our of high intermodal anticipated, the the reducing inflection business. assumptions point impacting and market to will has we continue in the Next, volume through brokerage while shifted We our out remarks XXXX macro-environment the challenging, quarter The expect impacting

full-year expect growth to and price $X.X the digits revenue to $X.XX full be expect intermodal range the billion. segment, in the continue the $X we billion full to of volume for per $X.XX for our in single high and down ITS We digits In share year, year. mid-single to of ITS

than revenue Dedicated, up for low as we ramping recent anticipated. digits year now be slowly full wins to originally For expect single are up the more

overcapacity continues for more is than demand to remain in to growth. market total we If Logistics allows potential guidance. grow given second traditional brokerage, revenue to single year. challenged expect continue When market. up digits There full restocking in we our mid-double-digit half in be the the excluding the the there segment, the single digits volume is we year. intermodal upside and expect to continue In the anticipated, and to revenue pricing revenue For mid-to-high surcharge for season peak of low to low brokerage, higher for a expect the

truck is Another helping to conditions push that conversions high guidance and market volume intermodal results increase the would growth margins. of to intermodal, to end increase

improved drive We higher tighter well financial market capitalize are services results. a will intermodal to rates higher upturn demand positioned and our on but and market for and truckload truckload a

As mentioned normalization at the on being rate and incentive are including costs, tax we the our to compensation, closer XX%, some facing of higher last the year, beginning annual of interest gain versus headwinds sale. minimal year,

assume we that year. throughout challenges quarter, last This continue assumptions we will the that the quarters to updated have few the experienced

As we of line exit performance with financial half to operator to strong that, intermodal year, our over questions. the free strong date discipline, cash we With the to volumes open I'll and the are flow first generation, pleased growing, sheet. it the with balance turn any strong to a

Operator

Research. Thank you. and remind Instructions] XX Group like on Wolfe is to would the Our available participants a from call first be Scott Hub is question I website recorded, replay this also will days. that of for being Group [Operator

Scott Group

don't the maybe yield the I know walk you through for trend us and in then and volume the just just quarter. like -- monthly Intermodal volumes? July volumes I overall it, missed just if intermodal Can And

Phillip Yeager

This Yes, is Phil. Scott, thanks.

volumes and a For was basis. X%. up X%, up was then XX%, up up June were year-over-year XX% July May was April, on

about at digit If the year obviously load which be said quarter look yield price, XX% impact. down for would mid-single we on you full down a the that the an in was was revenue basis, per

which out just and that a taken basis. nice and piece expenses. that good year-over-year is impact would revenue being was impact wanted per well. have a freight, basis. loads repositioning And and filling But more were repos has a other call a out highlighted the also XX%, is lastly, backhaul it second strategy, then mix in headwind really down be remarks a volumes from mix-related. obviously we've XX% empty mix That there has on prepared fuel done then his in those accessorial loan load. but as bid a on East our negative think And negative a to we I per through revenue job thing, Brian Local up

Scott Group

that that like so spiking so The with then winning in And color? sort of July there Is transloading? are in the Any quarter, Is it but slowing of there? getting market issue lumpy. July. per-day happening you're the trends a volume Is volume trend throughout that bids the is share? -- better

Phillip Yeager

a certainly we got would as part in little Phil. is slower it wins we've to This come out the But some are the say was Yes. wins of I that July. seeing a started little That's July given online. in hoping nice ramp last continue. really really up. the weeks, to started elongated. more see that We're seen of X improvement some that holiday we've

full those yet. realized haven't awards We

we into think So that continue August. will

of business part it year-over-year also and think well. comparables I as is days then

Scott Group

Okay. And along. then I'll just it one more, and pass then

like If think the So low I end, lower which XQ and the don't just higher gets any we've could I than And of to heard just QX, second you down what from of we that? that guidance. talk there. earnings take in XQ color implies the transports about anybody half I heard earnings what season in end the are else this the Can that you just actually year. causes go it

