J.B. Hunt Transport Services, Inc.

Q1 2022 Earnings Conference Call

4/18/2022

spk_0: that afternoon thank you for it can be today's jb hunt first quarter twenty twenty two earning podcast my name is hannah and i will be your moderator for today all all winds will be looted during the presentation parcel of the call with an opportunity for questions than answers at the end if you would like to ask a question we have first star one on your telephone keypad i would now it's about the conference over to brag dulko senior vice president of finance please go ahead you operator and good afternoon
spk_1: oriented speakers i would like time to provide from disclosures regarding or the newspapers good call me a or looking statements in the medium and private securities litigation reformat the bank ninety five words such as expects in a in and nights or similar expressed concern and it's within a by is forward looking statements be payments are based on champions can't and expectations about risk and thirty that could cause it rank of these and results can be materially different from those gotten the portal his payments for more information regarding risk factors please report of a behind annual report on form and and other reports and falling through the security for exchange commission now would like to introduce speakers on today's call
spk_2: good afternoon i'm joined by our
spk_3: john roberts
spk_1: our ceo john cool though shelley and or to commercial officer and a bp of people in human resources nick hobbes chief operating officer and pregnant a contract services aaron feel president of intermodal and brand next president of highly circuses at a time i'd like to turn the call to our ceo mister john roberts for smoking comments john
spk_4: thanks brad and good afternoon thank you for joining our call today we see the started calling for a coup and this or court reporters both encouraging and revealing while overall labor and other supply chain issued have act have continued we leverage experience focus and technology to move through this period with excel execution across all disciplines within the organization is running it solid performance level yet we have clear opportunity for improvement our equipment utilization continue to under performed at a consistent challengers with the and the for sickened me for new driver higher we added a pain hundred and eighty nine that drop hearing twenty twenty one and have so far increase or grabber forth but just over fourteen hundred this year
spk_1: are hiring claims are built out the levels not seen before in our history
spk_4: the increased ability to improve hiring performance or enabled by being treated and driver compensation improved benefit reliable schedules with predictable on time and a company environment and own growth for future career expansion for the past eighteen months our entire people and unique human resources discipline has been in a comprehensive refresh during the opportunity can make meaningful changes in the quality of services be capable teams can bring to the most critical area of our bit all of our people current and know as noted we announced that multiyear expansion plan for intermodal mostly recently coinciding with a renewed commitment between bnsf and jd a take the opportunity that lie ahead and thirty our customers are rejuvenated others commitment and we anticipate leveraging this unique and industry leading position the transportation dynamic a driver sure get an increasing labor costs are fuel prices congestion reliable capacity not commit than the remarkable and that intermodal had in the scope three emission reductions worshippers get with confident in our decisions another important rican development or the formation of aren't easy camp consisting of a highly cross functional group of manager and executive whose purpose is to continue to guard the organization towards new awareness and action this will no doubt maker for better company a leadership team here and we'll cover eat bit more specifically for you but before that i will turn recall over to john kuhn loeb thought on the corner
spk_1: john a good job and good afternoon everyone my current sales review our recent performance in the quarter providing some additional perspective to the results on a consolidated level i'll provide quick update on capital expenditure plans to the years not spend a little bit more time talking about our priorities around or capital allocation in light of recent market of them that opportunities we see to capitalize on long term sustainable growth in our business overall we are pleased with their performance for the first quarter year highlighted by revenue growth of thirty three percent and i'll bring income growth at fifty one percent versus a barrier period either you go through tempered by some fairly meaningful labour challenges at the start of the quarter related on cranberry an outbreak the most notable impact from this challenge was in our dps business as driver availability and productivity were impacted well as challenges in a rail velocity and intermodal and in product availability and her at them as network that said the market tightness presented are highly businesses opportunities step in to meet customer needs and our technology platform jp hundred sixty provided us and obsession the fact of avenue to source capacity for and on the have for customers the country's approval the resiliency of are multi modal business model and our broader mode agnostic supply chain solution buffering they get continue providing covered related parts at a quarterly basis recorded the goliath the numbers were not meaningful to are consolidated results are we getting for a little over seven million and direct covered related costs for paid time off without needing to quarantine and also for those leading time to get vaccinated and quarter weather out the bridge yeah did some challenges are network businesses but no more or less than what we expected given our lot of work i would say cylinder my comments last quarter labour continued to be an area with the greatest inflationary pressure in both professional driver and not driver salary ranges the benefits and we expect that trend continued throughout the remainder of the year in the first quarter we recognize approximately eighty million games on sale the quit money quarter which are a typical for us
spk_5: dan very few trade last year as we hold most the bird quitman to support our organic growth
