Hello, and welcome to the Hub Group Q4 2023 Earnings Conference Call. Phil Yeager, Hub's President and CEO, Brian Alexander, Hub's Chief Operating Officer, and Kevin Beth, Hub's CFO, are joining me on the call. At this time, all participants are in a listen-only mode. A brief question and answer session will follow the formal presentation. In order for everyone to have an opportunity to participate, please limit your inquiries to one primary and one follow-up question. Any forward-looking statements made during the course of the call or contained in the release represent the company's best good faith judgment as to what may happen in the future. Statements that are forward-looking can be identified by the use of words such as believe, expect, anticipate, and project, and variations of these words. Please review the cautionary statements in the release. In addition, you should refer to the disclosures in the company's Form 10-K and other SEC filings regarding factors that could cause actual results to differ materially from those projected in these forward-looking statements. As a reminder, this conference is being recorded. It is now my pleasure to turn the call over to your host, Phil Yeager. You may now begin. Good afternoon, and thank you for joining Hub Group's Q4 earnings call. Joining me today are Brian Alexander, Hub Group's Chief Operating Officer, and Kevin Beth, our Chief Financial Officer. I'm proud of the way our organization executed to support our customers and one another in 2023, while also delivering the second-best financial performance in our company's history in a challenging year. We faced difficult market conditions with higher inventory levels, excess capacity, and slowing import demand. This led to challenging fundamentals in our more transactional service lines. However, our execution of our strategy over the last several years of delivering world-class service, investing in equipment and technology to drive productivity, diversification of our service offerings to deepen our value to our customers, and maintaining cost discipline, enabled us to successfully manage through those challenging conditions and deliver strong results. We completed several key strategic priorities this past year that will pay dividends for years to come. We improved our rail and chassis agreements, providing us with expanded reach and flexibility while enhancing our cost structure. We achieved a record level of share of our controlled drayage, enabling improved service and costs. We continued our diversification strategy, closing an accretive acquisition that helped us build scale and capabilities in the big and bulky final mile space. Finally, we completed our capital allocation plan, delivering a clear growth and returns-oriented investment strategy. These are just a few of the many strategic initiatives we executed on this past year, which we delivered while prioritizing our team and customers, positioning us for long-term success. We are leveraging the momentum at the end of last year to deliver for our customers and shareholders again in 2024. We believe that the current global supply chain disruption and the normalization of inventory levels will lead to increased shipping demand and West Coast imports, which, along with accelerating capacity exits, will progressively lead to improved industry fundamentals. In ITS, we have a great deal of momentum in bid season as we are providing significant savings versus truck while executing an excellent service product. We believe that with our improvements in service and productivity, as well as our enhanced partnerships, we will be in a position to deliver strong volume growth this year. Our initial results have shown the quality of our value proposition, and we will continue our focus on enhanced balance, velocity, and productivity throughout this season. We've also driven incremental growth in dedicated, onboarding new wins with existing customers based on our service, quality, and scale. We believe these factors will lead to improved performance in our ITS segment as the year progresses. In logistics, we are in the process of integrating our recent final mile acquisition and are excited about the initial results. We are taking a best-of approach in finding significant cross-sell and cost synergies that will allow us to accelerate growth in the business. In brokerage, after a strong year where we increased total volume count, we are seeing some signs of improvement in the market, which, along with our continued cross-selling, high-quality service, and productivity enhancements, will lead to improved performance. Finally, within managed transportation and consolidation, our value proposition of service, technology, and savings is resonating with our customers, and we have a solid pipeline of new onboardings that will support growth in 2024. Despite the challenging industry backdrop, we executed on our strategy and are positioned for continued long-term success. We are focused on having a great year in 2024 through delivering best-in-class service, investing in the business for the long term, maintaining our cost discipline, and deepening our value to our clients. This focus will position us as a provider of choice for our customers and will accelerate profitable growth as market conditions shift. With that, I will hand the call over to Brian to discuss our segment results. Thank you, Phil. I will now discuss our reportable segments, starting with Intermodal and Transportation Solutions. ITS revenue declined 28% in the Q4, driven by softer intermodal volumes that declined 11.6%. Transcon volume was close to flat, Local East volume declined 8%, and Local West declined 17%. While year-over-year volume declined in the Q4, we drove sequential Transcon and Local East volume growth. This momentum and shorter lengths of haul is a good early indicator of truckload volume converting back to intermodal. In addition, the sequential improvement is showing the early results of the enhancements that we have made to the Local East and our disciplined focus on margin per load day that will continue to drive Transcon growth. We continue to improve our cost structure in ITS that drove a 30 basis point improvement in sequential operating income, excluding