J.B. Hunt Transport Services, Inc.

Q2 2021 Earnings Conference Call


spk_0: give me and thank you for standing by welcome to gb behind twenty two and a one second quarter earnings conference call at this claim all participants are in the listen only moon after to speakers presentation there will be a question and answer session to ask a question during the session you will need the press star one on the telephone or thatch don't do please be advised that to these conferences being recorded if you require any for jersey since response towards the room i would they'll like to have a conference over to your first speaker to the news or bad zeljko think you please go ahead sir
spk_1: good afternoon
spk_2: the boy introduce the speakers i would like to take some time to provide some disclosures regarding forward looking statements this comment came forward looking statements within the meaning of the private securities litigation of them act of my money by law judges expects it is a intends estimates are similar expressions are tended to identify these for looking statements these statements are based on jp hands on plans and expectations and evolve risk and uncertainty that could cause be directive these and results to be materially different from those with set forth in the forward looking statements for more information regarding risk factors please refer to jb hunt annual report on i'm ten k and other reports and filings with the securities and exchange commission now i would like to introduce speakers on today's call this afternoon i'm joined by our ceo and president john roberts or see a bow executive vice president finance john cool though shelley since then chief commercial officer and executive vice president of people in human resources near cards are ceo and president of contract services brad hicks president of highway services and there and field president of intermodal at this time i would like the turn the call to our ceo and president mister john roberts for some opening comments john
spk_3: thanks bread and we open our on a par for the second quarter twenty twenty one it make sense to consider our comparison data with recognition from where we all wore this time last year with the onset of a cobra virus that said we will continue our discussion on our views of our progress across the enterprise a general term we believe it or current position is momentum we noted for you dare last call a weird meaningfully increased prefer women order for containers in an immoral and trailers for the jb hundred sixty bucks program for the quarter regain confidence in the decision and are working with our vendors to accommodate delivery of this equipment throughout the bound for the year with a cane focus on being able to meet the needs of our customers as we approach the traditional peak season this is a fluid situation and we're deploying from new and creative ideas for ongoing equipment delivery kelly will add color for us on how we plan to work with our customers heading into the second half of twenty twenty one and twenty twenty two a high level of of you provide visibility for us to see that the company increased revenues operating income and earnings per share in total and in all segments compared to the second quarter of twenty twenty further review shows that intermodal dedicated and truckload all increase the revenue and operating income over to one of the issue i cs and about a mile increased revenue but failed to increase operating income and looking sequentially and adjusting follow mild services for the game we called out and i really as our segment later would discuss for you the segments are all performing well and present solid evidence that support our strategy to this point and what i believed to be strong momentum as we move forward from here given the work we have completed with our customers current demand friends or close and sales pipelines coupled with the data revealing some of the lowest him and tory levels we have seen give us confidence in this moment i'm continuing one last point i'd like to highlight of the progress the company has made an increasing our transparency and focus on our overall sustainability efforts under the leadership of our chief sustainability officer crack harper we have recently published or for sustainability when accordance with the gr i said the and p the if the framework which is easily access the our website i think it's also worth noting that of the last year abroad or sustainability disclosure effort have been recognized buff way cdp formally the carbon disclosure project sustain a linux and ego bodies with meaningful improvement in i went across these platforms crack call that twenty five you need people or entirely and many more who will help with this improvement as noted this is a journey and not just for a few but far tower invasion are now protocol over to our oh john too low for his comments john
spk_4: like a job and good afternoon everyone like to start with providing a couple comments on our second quarter just from a consolidated perspective the john noted we're pleased with the revenue or bringing come and he ps growth for the quarter i would notable achievements and are i was services revenue as well i see us and jv t there were certainly over prior quarter but more importantly they're carrying that momentum from their first quarter results in that the second
spk_2: current quarter was significantly impacted by labour shortages putting a strain on our ability to serve to service demand and effectively use our assets
spk_4: cost pressures in the quarter of primarily related to hire purchase transportation costs salaries and wages and other costs across or networks and operations oh you're hoping for improvement the still remains an area of concern we ended the quarter with approximately five hundred and seventy million in cash
spk_2: oh on our first quarter call we communicated are increase in equipment orders and guided our cat back to be approximately one point two five billion for twenty twenty one
spk_4: while all orders are still in place we anticipate some of these to push the twenty twenty two because of congestion on the waterways and also at the ports we're committed to obtaining capacity to serve our customers but our view today is that let capital expenditures for twenty twenty one will be closer to one point one five billion because of these delays and other challenges to equipment needs we resume stock buybacks and a more regular basis in the second quarter and have acquired approximately eighty million
spk_2: rounding out close to eighty five million year to date
spk_4: we'll continue to balance or can spend on equipment dividends and buybacks so the remainder of the year as opportunities and fold
spk_2: and trend closer to our target one times the the dial leverage mate metric on an hour basis when the environment begins to normalize