spk_1: although the line or tax rate was twenty four point four slightly lower weller interest expense was modestly higher gear over here dang netting up for yeah pts two dollars and twenty nine cents or sixty seven percent increase year over year can you to maintain a strong balance sheet with a hundred and forty five million cash zero drawn on our rebounder and up to seven hundred and fifty nine capacity and revolver and net that balance remains below are targeted level of one times trailing deep into a point six last quarter provided callbacks plans at one point five billion for the year and while we're slightly behind plan to the first quarter due to continued constraints and equipment availability on point five billion remains or target for twenty twenty two the quick update on her capital allocation priorities that hasn't changed we'll continue to prioritize supporting the growth of our business with reinvestment as needed remaining committed to our investments and capacity to server growing customer base we recently increased or quarterly dividend to forty cents a share or thirty three percent from prior levels in keeping with are different strategy we also intend to incorporate mindful share repurchases and opportunistically execute anemone opportunities we remain conservatively leverage to maintain our investment grade rating however we're not afraid to increase leverage as opportunities arise
spk_6: lottery emphasized that i'm better than our business will contain to be supported by sound financial discipline and maintaining fair and reasonable returns and are unless the capital keeps a strong healthy and capable of growing to meet the growing needs or customers
spk_0: this concludes my remarks and that turn it over yourself
spk_7: john and get up for name
spk_0: my gosh i think most of the job market conditions and how we are seven and have charged me by leveraging anger and our people are physical at that and are more come out get an break platform caveat restricted i'll provide an update of the and which will provide some insight and drinks expectations for the year and family of provide some priority that are organizational be focused on achieving this year for our people and for and on behalf of our customers
spk_7: i think beyond the case magic the last two years the market remains extremely dynamic as also evidence fire giants in the first quarter with disruptions across profit supply chain related to the the contrarian weather events across the network labour availability and rapidly rising fuel and commodity caught we believe our magic nothing approach with our assets and technology platform caveat three sixty both of which are powered and the name of our people allow it to damoclean mean every thought to the needs of our customers as the quota progress a market family began to find more balance which was evidence that expansion in march and we saw in our highway services segment as we've discussed for some time frame have been moving in efficiently over the last two years creating additional price for our customers did not cry for our business five years ago we launched internally are cycle of innovation to disrupt adapt and to accelerate which happened to coincide with the launch of jpm three sixty as week hit a five year anniversary for be a rethink the i'd like to reflect on our journey and our investment the investment we have made or in hand it to disrupt our industry well as an organization had to adapt and make sure we had the right organizational structure and practical and to execute er strategy
spk_0: a month before the pandemic began our organization transition to the theme accelerate going forward we will continue with our current theme to accelerate we will accelerate the speed at which we server customers
spk_7: like celebrate our investment than areas with promising long term growth potential and accelerate our ability to react to the needs of our customers andrew this dream of acceleration we will remain focused on opportunity to add value to our customers as are people technology and asset come together to provide highly engineered cost saving pollution we believe that remains the right recipe for long term compound and sustainable growth and we will continue to approach the market that way while maintaining of financial discipline unfair and appropriate returns on our capital
spk_0: we are now i'm like halfway through the season and were extremely encouraged by the feedback and the confident that our customers have enough to deliver and efficient and cost effective solution for their shipping mean
spk_7: as we sit here today demand for services and in particular that asset thought of orbit them as the strongest that feed in my twenty seven year career at the company and then the man continued to put pressure on armed need for more equipment and people going forward we have
spk_0: a lot of confidence in our plan to grow capacity and we believe it's a matter of when not do some of the labour challenges which includes the real providers will moderate and ultimately as did that with improved validity was elevated energy prices consumers and navy and expecting
spk_7: a lot for my but capacity in an intimate little that were remains extremely time thankfully or scroll and with allow us to continue to offer capacity pollution and yet to our customers with our ability to sort that capacity in the marketplace for jpm three sixty family i want to paint them can't were brought you some of our priority for the year as i discussed last quarter we believe that market dynamic for presenter with a lot of opportunity grow and that remains the case today as well as a priority but i also believe or opportunity to ride and create efficiency for our customers is greater this year than at any point in the last two years our investments in our container flee trailing clean technology and people happy to the best position to provide one solution for catch my and three key area
spk_6: on that the and from it
spk_8: more than any point since the beginning of this pandemic i strongly believe in our team's ability to execute for and our behalf of our customers delivering the i knew an efficient solution and then former band our thirtieth well as that have always their strategy combined with her
spk_6: financial discipline one out even greater confidence as we set out to achieve our mission to create the most efficient transportation network
spk_2: in north america