acquisition-related fees. We continue to implement several cost controls that will accelerate in 2024 and better position us to compete while maintaining yield disciplines. From a cost perspective, our new rail agreements are moving with the market, and improved rail service has helped us better manage our equipment costs. In the West, we're implementing a new Hub-controlled chassis program in the Q1 of 2024 that will improve our costs and service reliability. Our in-source drays held steady at 80% throughout Q4, compared to 69% in the previous year. With improved driver productivity initiatives, we have the capability to further improve our cost per dray as we grow volume in 2024. We're seeing a slow start to the year, and weather events have impacted January volume, but we are focused on returning to growth in intermodal this year, which will be driven by truckload conversions back to intermodal, inventory destocking and normalization, increased West Coast import and transload activity, our adjustments to our bid approach with a focus on regaining velocity and balance in our network, and improved bid realization. We feel confident in our timing and disciplined approach for the 2024 bid season and are already seeing incremental wins that will ramp in late Q1 and early Q2. Our dedicated trucking team finished the year strong with a great growth story in yield expansion. We are entering 2024 well positioned for further growth with a strong pipeline of organic and new customer opportunities. While the near-term ICS results are impacted by low volume, we are confident that our actions will position us for growth and deliver high levels of service for our customers with sustainable profitability. Now turning to our logistics segment. I wanted to start by welcoming our new final mile team to the Hub Group. The integration into our existing final mile operation is well underway. We are now positioned as one of the top final mile providers with a diverse offering that now includes appliance deliveries and a larger network of locations. These locations now bring our hub network to 11 million sq ft, strategically placed in 75 locations to service our customers' supply chain needs. We have a strong pipeline of cross-selling opportunities that are quickly materializing into wins that will launch in early Q2. Our brokerage team continues to be an industry standout as they thrived through a challenging freight year and grew volume while improving team member productivity. We have well-planned IT initiatives set to roll out in 2024 to further enhance our brokerage technology, while we stay true to our Hub values of innovating with a purpose. 2024 is off to a good start for brokerage, and we are seeing early signs of smart pricing inflation that will support volume and yield expansion. With a long tail of Hub customers to cross-sell, we are excited for our brokerage team to continue profitable growth in 2024. While we continue our logistics growth, we're also improving our costs as we leverage our close to $1 billion in LTL under management. This leverage improves our LTL buying power and creates density to support consolidations, which helped drive a 16% increase in our Q4 LTL volume. We are also continuing to enable our multipurpose logistics locations to support our continued growth of our LTL, final mile, e-commerce, and warehouse solutions, while also supporting inbound and outbound multimodal hub volume to service our customers' supply chain needs. With that, I'll hand it over to Kevin to discuss our financial performance. Thank you, Brian. Before I start with the results, just a quick reminder that the EPS amounts presented are after the two-for-one stock split. Despite a continuing challenging freight market, Hub generated revenue of $4.2 billion for the year and $1 billion for the quarter. Our GAAP operating income margin for the full year was 5.1% and 3% for the quarter. During the quarter, we incurred $5.1 million, or $0.08 a share, of acquisition-related expenses. Without the acquisition-related expenses, the quarter operating margin was 3.5%. The acquisition costs were allocated to both segments based on revenue, along with our standard corporate expenses. Without the acquisition-related expenses, ICS margin was 2.6%, and our logistics segment was 4.4%. Our diluted earnings per share presented post-split for the quarter was $0.46 and $2.62 for the year. Adjusting for the acquisition-related expense, EPS was $0.54 for the quarter and $2.68 for the year. In the Q4, purchased transportation and warehousing costs decreased compared to prior year due to lower volumes and cost management efforts. Salaries and benefits decreased from prior year as our non-driver headcount decreased by 15%, and we had less incentive compensation expense. Depreciation and amortization expense increased as compared to prior year, due to growth-oriented investments in equipment and technology, as well as acquisitions. Insurance and claims costs decreased by $7.5 million due to improved claims experiences. G&A costs increased by over $2 million due to the previously mentioned $5.1 million in acquisition-related expenses. Gain on sale was minimal this quarter, whereas the prior year benefited from strong used truck pricing. Turning our focus to our balance sheet and capital allocation.... Q4 capital expenditures totaled $35 million, with a full year amount of $140 million. We purchased $21 million of tractors during the quarter, $7 million of containers, with the remaining $7 million related to technology projects and warehouse equipment. For 2024, we expect capital expenditures to be between $55 million and $75 million, as we have no additional container purchases planned and lower tractor replacements. We are expecting our typical technology capital spend to be in the $20 million range. We anticipate 2025 CapEx to be in a similar range as the 2024. During the quarter, we continued generating strong operating cash flow while deploying $262 million of cash for the strategic acquisition within our final mile business, and an additional $26 million on stock buyback at a weighted average price of $76 per share. For the full year, we purchased $143 million of stock at a weighted average price of $77 a share. At