spk_4: as i know that segment comparisons the prior year difficult because of the pandemic but i would like to point out and item for consideration on the year over year comparisons for salaries and wages cover because in the second quarter decreased nearly ten million from the prior quarter which is primarily due to a reduction in pity over employees needing to quarantine however as we called out in the release this reduction was meaningfully offset by increases across all pay items about drivers and non driver employees
spk_2: in of the reopening on salaries and wages is widespread and we see challenges in this area continuing because of the importance of attracting and retaining or people
spk_4: that concludes my remarks and i now turn it over to shelley
spk_5: thank you john and good afternoon my commercial a day or focus on general all market conditions are expectations and plan for our customers peak season capacity names as well an update on the progress we're making as an organization with our jp hunt three sixty multimodal digital fright platform as we discussed last quarter we and twenty twenty one with cautious optimism about the opportunity the market could present to as during the year now the figure is just halfway over clearly the opportunity to bountiful but so too are the challenges demand for capacity solutions across a scroll of services remains elevated levels capacity across the supply chain or mean time and challenges around bullets for the and fluidity are still very present and likely to persist at least to the end of the year as an organization we are committed to working with our customers to address the challenges together and have plans a place to bad even greater as that as we approach pete and that i'll speak to next the result of the current barking had this and that is that the man for our truck contain nurse and trailers far outside exceeds our capacity to serve thankfully our ability to provide value to our customers is no longer limited by our physical assets as the power of our people and our platform allow that just source the most efficient capacity for and on behalf of our customers this dynamic as evidence across all of our business segments that we will be discussing during are prepared remarks as we approach bit season and peak season we are taking a collaborative approach with our customers to ensure that we have an actual plan to provide the capacity solutions to meet their needs one of our biggest challenges this year which got even worse during the second quarter was the detention of are trailing equipment by customers across both are intermodal and truck segment we are addressing these issues with our customers through direct conversations and acid soil charges and in some instances we are restricting capacity to certain customer location to be clear we did not employment or augment new apple for programs with the intent of increasing the cost of our customers are intent was to provide the appropriate incentive to our customers to encourage the improvements needed to be able to turn or equipment efficiently this improvement will afford a to deliver more value to our customers by being able to provide additional capacity to wrap up my comments on our plan for peak season we remain very confident in our ability to execute on the plans we're developing with their customers our capacity and ability to service or customers will be determined by our performance around three key item first the on boarding of equipment orders we discussed last quarter the specifically the containers for jb i am trailers for three sixty bucks second improvements in real fluidity am velocity and third improvements in customer detention or dwelt on progress on these friends will go a long way and meeting and exceeding customer expectations shifting gears your jb and three sixty platform we continued record breaking trends around user activity engagement and growth across both are terrier and shipper platform this is evidenced by our organization serving the largest number of unique customers in our history during the quarter a tall task considering the supplementation and restrictions that typically this know market like we're experiencing currently we believe we are continuing to build momentum as both carriers and shippers see the value and optimizing and transacting in our system in real time in an improving frictionless digital process going forward our focus remains on improving access visibility and transparency or process supply chain which we believe set this up to achieve our mission statement to create the most efficient transportation network in north america in closing as a look across or organization i remain extremely proud and excited for all the opportunities we have to solve our customers me i believe we are in a unique position to leverage or people asset technology and maybe most important our experience in bringing those elements together i like to think of that as or scroll and the power of the jb have scroll as strong as customers continued to lean and to us to help them sold for their name finally as previously disclosed i've been given the responsibility of the role of bp of people in human resources last quarter a discuss how encouraged our was about the progress we're making on enhancing are includes the culture and our believe that our organization could lead in this area as an update a want to share that we have hired or first vice president of inclusion during the quarter we are excited about our journey ahead and the incredible progress we can make in this area i'd now like the turn it over to nick
spk_2: would you showing good afternoon everyone on board to spend my time during a brief operational update focused on the current brother market and some other processes we're reviewing in addition to providing from greater detail on the performative for families of these years and follow mile services in the core of thought was some good both from of racial perspective focus on the current state of the driver market in addition to our code review some of our processes consistent with my all moved from was ordered the problem more remains astronomers love the them a thirty seven year career a you hear from dern comments in a few moments are we believe the availability of labor is having a meaningful impact the grasp almost a is faltering ranging from the boards for royal promo operations warehouse operations and certainly over the road robber market or we continually we are in a relatively solid position with some of the best paying and highest quality jobs in the market with over ninety percent of our jobs being either local or regional in our dedicated intermodal dray truck and a mile operations the truth is we are not immune to the industry drawbridge challenges we continue to make adjustments arcs be inflationary cause pressured with robber wages and benefits in addition to experiencing elevated robber hiring and recruiting cost across all businesses to close up i'm operational comments or want to i want to provide a brief update that am leading our efforts to review each of our vendors and supplier to make sure we are properly aligned growth or operational and sustainability goals while also