Kevin Beth

that's Kevin. for now, to the new challenging. competitive out we the market macro of just this But bid information is on at freight the side. a just your macro very Right you There's we is been hard and the Thank very the that the week feel market, this some come Scott, season. day, predict. both the It's market end freight question. Yes, is think

know. excess intermodal capacity have you impacting and as brokerage well We

expect remain we pricing XXXX. moving strong expecting do pricing While are to into we with inflection low volume growth,

guidance. just a So route thought it'd adjust conservative the be we to

Phillip Yeager

add in. is Phil. this just Yes, I'll

to do is I we earnings where second would which point first the half. think I at half midpoint, anticipate growth you,

we we've mostly place. putting operating to of of going would half the dip little QX mentioning. growth. to reductions, some ITS revenue second, is revenue rail just on up. price lot were But bit on that lag think nice sequential I up sequential we half, margin ITS, be I a reductions first new a be wins in that in are also QX, cost growth highlight, to going in to we're a On we're logistics, margins to we'll see realization volume more think first, volume. a operating ramping that second but we've got and anticipating really got due

to would midpoint. point the more I you So

I piece, imply which, exists I generation would view it the year-over-year last as our on think growth. highlight I market today, would as that's the flow is sequential best mentioned, And cash of earnings being up just basis. free a

Operator

Stifel. Our next from of Bruce comes question Chan

J. Bruce Chan

of of parts of you some of positive how sift improvement coming to that And especially print underlying wondering performance us help coming you moving mentioned just some and some much at know the I legacy maybe much from take from how sides here. OR top-line Maybe there, is of from Mile faster-than-expected appreciation? Yes. Final But the of the in through And there. much profitability. if just business a in business? terms is is wins How that look pretty can synergies looking the it acquired good.

Brian D. Alexander

that cross-sell a also And to been this really I'll that's acquisition, obviously with grow logos, of really one. complemented top-line position able Final we've Sure. is lot Yes, of the continue a take we've integration been Yes, And wins to line. adding previous by lot organic Bruce, that in driven Mile. our of Brian. Final and the it's we've of there. able get on Mile the and to top our new been top pleased

the able we've the to been perspective, up approach drive and to models there. efficiencies we to of as each be to when find put our best-of together, far a cost yield able As the leverage X geographies overlapping

and in to QX win out price to service are that Final I going capabilities and see in the on more QX still we Mile. as think well both have and -- and us continue as that in to play it's we'll we position runway

J. Bruce Chan

And Okay. I comment. How far more runway Appreciate you through much how is follow integration think are process, about you you When that go? just up that. if halfway? about are to on could that there

Brian D. Alexander

I But that continue new a and little the more would going growth into cost in efficiencies. we're as to continued see stretch there. than ways stride the we're continue halfway on pipeline say to our XXXX we the on cross-selling, well

Operator

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

Bascome Majors

for when potential as to that the a on is season, that the your state about deeper you look what year surcharges play the the business? some can better XQ And we in of we get feeling drive the As know how are lift peak for of the will calendar? you decent into

Phillip Yeager

this Bascome, Yes. is Phil.

are our think that customers demand positive varied say to others would their there's will and that we're We've see are demand conversations strong with I inflection now. similar. and saying kind going right remain of nice sequential a very very peak. got around a pretty a I lot are

are take mixed, little there. So a signs customer demand I seeing but step good I discussions continue to be a back, say, would some see bit in as strong. that import you're to positive

You East have the Coast labor disruption.

to points and that to intermodal opportunities. transloading the more of diversions domestic West probably All Coast,

seeing it a whether to weeks going a we're tell. It's signs to points robust little be, think in and to I peak, will early the I that's few there next So how the we'll would say that be surcharge revenue. know here.

least August a I September, this We're and little from we're the think I positive from of macro seasonality October, some to anticipating a signs. and that customer tell But bumps. early at point, Day tell but kind a have after typical at see would around a seeing of end the likely clear we'll really conversation, you pretty picture. Labor

Bascome Majors

and in to lift price-driven get of we need we're spring, in you think what Is the just drive indicators portfolio the year, thereof that the or more market to that And in get And it levers next are just happening it what price meaningfully? truckload lack to to profit ultimately your peak confident more see what's into or as the get when you ability are we that a is season? intermodal out up situation we will today? conditions

Phillip Yeager

Sure.