the end of the year, we had cash on hand of approximately $187 million. Our net debt is $166 million, which is 0.4 times EBITDA. We are below our stated net debt to EBITDA range of 0.75-1.25 times, and expect EBITDA less cash expenditures in 2024 to be greater than the $257 million generated in 2023. This shows Hub's cash resiliency as we expect cash earnings growth in a challenging freight environment. Additionally, we are confident in our ability to execute on our capital allocation plan, which includes paying our first dividend later this quarter, repurchasing more stock, and continuing to be active in M&A. After Hub's second highest annual EPS, we turn our attention to 2024. Our EPS guidance is $2.00-$2.50 a share, with revenue guidance of $4.6 billion-$5 billion. A few things to note as we come out of 2023 and into 2024. The middle of the range assumes ICF volume growth of low double digits, as OTR conversions occur based on continued strong rail service. Pricing in the H1 of the year is assumed down, but then rebounding to low single digit increases in the H2 of the year, as truckload capacity exits and the repricing of lower Q3 contractual rates occur. There is upside potential in our guidance if retail inventories decline, leading to restocking demand and more typical shipping patterns, including the traditional intermodal peak season and surcharge revenue during the peak season. Another market condition that would push results to the high end of guidance is intermodal volume growth, driven by OTR conversions, based on continued and sustained service level improvements. In the logistics segment, we are assuming growth due to the addition of the appliance final mile business, low to mid double-digit growth in managed transportation, driven by new customer wins and increased demand, as well as mid-single-digit growth for our consolidation and fulfillment and brokerage businesses. Additional guidance upside would result from the tightening of the truckload market, with capacity exiting, resulting in an increase in intermodal and truckload rates. For the 2024 guidance, we are assuming a normalized annual tax rate of 24% versus the lower 2023 tax rate of 20%. In 2023, Hub had very minimal incentive compensation expense. The 2024 guidance includes a more normalized incentive compensation expense. Another assumed headwind in the guidance is gain on sale. We assumed minimal gains in 2024. Our current average age of our tractor fleet is 2.6 years, which is within the lower range of our optimal replacement cycle. As such, we will be replacing less tractors than previous years. Additionally, we are not seeing improvement in the used tractor market, thus, we expect minimal gains as we replace older tractors. With these assumptions, we expect challenges that we have experienced the last few quarters, continuing during the H1 of 2024. In the H2 of the year, with normal seasonality, we anticipate sequential quarterly earnings growth. We expect earnings in Q1 to be a step down from Q4 2023, due to normal seasonality and continued pressure on intermodal and truckload pricing, and the return to a normalized tax rate. I do want to mention that normalizing our tax rate, incentive compensation expense, and the gain on sale of equipment, would add back approximately $0.49 to our mid-range of the 2024 guidance, resulting in flat or slightly growing EPS in 2024. The change in the tax rate will have the largest impact from Q4 to Q1, as we had the low 3.3% tax rate in Q4 2023, and expect the tax rate in Q1 to return to approximately 24%. We expect the incentive compensation effect to grow during the year as our earnings grow. Finally, looking at our cash flow, Hub's cash EPS was $0.30 and $0.34 higher than our GAAP EPS in 2022 and 2023, respectively. We expect this spread to continue to grow in 2024. As generating cash is an important goal of management, we will be noting our cash EPS results going forward. This change is not the basis for guidance, but to highlight Hub's cash earnings power. With that, I'll turn over to the operator to open the line to any questions. ... As a reminder, to ask a question, you will need to press star one, one on your telephone. Again, that's star one, one on your telephone to ask a question. Our first question comes from the line of Scott Group of Wolfe Research. Please go ahead. Hey, thanks. Afternoon, guys. So I just want to get a little more color on sort of the, the near-term earnings expectations, and just think about, like, the, the cadence throughout the year. So you're saying a step down from, from Q4. Should we adjust for the tax rate and get to something in the, you know, forties and then take it, then apply normal seasonality or, or not? Any color on just how to think about Q1, I guess, and then the, the sequential build from there. Sure. Thanks, Scott, for the question. Yeah, definitely, you have a couple of headwinds that we'll run into here quickly in the Q1. One is definitely the tax rate going from the 3.3% to a normalized 24%. You know, additionally, we're going to have less interest income after spending the $252 million regarding the acquisition. So those are certainly the two biggest things, I think, in the Q1 that, you know, really aren't management control. In addition to that, we will have some offsetting, you know, we're expecting to start to see margins return and get to at least, you know, the pre-adjusted or the post-adjusted numbers, excuse me. And, and then as the year grows, you know, we'll be seeing those price increases as well as volume increases that will sequentially increase EPS during the year. Yeah, I'd just add, Scott, I think, obviously, there's a bit of a tailwind here from the acquisition we just completed in December from a revenue basis. We're anticipating some sequential improvement in intermodal volumes. We saw that show up in January despite some weather issues. But to Kevin's point, operating margin percentage being relatively consistent with Q4 on the adjusted basis, and then the tax headwind are really kind of the big things to call out. Okay. And then, so just so you're saying take the adjusted intermodal margin, ITS margin of 2.6, and you think hold that fairly steady from Q4 to Q1? Yeah, yeah. Okay. And as you