ensuring we are receiving the best value for entire organization now let me ship my comments to focus on performance of animal services follow mile was able to continue his streak of strong performance revenue growth of fifty two percent in the quarter operating income was two point seven million but as disclosed in our press release it did benefit from freeport to two million net settlement of claims in the order the man for our services across final mile remain strong particular across are big and bulky home delivery and fulfillment services that said availability of inventory particular across the applied some furniture categories is temporary what would otherwise be even stronger demand for our services going forward we're going to remain encouraged by their own boarding of new business as the year progress is a more importantly remain encouraged about our problems both organic and inorganic growth opportunities over the long term as we continue to focus on the growth and scaling of the business we will remain committed to protecting and about testing in our service product and customer experience for and on behalf of our customers i'll close with some comments result in the theist are backlog and pipeline for new dedicated probably start ups is as strong as or company has ever seen by the end of june we will have added five hundred and fifty five drugs to the flee from the end of the prior quarter which is the third ice truck as we've had in any single quarter i am pleased that we are able to onboard not all a significant amount of new accounts but also a across a diverse group of industries all while continuing to perform within our newly established long term margin target range of twelve fourteen percent we saw seventeen percent growth and revenue good number five percent growth in our average fleet gap year over year in addition to productivity defined as revenue per truck per week which was supported by contractual annual process gliders and the decline of addled equipment from prior year levels additionally with regards productivity in many locations across our network we have been able to get additional funding to support the needed investment and driver wages in order to and maintain performance standards and maintain our competitive this in certain markets while we have strong momentum with our sales an operational efforts we think is important to recognize a driver and equipment by ability and addition to the ability of trained and experienced account managers is moderately governing our ability grow faster operating income with down five percent year over year as are wins in the prior year related to lower driver turn over travel and entertainment experience and lack of start ups have returned as anticipated and additional power personnel cost in the current quarter importantly we believe our investments to grow the business will help us gary momentum well into two thousand and twenty two and beyond to round out my the of comments we ended the second quarter selling approximately one thousand one hundred and sixty five trucks year to date given our prior gotten to sell eight hundred two thousand for the year i believe it's safe for you to assume that we will exceed our targets for the full year that concludes my remarks or turn it over
spk_6: brad hicks
spk_7: like a dick
spk_8: and good afternoon
spk_9: my comments today will focus on the performance of our highway services highway service business during the core which includes both and to pass me solutions five years and truck or jbt let me start off by saying how excited i am to see our team respond to the opportunities are cast was presented with to them they were both truck and trailing capacity solutions to of their needs these capacity solutions were unable bar more by boat or digital for a platform jt had to be shaky and complemented by a drop for the pools with three sixty bucks
spk_8: additionally he capacity solutions across highways and machines continues to provide value for our customers as evidenced by this most recent performance being the third quarter in a row in which both i cf and t delivered the strongest growth with an organization
spk_9: with continues to support our decisions to focus on investment in our people and technology which is driving further scale across the platform and nation i'll start with my canada and on trucks them revenue grew seventy percent to one hundred eighty four million dollars which is the highest revenue the segment has been deliver since the second quarter of two thousand lakes the income was fourteen million which was the highest second quarter level achieved by the segment since two thousand and seven our growth and performance continued it continues to be driven by our ability to provide capacity solutions with or without our physical trucking assets that with are trailing at our ability to say
spk_8: well for the most efficient way a should move by find the right carrier at the right time and at the right price is what continued his or to drive strong demand for three sixty bucks product more importantly our ability to access capacity quickly has allowed us to be a motel our customers yes
spk_2: as we have discussed in prior goals we continue to see the business shifting to a more asset light model and will remain focused on investing and scaling our service offering while staying focused on generating adequate returns on our best this will require a focus on balancing our growth with network efficiency as we scale in the future
spk_7: next on i see the segment deliver six hundred and eight million of revenue which broke our previous record set in the fourth quarter just last year
spk_9: revenue grew one hundred percent versus the prior year period stagnant volumes grew twenty percent within the quarter was specifically truckload volume growth was the was up thirty percent
spk_8: market dynamics remain challenge to as right demand strengthen from already elevated levels while capacity remain constrained across the country
spk_9: the result of ways put seasonal pressure on net revenue margins which with consistent with our expectation
spk_2: we continue to see solid trends with our carrier and shipping gauge me on the three take the platform and remain encouraged by the productivity we are seeing with our people all of which is enabled by investments in both our people and technology
spk_9: we continue to see opportunities to invest in artery critical areas are people are technology and scale in the platform and remain committed to these invest in closing our performances court and i see at and jbt align with one of our kids objects which is to grow volume and gain market share by leveraging our platform and using data to help our customers make the best decisions and deliver value to their supply chains we do this by eliminating waste and the system and creating a frictionless way way to access vast amounts of capacity across a multinational digital freight lap one we remain excited about our opportunity to deliver our capacity solutions to our customers across our highway service businesses well into the future that concludes my comments i'll pass it over there thank you brad and good afternoon everyone listening to today's call my comments this afternoon or focus on intermodal performance during the quarter i will also provide some additional details on network operations including the on boarding of new containers and how how we are working to improve velocity and