a or it's little call. to think I give XXXX a early guide

for hopeful certainly a inflection. we're positive think I

velocity in We're I into bid We've peak seeing sequentially. more would think certainly not contract volatility pretty done get seeing like help. capacity well are really attrition, to it flat spot demand there. pricing strong what I remained where our seeing we're the there's network drive We're has more and a utilized. more we deterioration and season right the seeing improve. in market any now

sign. So that's always a good

demand we'll exit. around we're customers our to that are see the place. think I to same and our with But to time, to going sure network So per constantly and improve having conversations margin making into capacity day, getting we're and would clip, demand could positive around shifts load need have that We assessing in fundamentals continue maximizing seeing at at continue and volumes our the be constantly But and well pricing trends might up XXXX. their more that additional to needs we're do network challenges. hopefully, for and offset what and currently that our or that frame the a we a continue see rapid

Brian D. Alexander

Yes, and add, into to brokerage I'd really give XXXX. market that X on willing any guidance looking points we of get there are to certainly to we're are our X pricing recovery before the just like model data are

longer upturn we in eventual on growth position that already we're as year market cost how to a ourselves able that and do the we'll for seen. both we volume efficiencies as focusing we'll the see that and well well But be believe make determination service progresses, there. the we've as So

Bascome Majors

your And as versus pricing you container power business? year, how the balance you on next strategy do think into utilization about existing

Phillip Yeager

Yes. This Phil. is

improvement improvements this the year from year-over-year getting and quarter We this sequential XX% utilization. year are X% in to a saw to a improvement. We last

volume for are getting what for out room We larger better. still have right have fleet on than us. we the in is earnings now. Pricing lever to a So power run far we just

see certainly And so. we will do rates, raise begin to opportunity so to if the we

to to take things us I we're right rates be the doing up. think to position able

be that. participate give for power, in velocity As into right change and back that move think looking conditions we network, more the right we us that's certainly to now. And we'll the market get pricing as

Operator

question UBS. from of Wadewitz comes next Our Thomas

Thomas Wadewitz

on could in coming to that on I volume thoughts other pretty you in of the that mix of some offer can I growth some that Is directionally looks know got like July? offer volume changing what some perspective mix heavy Intermodal, in So East. on if see July. you've in don't on as if the wanted you contracts

Phillip Yeager

Yes. Phil. similar. pretty This is you it's I tell would

a the to momentum East. lot see of in continue We

in East that Now through volumes market the a we portion the the Coast That's here. is entire are overlapping been and third continues the as point quarter But part will in Western lower on the comparable, our continue up downturn West really that Transcon in basis. improvement of remainder at well hold but network sequential year. we're that this carry time, a majority point the But well. anticipating the see Local in return of network. to to we in the in to a really improvement strong of will percentage continuing as through really

Thomas Wadewitz

against avoid this a truck that price next Okay. is win? primarily to time try it. volume more freight volume winning really soft back give and East and You've then keep Yes. intermodal backdrop. how it done I stickiness price next about do you of up? wondering from the that that nice the around strong think make business is when volumes you think up that you and the share do And -- I But players. the as don't how about if to know keep from job you you of then how or your you a year other on pretty money presumably, about think do you year? some ability guess, want you into go to to And But ability it I'm

Phillip Yeager

are We has this the again. to examples giving we service truck, that do business Phil we winning. because that the it specific that from to volume come where convert great know truck. of highlights There we're able majority where really Sure, think as that back we're we're of that lost Dan, is many and

I then that service Our at position that in of right right think And a And tenure XX% think gives in intermodal in point truckload in I very differential lot of Southern because we're haul, contract time. rates that stickiness seen about I versus best Hub. a that which is now that we're in creates but now, I with one, cost of the two, the product. the I've business, because seeing more price product is my that versus Orcel good length retain think think a to at service this differential,

derisk at are also this just sources customers looking capacity Our to their point.

I is concern service market market-tested one. people to watch think there in. high-level the performing shift less be to that capacity beginning that if at a far to is you're you're want And likely and

Brian D. Alexander

Tom, Brian. I'll just this add to that, is too,

I think in into the become retaining which comments sticky. and to services, allows them of we're also other our cross-selling customers their more volume, that

trans of has to I as that's that volume. part And well network, often network, big big offerings diversified too, offering deploy we've with managed into part final how we're been going seen bring also solutions. our then them LTL so to warehousing And the position mode as brokerage transactional a mile that our ability grow, that volume, our forward and a that, their and think we're inventory, that them throughout of be inventory retaining cost

Operator

Our the Kuhn question from of Company. Benchmark comes next Christopher

Christopher Kuhn

We heard if earlier know are today you guys I transloading don't about some activity. seeing increasing that.