think about your rail contracts and what you're expecting for price, is in aggregate for the year, intermodal price cost a tailwind or a headwind? Yeah, this is Phil. I would say it's a tailwind. You know, our new structure has certainly helped us through this more challenging environment, you know, with the structure that moves up and down, you know, obviously, with some of the challenges we've seen in the market. It does have a bit of a lagging effect, and I think that's important to call out. So as we see more stabilized pricing in the broader market, as well as an inflection positive, you'll see more flow-through for Hub. I think Brian mentioned some really good things we're doing on the other side of cost and implementing our new chassis program in the West. I think in Q4, we saw drayage costs down 25% on a cost per dray basis, so we're doing a really nice job there, and then we're very focused on layering in growth, that will help, really drive down our cost structure as well. Maybe just last question. You guys used to give us quarterly OpEx guidance. I get it's a bigger business now, but you want to take a shot at trying to help us think about going forward? I don't—we're not prepared to do that, using the individual segments. But I, you know, would say, again, we would be looking at increases, you know, Q1, like I said, similar to the after adjusted amounts, and then, going back up to more standard with a little bit of growth, into the H2 of the year. Yeah, and I think headcount will stay relatively similar. We're going to have, obviously, merit-based increases, some increase in incentive compensation in Q1, and then, you know, gain on sale will be a little bit of a headwind, Q4 to Q1 as well. All right. Thank you, guys. Thank you. Our next question comes from the line of John Chappell of Evercore. Your question, please, John. Thank you. So on the big, big year guidance ranges, you know, the revenue number is substantially higher than street expectations, so a fair amount of upside there, but the EPS is, is actually lower. So I'm just curious on the margin cadence for this year. Is this strictly just the pricing weakness at intermodal in the H1 of the year before things start to ramp? Or is there more of a structural lower margin for the entire enterprise as you're diversifying your businesses, especially with growth in the logistics markets? Sure. So I think what we've shown over this past year is the logistics margins are going to be relatively more stable. We think that there is upside within that as we see the brokerage market normalize, but we didn't really want to place a bet on exactly when that's going to occur. Within ITS, I think, you know, we've also stated that is going to have some lower lows, but also some higher highs and a little bit more fluctuation. We're currently in the lower end of that, and believe that that's going to sequentially improve throughout the year. So I don't believe that we're at a structurally lower operating margin going forward, but we're certainly navigating through some more challenging market conditions and wanted to be conservative in our approach. One item that we didn't include in the guidance is any share repurchases. Obviously, we have a $250 million authorization, which could be upside, and we'll be opportunistic within that around capital deployment. ... Okay, that's helpful. And then, probably for Brian, you know, I think it was last quarter, maybe two quarters ago, but probably last quarter, you said you maybe held the line on price a little bit longer at the expense of volume, and I feel like you've shifted there. You had some positive things to say about incremental wins in bid season. Is it that same policy you're sticking with now and maybe, you know, for the first six months of the year to try to get more volume on the network to help with efficiency, et cetera, at the expense of price? And when do you kind of, maybe expect a better balance of volume and price? Is that just, purely market related? Sure. Yeah, no, no, appreciate that, John. We are getting the early wins in the bid season, and what we're seeing is that we're positioned well now to defend our incumbency, to capture more share and get the over-the-road conversions that we needed to do. As I mentioned in the previous calls, we needed to make some adjustments structurally to target balance and velocity. And I think seeing the bid realization in some of those inventory normalizations has helped us plan and that demand and that forecast. But we saw Transcon, I mentioned that in the prepared remarks, sequential growth there. And when we look at January over December, we saw a 10% sequential growth in Transcon. And that's really us focusing on margin per load day and seeing some of that spot inflation start to drive more of those over-the-road conversions. And it's the same thing in the Local East. We saw a sequential improvement there in the Local East. In January, we saw that consistent and getting more momentum at about 10% over December, and that's a lot of capture from over-the-road conversions. So we, you know, we think that we timed it well. We had, we have about 43% of our bids going live in Q1, and we positioned in Q4 to time it right, and then another 18% of those go live in Q2. And so, that's going to drive a lot more of that volume and velocity that helps us cover the fixed expenses, but also staying disciplined on margins. Great. That's very helpful. Thank you, Brian. Thanks, Phil. Thank you. Our next question comes from the line of Jason Seidel of Cowen and Company. Please go ahead, Jason. Thank you, operator. Good morning, gentlemen. A couple quick questions here from me. You mentioned that there's going to be some cost controls that accelerate as we move through the year. Can you give us some more details and maybe tell us where you expect that to show up in the P&L? And, and also on the container side, you said you're going to basically pause any more container purchases. Can you talk to us about where the fleet's at and, and what% of the fleet is actually in use right now versus being parked? Yeah, this, this is Phil. So from a container perspective- Okay. We have around 20%, that's currently stacked. We're in the process of actually unstacking