spk_10: in turn capacity in our network
spk_9: born and on behalf of our customers with as we approach peak season the man for intermodal capacity remains robust in fact the man continues to significantly outpace are available capacity which remains constrained by rail performance and restrictions in addition to customer detention of are trailing equipment we continue to believe that the origin of these challenges center on the availability of labor for both the railroads particularly in their terminals and our customers in their warehouse operations volumes in the quarter increase six percent broken down by month as plus seventeen percent in april plus eight percent in may and minus six percent in jail as we discussed a year ago june twenty twenty was it particularly strong month for us as we had equipment properly position for the surgeon now in demand as the activity across the supply chain restarted never philosophy continues to be well below our expectations as evidenced by or box turns which were approximately one point six five turns per month during the quarter we are working very closely with a real providers and customers to improve our capacity across the network back focusing on reducing the the tension of equipment and helping rl providers reduce congestion across their terminal infrastructure going forward the on boarding of our new equipment will also assist us in serving our customers capacity need particularly as we approach peak season
spk_10: on that front we began taking delivery of our new equipment in the last few weeks and have even more on the water as we speak we expect a steady flow of equipment into the west coast at this point name for it which is now likely to stretch into early two thousand twenty two
spk_9: at this time we are three the majority of repricing efforts or this latest is dead season and rates came in at the higher end of our earlier expectation which are original expectations were for high single to load double digit increases by the end of the quarter about seventy percent of the ball hume had current been cycle rates and we expect the remaining thirty percent of the business yet to reprice to implement in que three inflationary cost pressures continue to present themselves in the way of driver wages and recruitment costs in addition to the cost of equipment ownership particularly as utilization levels remain challenged by both the rail and customer activity previously discussed we believe we have put him place the right pricing structure and programs that protect aren't necessity to generate an adequate return on our it's significant investment in our people and our equipment even if box turns remain challenge due to advance outside of our control
spk_10: as we approach peak season it is clear that our customers continued want to lean in more capacity and we feel very confident in our ability to execute our plan customers value our intermodal service offering as it continues to be a very cost effective or tentative to track and he
spk_9: even more so now the to rapidly rising driver wages and fuel prices and also because of the environmental benefits of intermodal as it's carbon intensity a sixty percent lower than the truck alternative going forward we will continue to prioritize delivering value to our customers generating appropriate returns in our business reinvesting to meet their future capacity need a keeping us on a path toward long term sustainable growth that concludes my prepared comments
spk_2: hey meager just up if your mind this is brad a word to the to the audience will give you one question again like we did last quarter as an equal attorney there would you open a cough questions
spk_0: right and as a reminder to ask a question you will need to press taiwan i had telephone bill which i have question past the found a husky your first question comes from the line is alison boundary from private smith line is now open
spk_11: thanks i'm captain and i'm so i just wanted to ask about and remote all on a i imagine that the the customer detention or but that at that all time highs and an echo what are presumably you're charging astoria hotel hoping you can quantify that on this rock and a quarter or relative to yeah like like a you want are are sort of are a normalized right right
spk_12: you know ousted i adult
spk_13: we've been talking to our customer base about about the impact it's had on our capacity for really several several months and even into it to the fourth quarter of last year with really been highlighting this challenge
spk_14: i don't know that we earn
spk_4: ah had significant changes in in them at the revenue cycle during the quarter as as as we've we've always talked about that i think that when we've what we've been doing more recently with our customer base is is trying to highlight in incentivized faster unloading but that was probably too
spk_10: or the end of of the second quarter so beyond that up probably don't know how to highlight the impact of that during the second quarter
spk_11: okay a against them but i'm sort of getting out any do think that there were that a positive and benefit that ah that that your parents and cute you as a result of that fact that we shouldn't be model it and going forward
spk_10: dad is i just don't think we can break out our soil conversation as it relates to the the margin but and no i wouldn't say that there was anything material in the quarter light it to that
spk_0: okay thank you your next question comes from the line of rubbish anchor from morgan stanley now line is now and
spk_9: ah thanks i get up know he want i just i p s i can you help us understand the either the gross margin forward out your you got it on well they will gonna keep the other aren't gonna black there but ah a what person either book has been replaced ah and be gonna have a jimmy spot you don't collapse from here that nets are we looking at the current trajectory of gross margin for the back of the up next
spk_2: you're just the start nothing shelley might join with a comment or two but i we definitely anticipated that seasonal margin pressure we highlighted that in our cue one call and so are we were not surprised by the second quarter performance with respect to where we landed on and i think that a historically the second quarter is
spk_15: always that more pressured
spk_2: gross margin quarter that we experience so we would anticipate seeing lift as we move in the to thank you for away from that based on historical norms shelley down the developer yeah i'm a bit things in perspective are slightly behind and i see as from where we are and jbl what is implemented