spk_1: that includes problem i'd now like the turn it over from it but usually and good afternoon today i'm going to you perform or dedicated been a while segment as well as motivated bowls improved room from the bar on a little expectation as with you throughout the year a lawsuit brought in perspective on the current challenges we face and the industry are facing in sourcing both equipment and professional drivers i've got my comment from dedicated a big expense sounding like a broken record are dedicated bit continues to have a lot of momentum as our backlog and outline for new bill to start continues to build to record levels after coming up the record you're selling or roughly twenty five hundred trucks in two thousand and twenty one the first quarter kept pace with around six hundred drugs sold in what is normally a slower time of year for new in sales and pertain to the result in the quarter revenue grew twenty eight percent driven from nearly by the average fleet thought it was about two thousand and drugs or twenty percent larger than a year ago which i believe that true spend our world nation in in the industry margins in the quarter remained under pressure to spot improving sequentially as a result of startup called we own boarded almost every account in the first quarter that what we did all of last year i'll also sure that are operations in productivity were negatively impacted by labour challenges brought on by on ron very in january and weather events in february that only added to some of the startup expenditures we incurred that said and hopefully with coven weather event largely behind us we saw performance the momentum out of the segment in march which we believe should carry board our new accounts on boarded last year are performing as expected which gives us confidence in our approach to the market and our annual profits lighters will continue to protect against broader inflationary pressures our concerns remain on both equipment and labour availability namely professional driver or need for both remain extremely elevated and may ultimately governor a to grow if the man remains or accelerates from current levels in terms of broward going forward we will remain focused on the x qt number growth plan as well as maintaining our culture of operational excellent hi service and safety which supports the value we deliver to our customers shifting to panama revenue grew about eight percent versus previous year period driven by newly awarded accounts over the last year but also bought some of the supply chain challenges in i think some of the primary markets we serve in the segment namely appliances and furniture we also announced and close down the acquisition of xena great lived in the quarter which contribute about ten million in revenue for the one month he was consolidated in our results we continue to make investments in our service quality and performance in order to differentiate ourselves in the market we believe these investments are was over the long term a dating service will be the cornerstone to our long term growth and success as we discussed last quarter we're coming up a strong year of new build new failed giving as confidence in are differentiated service product this confidence or did our decision to the some of our underperforming business that risk which we have done over the last few months while it's too early to come to conclusions on all the underperforming your towns we have been successful at getting meaningful right agree to that several accounts that should support better earnings emerging performance ahead we remain focused on generating appropriate financial returns on a business so we can reinvent to provide more capacity services for customers going forward or brouwer to remain investing in the big to support it's grow but was and greater emphasis on improving the profitability and this segment in two thousand twenty two closing out with from operational updates as i alluded to him a dedicated comments equipment market and professional driver market remain extremely tight
spk_4: we have clearly had success growing our equipment level professional driver workforce to meet the most of the need of are in a moment dedicated businesses but let me be clear
spk_1: it hasn't been easy and it certainly hasn't been cheap we have relied heavily on some our key aliens to help support our group but i'm afraid it's not enough and we're exploring new suppliers across oliver areas that need to support our group that includes my remarks well turn it over to their thank you hello to everyone on the call or comments which afternoon recap to perform and to burn and moto business in the quarter i want to want to give some comments on our recent joint announcement with the bnsf to improve intermodal capacity challenges and what our priorities are for the business as we continue to invest in our people and capacity
spk_5: for meeting the strong and growing demand for intermodal services in the month quarters and years ahead
spk_1: i'll start with the performance or the intermodal segment in the quarter demand for the intermodal capacity remain extremely strong throughout the first quarter and importantly remain so today as has been the case for some time or ability to execute on all of the demand for our intermodal capacity was hampered by rail last the into a lesser extent the detention of our equipment from customers
spk_5: fox turns good deteriorate sequentially from fourth quarter which is in line with seasonality but nonetheless still disappointing at current levels don't know cranberry did impact labour availability for our rail providers and our customers and in our operations as well and thankfully those prince didn't pay
spk_1: as the quarter progressed particularly for our customers as well as in our operations volumes for demand for the quarter were down one percent in january plus seventeen in february and plus six percent in march
spk_9: keep in mind february with a fairly easy can't do to some weather events in two thousand and twenty one we were successful it on boarding over forty three hundred containers in the quarter and i'm proud of our team for their execution on that front which puts us in better position to meet the growing need to our customers
spk_1: we plan on taking delivery of the remaining balance to the six thousand containers from march two thousand and twenty one order during the second quarter we did see approximately fourteen million and games on sale of equipment which is unusual for us but nonetheless should be transparently disclosed importantly the core of our businesses
spk_10: performing well in light of the inflationary and fluidity challenges facing the business and network which is supported by our people running operations in our customers who value our service offering
spk_1: during the last quarter jb hot bnsf announced a joint initiative to substantially improved capacity in the intermodal marketplace while meeting expanding needs of our current customers
spk_9: this is an important moment for organization as the largest railroad and domestic intermodal king carrier will be collaborating even more closely together to provide an unparalleled intermodal product leveraging the talents skills and technology the both companies to provide a seamless door to door solution guns for our customers
spk_1: with some channel partners leaving the be enough network we were provided an opportunity and had and have developed a plan to grow our intermodal container count to one hundred fifty thousand in the next three to five years it's represents forty percent growth from our town at the end of two thousand and twenty one
spk_9: for the record let me state the easiest thing we can do is go out and buy more containers it's will be a significant endeavor for our organization and were require investment in people equipment and technology to get our desired outcomes