as we've seen some momentum here. Brian mentioned some of the positive signs we've seen December to January, and that's actually pre some significant startups that we have over the next couple of weeks. So there's some unstacking. We think that'll come down kind of sequentially throughout the quarter. But given the amount that we have stacked, as well as the improvement in utilization that we can drive, we don't see any need to add any additional containers at this point, and it's obviously going to drive some pretty significant free cash flow generation for the year. On the cost side, and I'll let Brian, Kevin jump in here, we've done a really nice job on managing our overhead expenses. Our headcount is down 15% on a year-over-year basis. We'll be thoughtful around hiring and returning to growth there, but want to make sure that we're remaining diligent as we've done a very nice job in resetting our cost structure for the current environment. I think as we've also done a really nice job as well around reducing cost per dray and improving our purchasing. I mentioned that was down 25% year-over-year in the Q4. We'll see that trend continue, not only as we insource more and get more productivity out of our drivers, but we're also going to continue to be very diligent around third-party drayage costs. And then Brian also mentioned our new chassis agreement in the West. That's going to be very helpful from a margin perspective, and we'll start to see that really show up in the Q2. It'll be kind of ratably rolled out throughout the Q1 and start to show up there. The last piece I would just highlight is rail costs. We'll likely see some benefits sequentially as we head through Q1 as well as into Q2. Yeah, I'll just add a piece on specific to brokerage, right? We've seen the volume grow with there, and it's a really industry standout with what they've done. We're really proud of that, but they've also improved their productivity, their team productivity. We've got a good roadmap of IT initiatives that are set to roll out throughout the year that'll further enhance that productivity within our brokerage and help control that cost. Well, that's good color. If I can go back, Phil, to, you know, the 20% that you said you have stacked, and you said that that number should come down. You know, with 43% of your bids going live in Q1 and 18% in Q2, what number should we see, expect to see by the end of 2Q here on that 20%? Should it be down to, like, 15, or could it go below that? You know, that's a little unclear to me. I don't know exactly at this point. I would say 15% is probably a good measure. But I think our goal is to get improved utilization at the same time, right? So we're really focusing on balance and trying to win the right business that fits our network. And so a little tough for me to say exactly. Might have some temporary imbalances where we increase repositioning costs, or we make a decision to stack, or to unstack because we think the volume is going to be there longer term. So those are things we're weighing on a more tactical perspective, but it's a little difficult to say, but I would say likely you're talking about 15% or maybe a little bit under that. Sounds good. Appreciate the time. ... Thank you. Our next question comes from the line of Bruce Chan of Stifel. Please go ahead, Bruce. Yeah, thanks, operator, and good afternoon, everyone. Maybe just to follow up here on the revenue growth side, I'm not sure if I missed some of it, but it sounds like you're off to a pretty healthy start for the year on the volume side. You know, how should I think about kind of the cadence of you know low growth versus pricing growth in intermodal as we move through the year? Is the idea kind of that we're higher on the volume side, and maybe that subsides a little bit in the back half of the year and pricing accelerates there? So maybe just some commentary on how you know revenue growth proceeds through the year. Yeah, yeah, Kevin mentioned, I think, when you look at ICS, volume is likely gonna be down again, year-over-year in Q1, be up in Q2, and then accelerate as we have, you know, both new wins coming on, but also lower comparables in Q3 and Q4. I think around that as well, we would certainly hope that in that kind of 31% that's coming out to bid in Q3, and we're getting positive price, which would be incremental. And then certainly we hope if there's any normal seasonality in Q3 and Q4, you'd see some sort of surcharge revenue that's coming in there as well. That would certainly be upside to our, to our revenue projection. I think the other piece that is built in there is onboardings within our logistics segment that we have good visibility to as well as the final mile acquisition is adding some significant revenue as well. So those components together really are leading to the revenue guide. Kevin or Brian, anything you'd add? Yeah, I agree with Phil. You know, I think one thing to point out, Bruce, is, you know, we definitely have some high comparables. You know, we're looking at this year sort of as an exact flip of last year, where we, you know, we started off with really high revenue amounts in ICS, and this year, you know, we're gonna build back up to those as opposed to starting with it. And you know, as the bids come about that later in the year, we'll start to see that price increase year-over-year as those, you know, bids that went in in the H2 were priced at a lower amount to begin with. Okay, that's really helpful. And maybe just as a quick follow-up here, any comments around what you're seeing in terms of competitiveness in the marketplace? And I know you've got some boxes to unstack, you know, some of your peers have some boxes to unstack. So, you know, maybe just what assumptions are built in, from a pricing competitive standpoint into your, you know, assumptions for pricing this year? Sure. I'd say it's a competitive market, but we're very focused on our network needs and really driving that velocity and productivity and converting business from over the road. That's actually what we'll probably see in the majority of our wins, is in the shorter lengths of haul, which might be a negative mix impact to our revenue per load as the year progresses, but I think at the same