Hub Group, Inc.

Hello and welcome to the Hub Group fourth quarter 2021 earnings conference call. Dave Yeager, Hub's CEO, Phil Yeager, Hub's President and Chief Operating Officer, and Jeff DiMartino, Hub's CFO, are joining me on the call. At this time, all participants are in a listen-only mode. A brief question and answer session will follow the formal presentation. In order for everyone to have an opportunity to participate, please limit your inquiries to one primary and one follow-up question. 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 they could cause actual results to differ materially from these projected in these forward-looking statements. As a reminder, this conference is being recorded. It is now my pleasure to turn the call over to your host, Dave Yeager. You may now begin.

Good afternoon, and thank you for participating in Hub Group's fourth quarter earnings call. Joining me today are Phil Yeager, Hub's President and Chief Operating Officer, and Jeff DiMartino, Hub's Chief Financial Officer. Fifty years ago, my parents founded Hub Group. On this, the 50th anniversary, we're reporting record revenue and net income for the fourth quarter and for the full year. Strong freight demand coupled with the attractive value proposition of our services has led to a record $4.2 billion in revenue and EPS of $2.48 for the quarter and $5.06 for the full year. We remain focused on providing value-added services by integrating our business with the needs of our customers. We will continue to diversify our non-asset based services while focusing our capital investments on technology and growth in the intermodal business. From a macro perspective, we expect positive economic conditions will continue to benefit our customers. We are very fortunate to work with customers who have been winners in today's economy. The macro outlook remains favorable with 4% GDP, strong retail sales, a declining unemployment rate, and strengthened imports. In addition, retail inventory to sales continues to be at historically low levels, and our customers continue to tell us that their shelves need to be restocked. On the supply side, the outlook for truckload capacity continues to be constrained due to a shortage of drivers. backlog of imports, issues with truck production, rising insurance expenses, and driver regulatory changes. We believe that 2022 will be similar to 2021 in as much as our prices will increase faster than our costs as the economy continues to experience inflationary pressure. With that, I'll turn the call over to Phil to review our business lines.

Thank you, Dave. I wanted to start by thanking all of our team members across North America for all their hard work and commitment to our customers, which resulted in record financial performance and several awards for our service and sustainability efforts this year. I'll now discuss our service line performance for the quarter. Intermodal revenue increased 25% in the quarter, despite a 9% volume decline after 11% growth last year. Transcon volume was flat, while Local Wealth declined 10% and Local Eats declined 14%. Gross margin as a percentage of sales improved 960 basis points year-over-year, driven by improved yield management and network balance, which more than offset rising transportation costs. Network fluidity declined in the quarter, both sequentially and year-over-year, as rail transit and street dwell remain elevated. We are continuing to focus on improving our productivity while collaborating with our customers and rail partners to increase utilization of our latent capacity. Looking ahead, we anticipate a return to stronger service as investments from Hub Group, our rail partners, and customers drive greater throughput in our network. Demand remains strong, and we plan to invest to support our customers by expanding our intermodal fleet by 6,550 units this year while continuing to grow our driver fleet. Dedicated revenue declined 8% in the quarter despite improvement in revenue per truck per day and reduced third-party usage, which led to a 30 basis point improvement in gross margin as a percentage of sales year over year. We have improved our service offering and operational discipline and have a great pipeline of strong return opportunities and onboardings, which we believe will lead to growth this year. Logistics revenue increased 13% year-over-year in the fourth quarter, driven by strength in final mile and consolidation, which was offset by lost accounts from the prior year in our managed transportation offering. Gross margin as a percentage of sales increased 390 basis points year-over-year as new business onboardings and yield management improvements in managed transportation and final mile offset warehousing and transportation cost increases in consolidation. We continue to have extremely strong demand for our services given the dislocations in the global supply chain and anticipate continued growth this year. Brokerage revenue increased 112% year-over-year on 48% higher volume due to the acquisition of Chop Tank as well as organic growth in our full truckload and LTL solutions. Gross margin as a percentage of sales declined 290 basis points year-over-year as we executed higher revenue per unit spot shipments which comprise 51% of our volume in the quarter. The acquisition of Choptank has exceeded our expectations. We are winning with our customers and on track with our integration plan. We're off to another strong start this year and see ample opportunity to leverage our expanded network, strengthen systems, and sales force to drive growth through cross-selling. With that, I will hand it over to Jeff to discuss our financial performance. Thank you, Phil.