spk_1: importantly these investments will be done with same financial discipline as in the past needless to say i'm excited and energized for organization as we grow to meet the needs of our customers and we look forward i thought i would share a little bit of perspective about our priorities for intermodal this year as shelley disgust we are encouraged by the level of demand we are seen throughout the bid process for our capacity which continues to give us confidence to make investments we strongly believe in the value proposition we can deliver on the three key items or customers care about which is cost capacity and service
spk_2: as it stands today they're inefficiencies across the supply chain and within the rail network that is impacting the last he we are cautiously optimistic that velocity will improve which will create more capacity for our customers while improving efficiency and cause in our operations simply put
spk_9: but this is a good outcome for our real providers our customers and for jamie han we will continue product to prioritize investments needed to support our girl to help us meet the robot man we are seeing for intermodal capacity
spk_11: in closing intermodal value proposition remain strong supporting our view of long term sustainable growth we continue to see ample opportunities to convert highway for eight as well as trans loading cargo into our domestic containers we believe our service backed by our people and ownership of our equipment is dip
spk_1: graduated in the market and even more so when combined with the power of the jb not treat takes be platform that allows us to source capacity efficiently when needed that concludes my remarks the while turn it over to brad hicks thank you very good afternoon everyone i'm going to cover the performance of our highway earth businesses which includes both integrated capacity solutions and truck we continue to be tremendous opportunity to leverage on investment than are people at that and technology to support the growth opportunity presented our customers as evidenced by results i think we were able to demonstrate that in the first quarter so with that let me go ahead and dive into the performance of the pigments and make up highway and provide some perspective on our priorities moving forward and well as some perspective on the market currently i like a taco truck or jbt revenue growth that that one percent year over year to learn fifty four million while operating income and proved to thirty one point five million in the quarter this represents some of the strongest quarterly performances and the segment going back to two thousand and five yet with less than twenty percent of the company trucks or app it then we had running in that segment at that time this continue to support our decision to him that been trailing assets for the segment while leveraging or investment in our technology pathetically jp hundred sixty to sort them out the capacity to move rate or and on behalf of our customers as shelley mention that are common demand for trailing efforts which which is or three sixty bucks product remains strong as customers continue to realize the official than benefit of getting up a holistic view of there for eight and allow it to blend their their live in drought trailer networks with a single source solution we continue to be strong customer demand for this product and service offering it they recognize the benefits going forward we will continue to power ties aren't that in our people growing are trailing flee and leveraging our technology to support long term sustainable growth in the segment while maintaining our financial discipline around acceptable returns on that big apple to close out on jbt t you might have noted that update to some of the that we shared on that bagman which we believe better align with other business has transformed with the introduction of are three fifty bucks service offering by managing it trailing capacity equally and sourcing the most efficient capacity to move it for our customers weather or it's our trucker apa or someone else shifting gears out to idea we delivered six hundred and thirty five million of revenue in the quarter with year over year growth of twenty nine percent versus the prior year period this growth was driven by more balance between volumes and revenue per load and and are more recent period as are stagnant volume grew twelve percent year over year pathetic a truckload volumes are growth with fifteen percent versus the prior year period we have seen a moderate and spot opportunity that late which we attribute partly to more customers if the brain out of the spot market into published or contractual business but also recognize gay movement in the market towards more balance taking a step further for the quarter are are published business with that more than twenty percent while our spot business without low single digits that said we continue to be record levels of right opportunity from our customer to execute and our platform jb have three the which we think demonstrates the power of our platform to source the most efficient mean a believe rate for and on behalf of our customers going for we will continue to focus on leveraging our people and our technology to provide an efficient solution for our customers we believe it will support our long term growth and will be supported by fair and adequate returns on that the capital in closing i'd like to leave you with our confidence to continue to invest in the area that pilot for you and that is are trailing capacity or people and our technology we continue to see how each compliments one another to provide the most efficient solution for our customers
spk_0: our customers have and always will remain focus on cost capacity and service and if we can differentiate ourselves and deliver on all three we believe that is the right recipe for long term compounding sustainable growth as we continue to deliver on our value proposition for customers we stay true guard mission to create the most efficient transportation network in north america that concludes my comments alternate back to the operator to open a for qnx
spk_12: at me if you about to ask a question please press star followed by one on your telephone keypad if for any reason you'd buy term is that question please by star followed by to again to ask a question press star one we kindly ask that participants limit themselves to one question today with no follow up as a reminder if you
spk_4: we're using a speaker phone number to pick up your handset the for asking your question
spk_1: the first question at from the line of credit whether be when city you may proceed
spk_7: thing to good afternoon