spk_5: kb i have further along i think that's because that the volatility that's happening in the brokerage a market in general just under sixty percent has been implemented i would also say that a revenue per load changed inside i see us as a result of moving more business ah a near term to contract vs contract with carriers and so that business and a higher revenue per load did yield a lower gross margin percentage but are are gross margin dollars per load was still out there with a little bit apples and oranges compared to what we have historically dad is because the revenue promote a shame so
spk_16: dramatically
spk_0: i guess
spk_17: your next question comes from the line of chest and long from seasons your line is know thanks good afternoon i wanted to ask about your ability to ramp intermodal volumes sequentially in the second half shell he mentioned a few and a key drivers in the prepared remarks but is there any color you can give on the number of intermodal containers you expect to be delivered in the sec
spk_18: can have any thoughts around the sequential progression of box turned if we think about your capacity to grow beyond that five hundred thousand miles in the second quarter
spk_13: hey justin you know i i i think the key to this is certainly customer demand has been very very strong
spk_2: in the last he has been the the bottleneck
spk_4: you know we we we highlighted that we have new containers on the water today we have a strong confidence in our ability to receive between three and four thousand during the third quarter
spk_10: we also highlighted that we feel like of the twelve thousand and we announced at the at the first quarter earnings call some of those will certainly filtering into the to the early stages of twenty two the team is working every day to continue to receive more containers as we move into the fourth call
spk_4: order but for now we can like three to four thousand in in in two or three i think that on the velocity front you know we're we're working with customers to find ways to to free up the equipment faster that's certainly an ongoing effort and then the railroads you know the kids
spk_2: aries is getting faster velocity out of out of the rail system and and were aligned with all of our realm providers on their mission to improve their velocity and so that that is an expectation of ours during the quarter you know if you're asking for specifics we highlighted one point six five two
spk_17: turns in the second quarter we think that can improve somewhat to slightly in the third quarter but not yet ready to believe it's gonna be a real material impact at this
spk_0: okay great very helpful thank you there
spk_19: your next question comes from the line of and meet never thrown from by to killing zone think the much everyone staring other in about a question without without them updates from from the rails union pacific shut down here is banned movements to their global for terminal i think the and is also started the meter space on its own inner model trains and we through the end of this month can you just help but think about what the volume impact is a little bit similar to the last question in terms of what that had when this may be as you move from the second quarter third quarter and the you've been really helpful in the past about talking about maybe the margin progression expectations and and your been bang on in terms of sequential margin improvement at the prices
spk_2: and for their gets implemented you guys are shown good drop through and the intermodal on the agreement revenue growth of the sequentially of them of the pricing come through for that just be a continuation into the third quarter as that thirty percent gets replaced with the right expectation on margins answer those questions thank you very much i am as it is brad are often the first part of that i think they're and it him a really good job of giving lot of details on expectations for box turns in containers and clearly know where demand is i don't think we need to address even more in terms of expectations were volume i'll there and provide comments on the rail service and
spk_4: maybe the u n p stuff but i just wanted to get their point across a daring
spk_2: cheers so amid preceded the questions know the thing on that restrictions that you've heard from u m p's those are what we don't operate on union pacific but it's largely understood to be international only so there's not a lot of impact to us on domestic volumes in in bnsf in jb honor worked in really well together every day in an effort to expand our capacity and improve velocity and
spk_10: everything we can do to create fluidity at the terminals in order to help provide that we're doing that and working with their customers on scheduling were drain loads out of the terminals were doing a tremendous amount of work in order to improve fluidity so i you know when you're here and some of that
spk_2: restriction information sometimes it's more international focused than it is domestic we have
spk_13: some energy from that is that i think the international supply chain has been one of the more significant drags on productivity for the various rel terminals and certainly earth
spk_10: if if if they can be focused on
spk_2: eliminating some of the can just in from international in order to free up capacity for domestic we would certainly
spk_20: stand to have some benefit from that i'm not saying that's what they're doing bud certainly the announcement from you and p was focused on international only
spk_2: and then the margin the march and progress own the margin for you know i think we said the on the last call we we restated or long term margin target of tend to twelve percent we said we thought we would make
spk_19: some improvement as two thousand twenty one when on and as we implemented prices in and that continues to be true word were inside that range in and feel good moving forward that we will stay inside that range
spk_0: thank you very much
spk_21: the next question comes from the line as cop girl from wolf recent airline so hey thanks afternoon guys i know use sounds like you don't one another volume question but i have one cause i'm not so clear dude i mean i guess others as a directly did you think you can grow volumes year over year
spk_22: in the third quarter and then and i'm just a follow up on on the margins side as these as a soils and chickens and more and you get the full impact of pricing do you think that there's potential to get towards the upper end of that
spk_2: margin guidance towards the back for the year i've got a zombie brad again at me yet i think shelley they're prepared marks talked about you know volume will be influenced by three main factors rail fluidity the tension it because her location as well as the on boring our new containers and week and of those are out of our control we talk to you and their gave you specific guidance on what we be or containers will do in in the quarter so other than that it's going to be hard to to give you anything more specific and what we have so are just responded that part of the question and then to your second part on turn it over there