if you a Just have there. wonder comment

Phillip Yeager

Yes. It's robust season, that peak This tell is but Phil. seeing that. I that. say we to into early a would leading little certainly we be in seeing could are are how

outbound our X% even California volumes quarter, the were year-over-year. During up Southern

of of a repositioning in drive entire for volume. cost we year-over-year, improvement. and actually that X% But a quite sequential reduces inbound some Our RFPs is Coast offset the lot costs. is seeing lot are good well West a really which We've us our demand of up also done

We're sign and we'll volume. transload incremental certainly more say that seeing as are develops. we so of And a peak, that, a strong have to hopeful that's

Christopher Kuhn

Do Mile Final need areas you fully about? acquisition And any the looking should going be front, before the first the integrate to forward? thinking there be also that on else? somewhere sort looking acquisition you'd frame of What's we at time

Phillip Yeager

this Yes, again. Phil is

synergy work our there. a We've on our lot we've of done good the capture. the really nice through and job really integration think systems integrating of majority platform. We're on I done a vast

go opportunity feel now we do are good that those come have we'd especially and we're obviously, offerings. service we the go this the we seeing opportunities that And and It's to And to So service execute businesses have performed We downturn. financial acquisition hopeful scale have that think find fit. how the year. and through out market, offerings. have of something we to differentiation right right right well we exploring set the acquisitions. this complete And if now, about certainly an about flexibility we to more more to we out be add and do

Kevin Beth

Kevin. is for come. is acquisitions. upon balance I falling sheet going just to this Chris, to The ready was say Yes. that certainly

So leverage out we're the here deal lower much get we'll able use is, of cash our be to and the we we've that range. and have, than hopefully, ratio where a the some street, pounding been it being

via acquisition. So we'd like to the work put that to cash

Operator

next of TD comes question Our from Elliot Alper Cowen.

Elliot Alper

guidance. All Jason Maybe back right. Eliot the to coming for This is Seidl. on

in that we pull-forward So of the in dollar half the should peak. can year. year, in a cadence you back cadence half earnings you discussion about earnings them see? earnings been frame if if the factor a of any back midpoint, to the we if culture you're take seeing lot all. of And the of Curious help There's the

Phillip Yeager

larger think half we half digits the second last going forward. be because expecting unsure quarters, and growth up and Yes. the we're will that the revenue, guidance that's that is But seasonality comes the well as That's the Thank half little I to are not just benefiting larger be We're east and pulled Certainly, the a logistics intermodal year. you little are first we're that giving of giving driven the question. be a individual we for were when from as as year. to experiencing. by than it to than well volume mid-single bit

the side, expecting Certainly, On little are step OI strong. up. we're a logistics

on, mentioned, cost expect increase that Brian As logistics some we on the a side, we're cutouts OI me. nice and working we have excuse

cost and lag be with to the rail the of price realized down margins expect from based as well we Intermodal, as the benefits timing implemented assumptions modestly our volume. the timing higher the For volume adjustments now on of on

Elliot Alper

Is into? up Great. Or we Mexico Okay. in business said grow size I guys? And could about you earnings of it meaningful to contributor XX% should for this in quarter. the you or a were then what think believe this how the volumes

Phillip Yeager

I are tell we it's for are think on significantly. both that very But opportunities focused Phil, with customers We're not aligned say consumer a customers, very clients, I are significant would We there. is retail growth Union something driver on be automotive there of This what partner, there would our driving And investing our earnings. meaningful Yes. currently is their vendors would and growth. you products. our Pacific

and that for something say more driver important not would one becoming of a business of growth we huge now, foreseeable and right the another, but us it's So intermodal more for is a believe way be or driver our will future. we

Operator

Our of question comes next Daniel Imbro from Stephens.

Daniel Imbro

So the dedicated I want to side. on start

some you what you color some was then mentioned and but into second softer Curious quarter? business, you were headwind were profitability the those or quantifying the spring they could provide think for mean profitability just a I in if quantifying to investments won surge. I invested service

Brian D. Alexander

a to the surge was see improvement sure. and was good new volumes. see seasonal wins that then for our come spring Yes, of retail some in we It It really clients. online have some

then demand, out than that's capacity, parties the the and sure make which option we our a what challenge to That's go margin hiring an their that obviously us think own that to expected. and ramping to deterioration. providing to third were service we with they forced service was high-service the levels I higher-cost led business support up increase were and saw sensitivity in them

see smaller of as dedicated a the not obviously, we headwind point XXX portion as forward. seeing is the but We don't in ITS going that Dedicated was large one anticipate certainly intermodal, basis ahead. that segment, mid-single a quarter, don't it it Within probably impact. business, the was but

Daniel Imbro

it. Got

much the cost step-down margins lower you're And so about goes Any step that to will drag margin ITS quantify intermodal for back the margins? that thinking It's as ITS just down. how of the we step way kind in down think that help need headwind about half, to away.