spk_6: maybe just start with the sort of most pressing question that we're getting asked the market is is mister the view on the free take on it you're seeing to be comment a weakness maybe thoughts on the potential for consumer lot fake recession over the course of maybe next several quarters and then specifically with in math how should we think about you know
spk_13: low volumes performing see there is some downturn and overall consumer frayed with team and you get it noted that there's demand that what you're able to sort of still on the market today's can accurately you think that would play out it's words you slow down and broader frame mean it's a question for for john or shelley
spk_7: okay think he crashed to tell our say that there are varying ignore the and the market in a lot of what you're hearing in the market in and egg spot market for small carrying out today the for the most part him and think that wood carving a lot of conversation if you look across all of our product that when you would be a differing viewpoints inside the segments overall i do think there has been a temporary relief in the dislocation from labour shortages and also just worship shit men are located
spk_14: we do poor cat that to get a lot worse than three cabinet the summer months particularly with what's happening in the supply chain from an ocean perspective or enshrining coming and bound to we have had a lot of customers talk to him about that
spk_0: also i didn't mention that are bit season is the best the season the i have seen an very pleased with our customers leaning into us or solution i would say if there is something that will were to occur and we see a lot of inefficiency in the market we're constantly talking to our customers about what that is
spk_7: a very hurt here earth and have heard of talk about creating was sufficient transportation network in north america because we feel like of efficiency part of that labour driven by another part of that in most of our customers have been primarily concerned with on shop availability not as much around efficient the a wifi opportunity detail her customers the increased payload and get free injured to an optical mode we happen to have them and optimal way and transportation mode and intermodal into whether it's a downturn or even in the current environment we do think there is a lot of free from what we've been bedridden a can move into a more efficient mode
spk_15: like intermodal but i would pay across the segment
spk_16: i think that there are costs and structural issues that will continue to remain i think it's too early to say if there's anything happening with the consumer over the long term but certainly were watching all of that not our tell you customers are leaning into a more now even including the most recent data so
spk_0: i think that would say there are bored supply chain disruption happening that could be lending to what we're seeing and market today
spk_17: it's awful go with the wonder thank you mister my belly the next question as from the line of got group with wolf research you may proceed
spk_7: thanks good afternoon show we can you to clarify that those comments about that the shutdowns and in china and and what you think that means for volumes now and then heading into the summer and then don't just but spot prices down but fuel up a lot
spk_0: how are you thinking of are you see to spread right now between trucking and and intermodal rates
spk_5: that's that so i'll take that first part of care should look at alive screenshot at what's happening in shanghai that ship or
spk_9: it looks just like a lot of ship in a little bit of water in so that certainly going to make it's way back into the us hear that from our customers are concerned about the july time frame between that and also with happening with labor at the port i think there could be reason for concern or just read and and have different conversation here in this type of environment just take a little bit of disruption to really change the environment all over again and for that's what we're watching out for
spk_1: no else does not to questions in their printer
spk_5: i'll i'll try to respond year
spk_1: you know spot prices in the truckload market
spk_9: i've always been volatile over overtime and we've seen times in the past when new when they rocketed up times is really into iraq
spk_1: or higher cost of fuel and and in the most recent two year window a mean spot prices for highway solutions have to have ridden because in some cases
spk_9: intermodal capacity was tapped out and so all the sudden there's a much larger truckload spot more do originating from the west coast for example those the gap between that kind of rate and and intermodal price is north of to to actually mean two hundred percent higher
spk_1: to buy spot rated truckload solution off the west coast versus and intermodal raid so there's a there's a a very significant gap
spk_17: the or truckload prices put any kind of pressure back on the the intermodal market so again intermodal demand is extraordinarily high
spk_18: we have we have caught we have more demand from customers than we currently have capacity to serve in in so i'm very encouraged by that demand cycles feel strongly that intermodal can continue to grow in i don't really feel like at this time truckload rate
spk_0: following is putting and any pressure on or moaning pricing
spk_1: thank you i'll get back and que
spk_19: a given your group and
spk_1: the next question and some the line up on top all with evercore i aside you may proceed thank you good afternoon i'm barely stick with you that seven percent by a good number one to i understand that february will be very calm but the rail body becomes too and and know and put up you know even growth let alone was hoping will digits or from a volume perspective the hello to the was just strictly the new comment that you brought i'm obligated how much of it it's on specific marketshare game when you think about with long term growth strategy you said on and we had a layer that i'm top of it's really strong relative one you know how sustainable is this type of our performance as you continue doing that new business okay well preceded that we're we're we're proud of our result but not yet satisfied because we can actually grow more than that and demand is is actually stronger for our product in and that gives a lot of motivation a lot of energy so you know certainly did the new equipment we added last year and on board during the first quarter obviously contributed significantly to are grown when i say
spk_9: the weekend grow more i mean six months ago prior to the midway through last year even in the third quarter of last year we would have anticipated stronger growth and we achieved but that equipment we added really was consumed by weakness in velocity
spk_19: and i don't want to beat a velocity drum here on the call all day today a real providers all know that it needs to get better they're all working very hard to improve that we're very aware that they can improve that fully anticipate that they will the question remains