spk_21: who need a quick refresher on a par scott refreshes on the second part your question change i was just about as we get the full impact of the pricing and and the isis orioles do it is their potential to get to the upper end of that
spk_22: margin range and then maybe just to clarify the first part of that volume question that don't you mentioned june a year ago was it was a month for you add in the boxes in the right place was that the same scenario did you have the boxes in the right place
spk_13: and the third quarter last year i just don't really remember
spk_10: okay well i'll just sit on that real quick and then we'll we'll hopefully move on from the volume stuff so we depleted ours are stored containers in and at the during june of twenty twenty which largely created a lot of very fast fluidity for us because we had
spk_2: gone into storage during the the really weekend part of the year that the second quarter last year so during the third quarter demand was so strong know we didn't have a couldn't really position strongly so
spk_10: that was good it back to the need to really reposition the equipment which drove a lot of the year
spk_2: velocity challenges that that we certainly had a year ago you know on on the margin friday at its arranged because i'm a lot of factors in influence is that certainly can we achieve it you know it it really depends on some of the cost challenges and at this point there's no let up on
spk_13: challenges for recruiting and hiring and retaining drivers there's no let up on the cost to outsource capacity or need to secure capacity in order to dray loads about of the terminal so all of those costs challenges are real so we just gotta stick with in this say that is gonna be within the range than that
spk_23: think that's really all i can comment on the margin
spk_24: a time like
spk_5: that we are working and a very tactical level with our customers on a regular basis probably the most detailed plan that i have seen as work with our customers to try to avoid those charges were doing a lot on the front end to try to identify where the bottleneck star or and and is to move more volume would you
spk_11: have to have these three things come and mind that i we really even thought about it our our asses royals are not there for us to gain incremental or even more margin dollars to bottom line or as israel's are they are so that if we can't anticipate what's happening as those containers interest
spk_21: sixty bucks desert dwelling that we can be properly rewarded for that are sitting
spk_0: make sense thank you guys present it
spk_25: your next question comes from the line of queens whether weatherby from now line now made you question on t v as i could
spk_10: a little better sense of how the case acquisitions will go on the back half of year contract with how we should expect start cause the gonna rahm obviously was a bit of a heavy quarter this quarter
spk_4: that persist and three or four cure gpp celery little bit
spk_2: read
spk_26: well based on our pipeline we think that
spk_4: where are you so cute to was very strong we think you'd cute three will be strong as well and it's hard to tell on cue for ah we gotta make sure we get equipment we gotta make sure we get drivers are just a lot of unknowns that far out
spk_0: will say that the pipeline is for ah but there's a lot of things are going to metering how as we to start though the robbers equipment
spk_27: and even some on the management sad so or but i would say cute real is looking very strong as well
spk_10: your next question comes from the line of can help stem from bank of america reliance on them
spk_4: great calgary think i'm so great great job and in keeping rate that of cost them and they talked a little about the hardest hiring environment and thirty seven years and and nyc read the gun but he highlighted the labour pressures to keep fluidity so john maybe the step back in and give a little bit your thoughts on labor and when you think about gearing impacts of and
spk_2: var goes on some the networks that are any concern that the network starts to melt down like we've seen on on some of the rail networks when it start spreading and and and you know spreading out wider from just one area especially when you're adding capacity when than rail networks not fluid as they're concerned that the it gets gummed up and are not able to take advantage of their prices scheduled railroading overalls yeah okay let me let me add have their spawn a that have a job have better look at of picks so that erm you know is there a concern of a meltdown i think that the the railroads have all shown on
spk_13: a fairly quick
spk_10: step in to the slow volume down is heading towards that can have that i challenge you know t and twenty one has been certainly and an unusual year so on but no i don't expect a a any kind of melt down from from the railroads i do think that i when we talk about labour challenges with the rail system amino i really do think it's
spk_2: you know we're talking about locations that need the to find you know four or five percent more employees in order to be fully staffed in the in overcome
spk_0: i'm the kind of a a challenge that there and now these aren't just massive massive amounts of of people that they need to hire so feels like i'm that would be highly unusual and i think all of the railroads are are very focused on these challenges in the in their out the addressing them in an ad
spk_28: don't feel like we're that some sort of a significant meltdown is it is a very significant risk at this point
spk_9: right next question comes from the line of palm why the with from you be in your line is no
spk_29: ah yes good afternoon
spk_2: well i guess what related question it seems like labor is such an important topic
spk_9: i wanted to get her thoughts on how you look at
spk_15: labour intensity of your model i tend to think intermodal is an hour
spk_28: and if you less driver intensive than truck so you would have some advantage vs truck in a tight labor market
spk_10: but just wanted to see if you could offer some thoughts about in the did this tight labor market provided bandage due to jb hunt in a certain way
spk_4: and then if you could also just say have you seen any signs of improvement eggs i think we've got and of it's twenty five or twenty six states that i i think it started to ease up on the the payment of the bonus unemployment
spk_2: i the you know is that is that improving or i use a kind of know light at the end of the tunnel in terms of bub labour availability thank you
spk_4: the i would you say from a labour standpoint and i would say that said mccomb is very very tight i think we do a very good job of responding to that are our model is pretty agile very sad specific own how we can address individual labour concerns whether it's in some of our performance warehouses