Brian D. Alexander

just rest think to to that I we've the of difficult a material, stepped-up, a for be achieve not we about little talked in it's year. and would Yes, more think calls, previous the going little

Phillip Yeager

Yes.

we reductions. rail think, decline slight some volume where that we've lag We've got nice past, wins QX. that's the being I realized, in really I QX think are highlighted, but be quarter, it's right? the would on. the QX And volume that in have once we realization effect the new then is have from price coming And likely plus in from on those we think a step-up a QX,

Daniel Imbro

one then And maybe us. Great. for last

brokers brokerage mentioned some July. You were other increase revenue sequentially. about flowing trends in should logistics There talking

you see part Just the half curious we year. as improving move the back of to of which logistics

Brian D. Alexander

that take Yes, Sure. is I'll Brian. one. This

we've trans as in I business logistics. Phil think wins integrated that some well opportunities we managed mile. our and really in, coming out saw new That we our that fast. called we includes that as contract final had of When -- within pipeline our

to those have and a And so the board lot we're on drive up revenue. excited of

maintaining margin volume X expansion we perspective, a brokerage consecutive where with a year-over-year, after we But see good didn't did points but quarter start and our from we that basis was in quarters XXX first is have what we're down up having about yield quarter-over-quarter had with July, XX% think growth, I brokerage growth, of really modestly. it one the got third of expansion. strong in volume we've volume

excited what space. that's So us the do in got we about can logistics what

Operator

of Ossenbeck question Our Brian next comes JPMorgan. from

Brian Ossenbeck

go you network it local the East. you've running was Maybe the up in Just I to rebalancing network of in if pretty rather, bit or -- share you're growth or done done you the bunch comps wanted call what can little network see when bit getting guess, how was affect coming with that for that but a a a the productivity. gains to that, a of significant re-appealing efficiency it that's terms on some on will there's And more elaborate move. and big

I turned just wanted that out. So

Phillip Yeager

very service strong. So have been levels

benefit So that us. to a is certainly

down As repositioning XX% we take about were year-over-year. his able costs prepared Brian into to remarks, in mentioned

day came per cost Our down about XX%.

One XX%. And XX%, while share about of the basis with we XX% good things that there is declined our of XXX productivity X% fewer up grade did to points drivers. being

drivers share back we a to and in think closer some back our to have that to get opportunities markets XX%. we capacity So fill few add some

well we're we as network-friendly We continue. into those within have that on, dedicated redeploy will cost opportunities freight. that come drayage think as it's And some to containment wins configurations. looking idle as But equipment our network these new

So as repositioning further. productivity design will benefit it on reduce our to the street and network our costs as continue well

Brian Ossenbeck

when think how the discount it you're to the able want to hear operating box XX% rail, I how market guess, a just it your day bit East, make you mentioned comes I loose is model. in truck I income accretive, to on but that the little And about with East earlier, more a -- per in

Phillip Yeager

Yes.

margin velocity. on the network focus to Eastern mentioned, continue is you day, We and higher as load per far in

and boxes quickly. very out triangle those to we're margin to takes the So moving them They're us. reposition in getting within moves, it

a really So of than does margins a day skinnier some per margin on still get higher little lower basis, a return have like that this drive it's investment environment it load those hauls per a nice in longer margins. where maybe an can day

is very about longer now. at of The you East the continue right to We're that. look we about that of place if great you to is a to look think differential contract-to-contract, think the length XX% we committed XX%, So haul. some grow

are is to buy-in customers the the So from continue our us providing once there. And again, road. really convert conversion the opportunities giving over we're which from good service, to

Brian Ossenbeck

last rail And then the on contracts. one one

it market is of in how half see I mentioned and Have guess, again tailwinds whole fourth year? really And guess, a the freight improve a not pick you experienced any the we bit into this 'XX. in broader up lot the You going -- think little in of it it's in half, XXXX, I lag the to and of here about quarter. first should the will first you the if sort stay where a