spk_20: wind is that begin to show up in in certainly during the first quarter there were some challenges in that area were turning down thousands of loads per week and in feel strongly that we have ah
spk_0: more volume to grow as as velocity picks up and and again we're very encouraged by the way we're communicating with that both our customers as well as are real providers
spk_21: got it thank you don't
spk_1: thank you mister shop on the next question of some the line of just and long with the then you may proceed
spk_21: thanks and good afternoon
spk_1: bigger picture too bad i already figured conveyed historical europe focus on growth and a focus on our life i wanted to ask about the balance between us to items specifically that relates to enter modal as we think about your intermodal container for you growing forty percent flash and the next three to five years do you feel like that's something you can execute and a way secreted to intermodal are alive and again
spk_9: after that and yes i'm curious what the assumption dar from a pricing and box term perspective to make at math work
spk_1: my good it's just been you just asked for for for all of the answers their so you know certainly week we've highlighted then and then returns drive our investment decisions and that's not any different today with the announcement of the expansion of our of our equipment i think that that signals are believe in the long term growth available
spk_9: in the intermodal system and that that growth can come on board at the return profiles that we would expect now there comes a point at which ah
spk_22: whether or not it's a creative or you think we're just sustaining your return profile i mean that that there will be some small cycles you know whenever
spk_5: and if we get the opportunity to take cost out of our system
spk_1: ah i could see a world where that that that transfers to nag prices did it go back to the customers and that's okay with it fully anticipate a velocity improvement and that could very well result in in price is going back a little bit to benefit the customers because frankly the today
spk_23: weakness in velocity has been considered inside the yeah
spk_1: the intermodal system but but i would certainly believe that we can sustain
spk_20: longstanding success with our our allies see in and we don't and we're not we're not willing to grow in a world that would damage that that's the first thing that would slow down that investment so that they that is core tenet number one a day behind there will be no change
spk_0: to that
spk_24: okay great ali the hair thank you
spk_19: thank you so long
spk_24: the next question as on the line up kin actor with bank of america you may proceed
spk_1: hey good afternoon to to a couple of follow ups on that
spk_5: the agreement with burlington darrin can you talk about or be any more specific on the time frame
spk_9: to get that target or what what encourages you to speed that up to the three vs but five years in terms of growth and it in the agreement anything that you can specify in terms of it that to like you were aiming to improve service or other things you want to work on through that i in the in the long term part of that that agreement that
spk_1: you oh okay appreciate the question you know i'm not gonna call out anything specific in the agreement i think it's really an obviously it's a note that we made that release jointly and be enough steps logo is on the at the same press release with ours and that because word we're very a line in our effort around growth were aligned in our efforts around how we in use technology and build out our systems in a better way that allows both of us collectively to be more efficient on the whole that
spk_4: could mean things like
spk_9: if we get an opportunity to take a load in the gate at have been a safe location and target trackside so we can eliminate a hostile move we wanted connect our our technology so that
spk_1: that the planners with bnsf we have good visibility into load that haven't yet picked up but that are going to come in the gate later that day and that's why you know you heard and some into prepared comments that the easiest thing we can do is go by containers and that's very true i mean that the mission were on has a lot more to do with how we work together how we work with our customers and how we solved long term supply chain solution
spk_5: and together
spk_25: and all of that effort drives into that decision on grow in that capacity whether it's in three or five years mean certainly the window it in there because
spk_0: we recognize that there has been a velocity loss in the system and over the next couple years we anticipate a time when we can get velocity back we would fully expected to do that and if that gives us the opportunity to grow in maybe we didn't have to on board quite as many containers
spk_26: in a given period that's okay to me were we also highlighted than are our allies he is gonna be the driving landmark behind how we do that were so confident in the market size and the magnitude of the opportunity that's why we made that announcement and we're we're more alike than ever with a with bnsf from are very energized by yeah
spk_1: by these that announcement
spk_5: right projects that back
spk_26: the next question and some i am torn analogy that goldman sachs please for thing he i add to sort of curious sam can in light of your comments or and congestion in what may be coming enough is this lol from china
spk_1: me or mcnabb starts coming over here the on box turns where you noted it was all disappointing in the grand scheme of things in the first quarter although in line with seasonality how are you thinking about it from here whether be sequentially normal seasonality
spk_0: can you see some year of here improvement or is it hard to call at this point facts
spk_19: but i mean i think that that it's a little bit hard to call a mean
spk_27: again we are are commentary on box turns at a lot more to do with velocity challenges not from
spk_1: the anything going on in china certainly demand is very strong in so we're encouraged by that would anticipate that box turns will improve its velocity improves thanks the next question as from the line of ravi shankar with morgan famine please proceed i i think everyone has just are on be that the new agreement yet ah it possible to quantify kind of how much of that forty percent growth is likely to come from just expanding the by and that clock and logan etc were just taking market share a bigger to have a favorite your
spk_28: with with your peers also going about be right them her about that is a lot about becoming and so are you guys like really got going to can cut what all that and truck or is that gonna be going up a chair ship from the of years