spk_2: find a mile or whether it's in a rail ramp specifically saw think we have a very solid approach and they were gonna very robust corporate driver personal pain as helps us in the labor market so it's challenging and then i would you say the other side of it as a very good at shelley's glued into relationships with
spk_4: customer are very open we try to stay ahead of their show them metrics in those areas and try to get ahead of that with them so i think it's an advantage to us
spk_2: personally i'm at that market now does that mean we don't have a know we have fame but probably not as much as others ha and then on your question about unemployment it's too early to say we've been having some conversations about and we measure in the states with roll back the unemployment benefits and we've been able to recruit more there is too early for us to tell ah i paid by the end of cute rate will have a better feel for that i know it into september supposedly the rest of the country will roll back on that so i figured out is kind of become very clear that abbott is too early right now tell us the that's in the south and i've as those are you in the area was a little less pressure than the other with the in the sounds a little less pressure there are pressured ah but the less pressure there in general so out to add to that nick on your first or your question the term work we have good agility and i think that's very well represented in the pivot that we've made in our strategy and jpg moving more towards an asset light and i think it has facilitated the the the growth that we've experienced over the last several years that we've been talking about records since two thousand seven into that
spk_5: and eight am i going to the after light model and tapping into the to the carrier based that they leave had access to the i'd yes and so i've read that a platform it certainly enabled us to be more flexible for our customers can be able to do more for them in that environment is just another good example of that and i'm amanda finally out in a whether things with our customers we certainly talk to them about we are are painful
spk_0: points at by it is much easier to day for us to say yes and ten make a pick up on behalf of a consequence it really comes down costs only take are more than twenty thousand drivers and extend that to our platform reaching nearly one million tracks or diligence source on behalf of our customers insignia you can't we different than what it would have been maybe in the last cycle so we can always say yes to she's down the cost and what that means from a pressure perspective helping i am meet with our customers than helping make sure that their budget are intact
spk_30: next question comes from the line of brian else and back from jp morgan your some
spk_10: hi good evening picture taken the question as when asked about i see as and three sixteen particular so saw the employee countless up a little bit at the end of the period from the first quarter but the average number of votes from play the still so pretty good moving moving or favorably so i think it's easy to talk about just it
spk_13: the on a platform and then i hear in the near term maybe the rest of the year and then just give us an update in terms of the road map the investments going for a here
spk_4: cross the different metrics you look at in terms of people technology and scale or seems like made progress know that but also seems like you've got some more investments to be had so a give us an update on productivity and where you see the investments going next hour for three sixty thank you and they like allah inside of of questions yeah we're definitely dead it's time
spk_2: the progress that we made pressure you gravitating towards our three critical areas of of our people our technology and scales i think that that has been demonstrated over the last several quarters and as we continue to grow and on the scale of will be gotten back to profitability
spk_13: with with we talked about for the let a quarter's that investment window
spk_2: investments will continue on obviously with the work that we're doing with google and and the a co innovation that will come from that will will allow us to make good decisions around how we continue to invest to enhance three sixty platform and and and how we can make sure that they were providing value for our custom
spk_5: mers and for for carriers ah young i think it's clear that that our goals are to create the most efficient transportation network in north america and and the a we feel real good about where we sit with respect to that i would say that you yeah that the things that are that are most and kept talking to our customers really costs everything capacity and in our investments continue to focus around visibility transparency and access and and that's where we'll continue to make decisions and how we move on go out on fuel added an a matter of fact that if we're looking at our five year modeling that we've had him i am only very first all that three fifty we have made good improvements across the board we still i do see i mention and i believe the end of last year that we did have some internal work happening and three sixty with her internal systems called match that will help us connect are people with what's happening in the marketplace and can really allowing us to use that frictionless digital platform externally and connecting that with people when we really need to be problem solvers on behalf of our customers and are carry
spk_0: years and so he made improvements are we do still have improvements last ah that need to occur in our five your modeling and and certainly in the stealing p or gross margins as a percentage those numbers we still believe that we will continue to find the right track at the right time at the right price at well
spk_31: allow us to continued extreme expand margins and inside that overall next question comes from the line of joined an alley check from goldman your linus out
spk_4: the a high as wondering if he could talk a little bit to fine final my aura profitability i think the long term target range is forty percent you can have been there the first half with probably what can be a strong peak i mean did the and the various cost pressures do you think we could stay sort of within as general targeted range their bowels of the year facts
spk_2: but they were were clearly moving in that direction there's a lot of things going on one there's a lot cause pressure that you loaded to inside the warehouse loading of our box rocks second see only even our contractors of contractors like rates are going up so we're facing from headwinds they're ah but
spk_32: the other part of it is the supply chain where the very end of the supply chains we gotta to make sure that the product is there are the furniture industry if you look at that others lot of
spk_0: long lead times chips are affecting a lot of the appliance folks are just a lot of things going on in that that our plan is this stay in that ah target range ah but there's a lot it went towards it so it's it's hard to clearly say right now
spk_21: that class comes from the line of the bids as a lot from barclays sailings hello