time is a positive for velocity and balance. So, while it's competitive, you know, we're not gonna unstack containers unless we're getting a return on that, and we still have a long way to go to get our fleet to running optimally and at the utilization levels that they should be. So, there's capacity available even on the street today, but we also want to make sure we have ample capacity to support new onboarding, make sure that those are seamless and that we're serving our customers appropriately as well. That's great. Thanks for the time. Thank you. Again, to ask a question, please press star one one on your telephone. Again, that's star one one on your telephone to ask a question. Our next question, please stand by. Our next question comes from the line of Brian Ossenbeck of J.P. Morgan. Please go ahead, Brian. All right, thanks. Evening, guys. Appreciate you taking the question. Just wanted to go back and make sure I understood the cadence again. Like, where are you seeing contract renewals now? To your point, you were holding the line a little bit too hard on, on price, or is pricing, you know, down at this point? It sounds like maybe you're hoping for that to recover and turn positive on market recovery and maybe comps at the same time. So, maybe you can just start there and kind of walk me through that again. Sure. And focusing on our incumbency, you know, we are seeing slightly down renewals, I would say. And then what we're really trying to do is, ensure that we're getting growth that is consistent with our network needs, that help drive that balance, help reduce costs, and really spread our fixed costs a little bit more effectively. When you look at the latter part of the year, you know, Brian, that's where we mentioned that we held price a little too long, and it's those contracts that are gonna come due here in the H2, and we'll be able to price better and have winning more volume at that time. Right. So then, I guess I'm just having a hard time with, if you've got prices held too long in the back half of last year, coming up this year, wouldn't it flip the other way, and you'd lose some on price and lose some more on price and get more on volume? Obviously, a lot can happen between now and then, but just wanted to make sure I understood what you were assuming, you know, in the outlook, focus on the midpoint. Yeah, maybe I can try to take it again. It's slightly down price in the current bid process, which is that 41% and 18% that are here in the H1, right? So, that's what we assumed on those renewals, and then we assumed slightly up on the Q3, Q4. Yep. And as we bring that on, you know, we would be hopeful that we are growing volumes during all of those bids, and that is what we are seeing currently right now. If you talk about the 41% that is currently in bid, we are seeing, we're locking in our incumbency at that slightly down level, but then we're adding incremental volume, which, as you know, has a significant flow-through for us. That's been the approach thus far. Obviously, we want the market to assist us. We want to see, you know, there is some stabilization in the spot market. We haven't seen that necessarily translate into contract rates yet, but we're certainly hopeful we see the market really solidify, start to move upwards. As you know, price is a large flow-through for us, and we'll certainly be, as the market enables us to, be going after rate as well. Yeah, I think one thing we didn't mention, this is Kevin, is on the upside of the guidance, is the potential for some surcharges and then accessorials coming back. You know, that was really muted. In fact, there was no surcharge revenue that we experienced in 2023. So, you know, if we can get back to a, to a standard, environment, we think we'd be able to get some surcharge revenue in the H2 of the year as well. I would just highlight, I think we based that on discussions with a lot of our customers, who are having some concerns around the East Coast labor challenges that may be existing as we enter what is typically retail peak shipping season. I do think you'll see a little bit more diversification back to West Coast ports. Okay. I appreciate all that. And just to maybe follow up on the current market conditions, it sounds like things are actually pretty strong, relatively speaking, from December into January. I think, Brian mentioned there's some signs of spot market some spot market strength, and clearly not as strong as you'd like, as you just mentioned, Phil. But what, what are you seeing now that sort of gives you confidence in, in looking out for that, for that back half recovery? Is it too early to say we've turned the corner? And then maybe specifically, since you talked about truckload conversion, just on rail service, are shippers really willing to commit meaningful volume to that, or is it just kind of wait and see? Yeah, sure. Sure, Brian. I'll start with the quality of the bids that we're getting, and Phil mentioned some of the dialogues we're having with our shippers. They have a much better view with the normalized inventories of what their demands are going to be in each of the lanes and some of that seasonality that comes with it. That helps us align with what to execute to, what to price to, how to balance our network. And so the quality of the bids are coming out really well. And so we mentioned some of the early wins in the bid season that have already started to materialize here. We've seen the early signs of that in January. I mentioned some of the sequential growth that we've seen, not just in intermodal, but also when we look at our brokerage. Sequential January over December was up 9% and up 4% year-over-year, and we think those are good indicators. And within that brokerage piece and over the road, that we did see some spot price inflation. We'd like to see some more of that continue through the quarter, and we think it will as we start to see some of that spring restocking and as we go through March and into April. So I think that's a big part of it. As far as the rail services, Brian, go, we... You know, throughout 2023, we saw continuous quarter-over-quarter service improvements from both rail, or both of our rail partners. And they're at a very good place. They're continuing