spk_29: so first of all there's not a new agreement with bnsf for want to be clear about that we've had a year alone long term agreement with the intercept and more energized by the work we're doing together as we've been energized by that for thirty plus years now
spk_0: you know the growth is gonna come organically from our customers the growth is gonna come from
spk_1: significant and in efficiency in the networks today we're truckload of business is moving intermodal that should be intermodal and lastly there continues to be a really significant effort amongst some of our customers to grow their translated business and take international intact author of the railroad and replace that with with domestic intermodal and that that certainly can present some additional efficiency for our customers so you don't worry we always look to grow in that way we don't look to grow by just going out in a pricing fight with the host of intermodal channels we believe strongly
spk_4: presenting supply chain solutions to our customers and that that's gonna drive a behavior change or have no change in the way they're executing it it will certainly always be business lives in the bed that other people handle but our mission to grow is off the highway in france load and an organic growth with our
spk_19: existing customers
spk_9: good thank you our next question comes from admit marotta with deutsche bank please pretty
spk_30: take operator hi everybody out there you can you just talk about where box trying to exited in one to understand january average bring on the quarter down by women and where you actually and you know when can we see more meaningful private lender him velocity and and trained for liberty is is obviously key key variable but all well
spk_1: equal i would imagine that this new initiative help turn the boxes faster so if you can just talk about where you exit in the first quarter and when can we see more meaningful kind of idiosyncratic improvement on the back of this initiative and you know i i also think talking about the long term margin target with you guys obviously reduced i'm it's i guess it's it's it's my understanding that maybe you guys incurred some extra costs associated with dom a lot got to cook county of the bm relationship like put it that way and and and now obviously with that relationship both both parties kind of growing in the same direction for the first time in a while in this initiative is there an opportunity to read that margin target or would you use that canada a lever for grow to to address those points well all this quickly bar with your second question and say it got the better part of three or four years to change or margin target we don't have enough day for you today certainly it's our mission to to be focused on our return on invested capital and that's what we're focused on and a margin turns out to be kind of an output from that
spk_0: don't i don't have a good way to describe
spk_31: the turn number coming out of that a quarter what i would just say is you know who we highlighted that volumes what we're we're still slightly negative in january and then we started to experience growth as the quarter went on we did on board new equipment as the quarter went on and we're not satisfied with their turn number
spk_2: but we're encouraged by what we've seen from our customers and we're beginning that have worked with were encouraged by what we're seeing from the rail network today but it's nowhere near getting back to where it was prior to the pandemic we have a long way to go in that area but with there's no lack of motivate asian from a rail providers to improve their velocity so as as that goes we're going to continue to work on box terms that will be a subject forever but the for intel week and get an improvement inbox terms we have to consider the cost of the ownership of that equipment at the weaker velocity until get an improvement in that with that point i'm certain you'll see those results and now in our results
spk_5: ouch
spk_0: our next question comes from our sample in the act wedlock fargo korea for theme hi guys good evening and i just want to turn few dedicated you need or is obviously the pipeline's quite strong and dedicated you reference that but there is also a comment around the ability to get capacity their potentially limiting your group are there any way to a better understand how that back limiting capacity when near growth as or wait it is it a point or
spk_1: two and you think you can overcome that be thing your current conversations with the alien thanks
spk_19: you that the big challenge him what it limits really is were having to use whole products for up to six months and to help us increase our capacity just because of the chip shortages and other components that the aliens are facing right now so we're addressing the
spk_7: right now it's not limiting as other than is pushing what would normally be at ninety days start up to one twenty so that's person out some startups a little bit longer but at this point it's not really limiting us
spk_0: for many deals are plan is still very strong is just pushing them out probably another thirty days from what we would normally have out there we are having good conversation with aliens but none of them have any extra capacity at this point
spk_7: thank you our next question as from the line of brendan organ ski with barclays please please proceed
spk_0: he could have new thanks for taking the question i'm so it maybe put a follow up on you know the earlier closer and a consumer demand just because he comes conjecture an anecdote in the market right now you know about a looming great recession i think he said you know the markets and the new mixed signals but the are you seeing a code as and demand and any of your cosmos
spk_32: edmonds and then maybe second to that he knows we see spot truck rate come down and airborne focus on that how that can impact i yes that encouraged to gain pretty good volume games there at least to the first corn thank you okay so am i think we noted that we are things straight particularly in the act that part of our business is part of that because it a model of the most efficient way to move them and dedicated really taking on a private play in a long term agreement but also in and jamie v and three fifty bucks for saying
spk_1: as significant growth and our customers are really pushing it is as a part of that labour challenge but i think part of that it or solving for a better way to do that that's more efficiently by lightning bought all of that power through jpm three sixty so i think that's one of the biggest benefits we've seen through our technology is the the be seen and also the day we create for our customers and i feel it margins where you