spk_33: and thanks to take my question maybe another round of a final mile arguments in the revenue per stop is down due to a chef
spk_34: between the as a bath and our satellite segments of of that's i met wonder if he could just comment on whether that's tough
spk_4: ah can your the normal course of business or have an intentional shift towards more after like model with within upon a mile
spk_26: oh we're very agnostic with our customers we present both pricing and so it just depends on which customers buying at the time
spk_2: right now it it seems to be the non asset ah was of what was being bought recently but i would just tell you a couple the of own assets about now so it moves around
spk_0: but what i say in the pipeline i would say more on the non ss sad for the most part they're still an asset play that moves in there once in awhile
spk_9: and so it it moves around it's hard to predict or pricing all of them and so we just adjust our i say based on the amount of capital we have to put in there
spk_35: so but papuan i would say is more under non asset that right now
spk_10: your next question comes found the line of thought to follow some keyboard killing someone
spk_9: a great thank you i've read delco can i ask what intermodal lines were yesterday is that okay at my eyeliner as well
spk_5: hundred can have a go at that beard partially kidding which now and i'm cheating or yeah thankfully i and harshly hide him on what i did want to ask about his your there's a lot in anticipation lot of hype around this peak season so that means partially partially may be partially for john who loves me think about kind of peak planning you know with the expectation be that this is more of an elongated peak in our customers in the start to pull forward activity earlier than what we typically see and then how do we think about that the seasonality of either even or during students in the second half of the year to that to that follow kind of them piano the change and customer shipping habits awards you just a situation where we're going to be at this elevated level for a longer period of time these were the dumbest environment is thank you and to china i'll take a customer and side i'll turn it over to john on the last part of the question in a disruption that occurred and twenty twenty has continued all the way as read today and we believe will continue to the rest of this year into next year our customers do you have a display and happening and it from an inventory perspective and we have heard our customers say they move from and been ordering from and me by dave tool when can you get it to me date in they are up there is inventory in the supply chain today and has already been delivered didn't typically would not be there to there has been some pull forward i think it's just been based on a lot of the disruption it's happened particularly in the global supply chain so
spk_4: that has kinds canada upstream issues that are now hitting in the us as well and insert when we know the problem there occurring across every part of the supply chain and delivering them for our customers i would say our our customers from a demand perspective
spk_2: believed that the rest of this year will be strong into next year as well and finally i would say peak season we're doing a canopy planning i talked about that on the last earnings call we we're doing that again now have a really do and that comprehensively across all our five segment and so how can we help understand and the needs of our customers would that will look like and then what will we do when more disruption occurs and locations that are outside of what we are focusing on from a peak perspectives the sooner we can do that that that more successful have together with our customers
spk_0: and tata apologize were allowed to shoot earlier your second question that don't really know how i can answer that without giving you games on her margins for or for the second half when i will say is the a silly minutes and we're doing everything we can talk with our customers and understand what their demands are
spk_10: we trying to get as many resources as possible look people in assets with the equipment orders that we have put in place the be in the best position to address those needs and as there and mention working with the rails to you can do to try to alleviate some of the congestion so we've given margin total guidance ranges and that's really all that the further i can add to that
spk_4: yeah next question comes from the line of beaded very non from bursting alliance home
spk_2: hey guys that are thanks for taking the time of question for a longer term topic than just wondering you know kind of these you look across
spk_4: demand for equipment i'm into this year and than a decks your should we expecting sort of the a multiyear of level of elevated catholics would you feel like we we should be seen the recovery in in rail service embarked on that would allow you to kind of on the liberal with with a little bit more or less understanding and article twenty one i'll provide just some comments on on a consolidated cat bags and what we're looking at as we mentioned some of blood the orders that we have played some of those are going to push the tony tony to we haven't changed those orders and so that will move and so i would expect that are twenty twenty two callbacks is going to be
spk_2: they did as well we're still trying to understand why the replacement and growth needs are frankly we have reduced some of our trade and this year on tractors just to contain maintain
spk_0: the available capacity and so we'll probably have a higher
spk_9: callbacks and twenty twenty two with that as well so those are right now i would say that are twenty twenty two callbacks is going to be a not as high as twenty one but will be elevated over what we've seen historically
spk_5: he left us and fans find the lamb chops kaufman from right to call me so no line of well thank you very much thank you for taking my question of and shelley you mentioned earlier about how customer inventories is where is tight is if you've seen them is in any way we can put that into perspective by their with anecdotes or just to give us an idea where inventory levels are ah at customer acts or trust and rely relative to where they should be well i am i can't be specific advocates for level obviously i had seven days anecdotal stories bed am i think it would i said earlier which is
spk_2: they don't have the inventory exactly where they wanted or at the timing that they wanted either i think there are concerns about this christmas season and will they have all of the necessary inventory on shelf or available through ecommerce channel so that's a concern of our
spk_0: customers inventory will take some time to catch up gesture more normal levels that there are several stories from our customers whether it's christmas product already here in stock ahead of schedule or concern that their peak am

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