that improvement that's compounding over the Q4 into this year. I'd say in addition to the consistency that we've seen in their rail service, we're also seeing them be more nimble and quicker to respond to disruptions, whether it be weather, and they recover very quick. So, shippers are noticing that as well and becoming more confident in those conversions. Yeah, I think we're using the most recent winter weather disruption as a rebound in service that was very quick, as a proof point for a lot of our customers. And I think many of our customers are thinking about how they want to lock in capacity right now as well, and that there likely will be an inflection at some point this year. I don't think anybody's calling a change in the market, and that's not really built into our guidance. But we're certainly hopeful that we're seeing the positive trends that will lead to that. Okay. I appreciate all that. Thanks for the time. Thank you. Our next question comes from the line of Bascome Majors of Susquehanna. Please go ahead, Bascom. It sounds like the intermodal outlook for the H2, you're expecting slightly positive pricing, you know, slightly favorable costs for a nice price-cost spread. I'm curious, if the pricing comes in more neutral with cost for a kind of break-even spread there, do you still think the low end of your guidance could hold, if that's what the H2 gives us? Thank you. Yeah, absolutely. I don't. We did not build this guidance with a large market improvement in mind. As I mentioned, there's some upside factors as well in there around share repurchases. And certainly, you know, if we don't see the market stabilize, we have levers we can pull to continue to improve our overall cost structure. So absolutely. Yeah, I think the costs, both, you know, the dynamic rail contracts that we have, will help allow for, for that, Bascom, as well as, you know, our enforcing of the drayage and the new chassis agreement all should help, be able to allow for, for hitting that low end of the guidance. In your prepared remarks, you talked about in recent years, cash EPS being... call it $0.35 higher than reported EPS, and clearly, that goes up with the acquisition this year. Yes. Do you have a preliminary purchase price allocation sense of what that gap will be in 2024? Yeah, we think, preliminary, you know, low teens is probably the additional amortization. You know, certainly that's not done yet, and probably won't be done until the end of the quarter. But yeah, that's our preliminary. I'm sorry, low teens, do you mean like $0.10-$0.15 or 10% of $0.35? Oh, yeah, sorry. No, actually, I was thinking an actual dollar. So yeah, about $12-$15 million of amortization, additional amortization expense from the acquisition. Is that what you're looking for? I'm sorry. Thank you for the time. Thank you. Our next question comes from the line of Brady Lierz of Stephens. Your question, please, Brady. Okay, great. Thanks. This is Brady on for Justin. I wanted to ask if you could share what your guidance is assuming for margins and logistics, and maybe if you could just share any color on the cadence of margins in that segment in 1Q, and then kind of as we move through the year. Sure, Brady. I think, you know, actually similar to what we've been talking about with ICS, it's going to start off a little lower than we are, would certainly like it just due to lower transactional volume. But you know, the spot market and the brokerage pricing right now is a tough headwind to battle. But we're expecting that to increase as our contractual rates on the truck market improve. And also, as the final mile integration that happens, you know, we have a lot of upside there as well to help with the OI of the logistics segment. Yes, I would think about it as adjusted operating margin% from Q4 is probably relatively flattish, yeah, to Q1, and then we would anticipate sequentially improving. Okay, great. Thanks, very helpful. Then maybe you could just talk about the growth that you're assuming on an organic basis in logistics, and maybe any updated thoughts on kind of what you view as a normalized margin for the segment, including the recent acquisition? Sure. Yeah, this is Brian. I'll talk a little bit about that. I think what we've seen obviously is in our logistics segment, is our brokerage standing out and continuing to grow volume. We expect that volume to grow into the double digits, low double digits, as we go into this year. Like I said, we've already seen that in January, starting to materialize. I think also within our brokerage, what we're seeing is their ability to cross-sell across all of Hub Group, and they're adding new logos, and then those logos are cross-selling throughout logistics. Within our final mile, you know, we've added those appliance capabilities, but we've also seen that cross-sell pipeline open very quickly with materializing wins, ready to onboard in Q2. So that'll be another good piece of that revenue stream. As we think about our network, which I've mentioned is 11 million sq ft, that helps enable our cross-selling and our growth with strong pipelines for that network, as well as our managed transportation. I've also indicated, too, as we've done this, we do see a higher retention rate of our customers. We see them being less price sensitive and a higher rate of return with those solutions that we deliver across our logistics offerings. Yes, you know, obviously, the highest growth rate would be in final mile, just given the incremental revenues there. I would, I would say following that would be managed transportation because we have some locked-in wins that are starting up actually in February, so we're excited about that. Brokerage, we didn't assume a massive amount of growth, just given we don't know exactly how the market's going to look. And then within consolidation, we said things would be a little bit more muted, but maybe just some organic growth and overall volume and velocity. So not anything, you know, massive, but actually up year-over-year. Okay, great. Thanks, guys. I'll leave it there. Thank you. Thanks, Brady. Thank you. Our next question comes from the line of Thomas Wadewitz of UBS. Your question, please, Thomas. Yeah, good afternoon. Wanted to ask a little bit