Phillip Yeager

Sure. Yes, Phil. is this

year with been us of on to contracts to first our So through benefit a quarterly have rail a it associated resetting has have There that. yes, been the a is the us some benefit lag through basis. continue half effect to a and

that lag inflect. price continue would effect see So we when

bit slower. it So you going down, little slower. as lag it price up, and move prices a move lag get is But and it going when does will

So there's and is far desire and opportunity margin And that move shift. expansion stronger driver returns with see market of price once this again stronger comes a volume. pricing know the we to to our a fundamentals. that profitability Goes

that to so certainly hoping And we're see to come opportunity fruition, too.

Operator

David Zazula Barclays. from next of Our comes question

David Zazula

like a revenue maybe move? brokerage to with the about could I ask and them XX-XX. in environment down loads losses a see respect different Was a that spot maybe you tactical available bit If year? wondering turn put strategic you're that contracted Did specifically come later contractual that keeping little you the were might expectation am side, the potentially some back the in with

Brian Ossenbeck

well. decisions. that's and volume take Yes. the it. in more you're Sure, basis we bit revenue Dave. make on our perspective some QX, little along decision What was through yield that lines. is But where This and I'll had we're and the contract. yes, of from spot, And I carry XXX a quarter-over-quarter, to on is some towards going we as that But than it the think one. about needed that's we're where did decline and see that we're Brian. seeing the right that point improvement seeing weighted XX%, Volume-wise, we a thinking it's we're less improve XX-XX way it's where

where buy continue I the cross-selling we technology transportation. And per more out the called that member. we're we're methodical we've going expand that space. to initiatives. I how our purchase approach our efficiency this to with roll our a those, Lowe's overall, out And on And providing leveraging we down spend diversified face about how as for had customers. modes and being service our in team in continue at, the we be very think see technology product. brokerage, we're superior We're to headwinds. we pleased We're We're to progress we're providing

David Zazula

just on great with If the how had is business with It's ask coming? I Dedicated. the retention to in customers you helpful. half? color And Very the your hear wins on could the back conversations in how coming here those existing customers, new

Phillip Yeager

Yes.

RFPs in some I that incumbency, defend certainly We've has very had we've retention been very but nice job had our to done we've and a strong. So participate there. think

looking fleet that their a of to renew Most churn. they sensitivity contract much of want high to we portions exploring business. moving service and are seen haven't grade, don't way, are it's many to high though customers disruption customers Some one sensitivity very -- service our contract so

well. our And with growing strong. very have right the customers us that, levels gives to contractual and to the that the frameworks keep right been and as so think yes, opportunity continue retention we best We want

David Zazula

I just on number just the or color release. in. combined if squeeze in you the then, one And nondriver Kevin, the headcount number? sequential I have could the legacy headcount Do a quick see

Kevin Beth

Yes.

mentioned, So down year-over-year. as it X% I was

the for the of headcount number So the the legacy was end XX.X% at that, quarter.

David Zazula

of add And a just couple of on to that. on for hundred the top acquisition

Kevin Beth

correct. be that Yes, would

Phillip Yeager

a on And just was basis, we XX% headcount on in I we've seen X% our XXXX. down highlight which a I side. actually decline year-over-year said would but peak, the know from

and deployment job of for workflow. opportunities finding I team think has great the in a through done efficiency technology changes

efficiency how focused very is and here can everybody we So on more. do

Operator

next of Our Shanker Stanley. Morgan from question comes Ravi

Ravi Shanker

a in I that up to take operators you similar if shift the think heard cycle guys from seeing broker asset-based of peers what side Wondering shippers. to couple something in brokerage or you're shippers seeing kind from your approach asset-light somewhat business? are a of kind the the of of we've might

Brian D. Alexander

Yes, sure. take Brian. that one. Ravi, this I'll Yes, is

seen seen seen we've too. shippers Phil what too, in in and as have the his But comments, market, have volatility and spot out called a think that I well. more we it lot our

them We contract. shift drive a seeing are more towards of

to secure pricing. seen pricing and I bottom of more they've the want contract with they the think instability spot

towards We providers. more that asset move haven't seen

the the like they table. non-asset the think piece bring I to can that flexibility

our offer volume or do that's that work lock to and dedicated offer them solution much towards when types price in solutions. of I those on so. want we to shift And really and they into sensitive with pricing more want stickier customers to do intermodal LTL, able or a we're they're less we they find where think or move contract of unique mode we longer-term where