spk_7: birth is the at it there were some kind of downturn i think mark and would change clearly from and and expansion and might have our been have been are you know back then we're about halfway through or central hub frightening left and or large portion portion of that the and then have be flexible in the market from a spot perspective that really goes across all of our businesses anywhere we have a chance to talk your customers about being dynamic and pricing and capacity were going to be that on the half of our customers the that will live with the market and then our contract griping what they are relatively in line with whatever we finish the season thank you
spk_0: the next question comes from bhaskar major with back where homer priest pristine
spk_33: yeah thanks for taking my questions and just the last as six weeks you've had diesel prices go up a dollar you've had the se seek to require disclosures of sculpturing supply chain emissions and even out this investment publicly that you intend to make in your capacity in partnership with the enter
spk_5: deliver on that for your customers
spk_26: can you talk a little bit of he is is the customer buying behavior and intermodal changing your do you have customers out they are asking for capacity and twenty three twenty four twenty five is there a chance this could shift to a your paycheck commitment just how much visibility to you have been in and where your strategic customers looking the grow with new not you
spk_5: this year but the year after in the year after next
spk_34: i think people that are really should have mentioned it not just or been a they were urged bad but also a longer term a discussion that we're having with our customers
spk_0: in general certainly we have customers right now have enough or intermodal a lot more of it in mentioned fuel that's part of it but also and just overall our ability to service or consumer in an efficient way in intermodal the more we can do that the more they want to do that in know psr has really created
spk_7: the pent up demand from our customer that the laugh about six years they had to move into the truckload market when really intermodal is the most efficient way to move good so as to your customers continuing to lean and long term but that's not too thin in a modal that long term across all five of our department your customers adding to the length of agreement and also talking to a across about durban the next question comes from tom way to it would you be as please proceed ah yes good afternoon wanted to ask you about how you think your business is worth been to a down cycle a minute things like you know the stock market data creep that concern it's they get it's hard to tell whether that continues or or not maybe maybe noise maybe the downturn but you think your businesses will react in a similar know what that again maybe twenty fifteen sixteen or twenty nine and we saw a prior downturns and freight
spk_32: an orgy think things are different for jb hans in terms of your biggest businesses and and how they might respond to work to downturn and creative it that plays out
spk_35: well if you look at other than
spk_27: eminent called downturn a recession and from two thousand eight kids out the not really the last time he can be it dramatically in our bed
spk_0: intermodal performed very well and we would expect and another to compete have performed very well for our customers that would be a great way for to deliver more efficiency for them and caught everything capacity to retain a and or intermodal model certainly would be resiliency and are dedicated model remember the that visit
spk_36: is really private fleet timbers and bet that that when they made that decision you know they know joe and is coming into the ability and a regular basis much like
spk_26: not an employee but similar to representing their brand and to that a longer term discussion for are dedicated customers and think in a highly services side we are more variable that song that last time so in the last recession we had a lot of trust and a lot of trailers now we have a lot of trailing from
spk_5: after the that a lot to be flexible the market with jimmy have three sixty two bad idea and maybe he will be able to be flexible in the market and creating right costs are capacity for the right let's that the right time and then and panel now i think part of that they had a non at that part to let and part of his on the asset part of the business
spk_1: you know that the growing sector so i think it will continue to take share from it's sector perspective on nick at be true if the of anything that on that god is think we have a lot of flexibility depend on one of the for channel that we have been suing adjuster cause when we have been on assets but only as if we have contract employed could help protect us there as the volume changes that we feel good about that so
spk_30: i think we will protect
spk_1: great thank you the next question comes on the line of brian often back with jp morgan please proceed having to take taken the question maybe one for bratty can talk about the the skill the size and scope their fame in terms of three sixty and the platform terms of profitability in terms of load headcount you where do you think you are at this point relative to where you want to be in the next cor two to three years in the market her tail and from march and perspective is a little your hatchback here i need you can elaborate on that to when you think about the next step being accelerating the phase of the investment eventually with his platform thank you yeah brian a question are you know just build on but shortly ago or in her prepare conference yeah we just rolled in there are five years of or three of three sixty and and and knowing that just in the last twelve months i'm from a key as he won we grew thirty six percent on the platform and so i didn't think that that really speaks to us
spk_0: having made the foundation of the apartment in the technology and the beginning to scale and so young with a revenue growth in jbt t of seventy seven percent year over year
spk_37: just outstanding a performance in an area that for a long time had been relatively flat or as you get behind south the combination of are out of the and and nine that model with live and drop in part of highly earth
spk_1: we believe that those networks together to create a bit and value for our customers i really am encouraged about where we were we the day as the relate that kind of where we're at in the environment as we'd be canadian and not trying to predict what was in front of it at the variable nature of the power that enough flexibility and though i do feel like we're going to be able to be any environment given the foundation of our trailing fleet that batman and we will look to continue to make investment their girl that we and it we can compliment limelight brain into our drop network
spk_5: and provide the physically per customer them
spk_1: i people questioned pride our brain we for one more question thank you
spk_0: the next question as to malign line of david byrne and with bernstein please proceed
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