Phillip Yeager

activity. opportunities many as opportunities And think, surge. think highlight, way to I flexibility been with think the we highlight in footprint just have well. it's ability positive also spot that project important Yes. the I to shift generally contract more given that see just now, when the a as I which customers we market very would seeing you you Those still I brokers, and are come would a that more right is toward gives our

performance, get So out shift those as it's contracts, right sure we playing that margin think we volume well. we in our and strategy in and see making continue performance been market as hope of opportunities locking the certainly is our to one, with we see

Ravi Shanker

And those there? or saw as just I maybe customer new some your that Understood. prepared anything unexpected remarks you normal there expenses support you a That one-off makes sense. increased in follow-up, think to mentioned guys launch Or wins. Are had costs? was

Phillip Yeager

we driver was high to was in that line given we start-up and the demand bring little capacity, we on That mostly short we then need to time related to outside were to and that ramp It Yes. we -- support third-party capacity the needed had. costs a service had initially, Dedicated.

in that really it's investment business. so And an

hopefully our in helps retention so, those And growth customers. with and further opportunities in view,

Operator

Evercore Chappell ISI. next Our comes of question Jon from

Jonathan Chappell

follow-ups. ones, quick X So

beating was of range on quarter some the a glide Or about similar shape to the a bush it the with the kind the that mean XQ? XQ kind fourth better sequential $X.XX is most of tail commentary does of of the more XQ little around starting on take from half. likely think that being midpoint up a this new peak, and looks there in of point? the second very I guidance of we bit If the

Phillip Yeager

say think is Yes. a up your most appropriate, I get little slowly but slide there. comment I second the that would surely

the that we the more the as that volume forward expectation. that think see on starts, season I that way, seasonality whether peak or a bring But either to. we're would we're we expecting be the little pulls as used natural

Jonathan Chappell

just of on this inflection Phil shorter to then baked volume quicker? recession the a of as first lot in the of per gone whereas of on or now bid spot, Brian, half been see you if the duration you've through that able you can any maybe X see take it contracts, And been next is load has kind an Or have long year. kind in you tier, in duration Okay. season the revenue of just through

So of really that. second half, price XX% would any inflection kind the in of be

Phillip Yeager

say I to now. network. This that would be Yes. right doing we're constantly assessing We're Phil. our going is

And always basis but open want right, have fits so or business, discussing with also customers. with we're our our to we dialogue network contractual ongoing an even an not might what needs, with on customers because

sure constant evolution network, day market making view, maximizing that our our low in we're on it's So that conditions. margin for based a of

certainly also so honor contracts dialogue and the our that market keep want dialogue And to our agreements, clients. with as and open we'll shifts have but

Operator

of from Our Scott Group Wolfe last question comes Research.

Scott Group

Thanks for the follow-up.

wondering, just any So in East the West or same? or is with different it pricing basically this dynamic lag, the kind of rail the I'm the

Phillip Yeager

Similar I wouldn't I similar very Yes. go I mean say would into depth framework. much framework. around that.

Scott Group

margins overshot, get to our wondering our right, some in higher? balance get up order just mean in I And seen need your volume, model midway I'm volumes idea do price that time. a local volume a we XX%, bid approach Okay. Phil, made than important to through and we've the some we lease better over have kind kind more get lot of season, a to of with of these is asking I'm the give you price long which a up to is comment, period

Phillip Yeager

so. think don't I

I quarter know fourth of potential that to one, the quarter, it sequentially. levels. kind in flat highlighted think anticipating challenge I back we highlighting margins we're be will third similar But sequentially. we're were some there

for velocity say the improving I the We're reducing we're costs. market upturn. network. So in would We're positioning

about we're this going constantly there's point, better. this right we've I wouldn't we executed can like But good to at point, So strategy. at obviously, We feel required. deployed. say And strategy we've the with conditions, assessing that's do any be market we feel pivot the

Operator

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

Phillip Yeager

I this Thank have Brian available good thank us And you, Well, and any for joining evening. and you evening. Great. for are Kevin, as always, a questions.

Operator

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

may You disconnect. now

Hub (HUBG) 1 Aug 242024 Q2 Earnings call transcript