about, what's behind the optimism on volume growth in intermodal, and just think about where, is this, you know, shippers are really kind of, you know, interested in the conversion and the, and the better backup on rail service gives you that momentum. Is it, you know, the share gain or the improved volume performance, is that really at the expense of truck, or, are you thinking about maybe competing better against some of the other, intermodal players? Just some more perspective about the, the improvement in intermodal volume as you look at 2024. Yeah, this is Phil. We are very focused on once again finding the right business that's going to fit our network. But yeah, we are very focused on returning to growth. As we mentioned, we don't think Q1 is going to be a positive year-over-year volume growth, but that it will improve on growth rates as we go through the year. One is low comparables in the back half. So that's certainly an aspect of it, but at the same time, it's discussions with our clients around incremental wins that we're actually receiving and then their forecasts for the year as well. And with the service levels we're providing, you know, we're winning a lot of awards and positioning ourselves to really take advantage of the market upswing here. So it's a mix of comparables, confirmed wins, and then, you know, discussions with our customers around how they see their supply chains adapting throughout the year. Do you think it's more share gain from truck or competing better versus some of the other intermodal players? You know, we're targeting truck. I mean, we're winning a lot of short-haul business right now. Sometimes it's more challenging to tell exactly where it comes from, but you know, I think our main target is truck. Right. Right. Okay, that makes sense. One more, you know, you've built a nice portfolio of services you can offer. You talked a little bit about cross-selling. What do you think is the kind of, you know, the best hook with the customer when you go in, something they really want, and is helpful for cross-selling and perhaps an area that you might want to build out additional capability? Yeah, so we're able to really open the door with, with any customer based on our Intermodal capabilities and our, our service reputation. I think that's certainly our way in. Once we're there, it's about finding the right solution for what their supply chain requires. It could be anything from something as simple as transactional brokerage to a consolidation program, to a full outsource or just managing their LTL. We find that our managed transportation capabilities, we can come in with, especially given the inflation that has been taking place in the LTL market, with what we can do with consolidation and managing their LTL spend, is a very sticky and strong service offering. But when we combine that with our warehousing capabilities, it becomes even stickier, as Brian mentioned. So, it really does depend on the customer and their specific supply chain. But when I think about where we're at now, I think we have the right set of capabilities. It's about building specializations and scale within them and finding the right cultural fit that will help us continue to drive that growth. So, you know, I think you'll see us continue to be active in non-asset logistics M&A, but also be very thoughtful around our approach, in adding to those core capabilities that we've developed. Okay, great. Thanks for the time. Thanks. Thank you. Our next question comes from the line of Ravi Shanker of Morgan Stanley. Please go ahead, Ravi. Hi, thanks. This is Christyne McGarvey on for Ravi Shanker. Just wanted to take a step back a little bit. You guys issued some long-term targets a couple of years ago now, and it seems, you know, we're quickly approaching 2025. So maybe you can talk about kind of confidence and path to some of those long-term targets. And if I can maybe, you know, thoughts as we approach them, how you guys are thinking about kind of the next benchmarks that you guys are looking to benchmark against. Yeah, so we're not ready to publish any new targets. Certainly, we're very focused on the 2025 targets we'd set. You know, we have some work to do on the revenue side, but I think our guidance shows that, you know, where we think we'll be is relatively consistent, and we'll have the opportunity to achieve that target. We operated this year and the prior year within and above the range on operating margins. I think our guidance is also within the range, obviously, and we think that with a positive inflection in the market, we'll be, you know, well within that. So, certainly our focus is on achieving both of them, and we think both are very doable. Great, thanks. If I could squeeze in one more. It's been talked about a bit on the call, but maybe to ask it a slightly different way. In your customer conversations thus far in bid season, it, you know, the over-the-road conversion, it, it seems, at least collectively, as a market, it's sometimes, you know, been harder to prove out, than maybe hoped for. It sounds like there's some inflection here, you know, in those conversations. You alluded to kind of rail service confidence coming back, but is there anything else in terms of customer priorities or what they're telling you that makes, you know, the over-the-road conversion a little, you know, more attractive here? Yeah. Yeah, I think our customers are looking for service, they're looking for consistency, they're obviously looking for cost savings, and they're looking to ensure that they have available capacity when the market does inflect. And I think intermodal is a great solution for all of that. And, you know, as Brian mentioned earlier, when inventory stabilize, there's more of an opportunity to extend those transits, which also opens up more intermodal opportunities. So all of that leads to some of that shorter length of haul, which we're seeing right now start to flip over. Great. Thanks. I'll leave it there. Appreciate it. Thank you. Thank you. Our next question comes from the line of David Zazula of Barclays. Your question, please, David. Hey, good evening, and thanks for taking my question. I guess, real quick, are you able to share the realized yield you were able to get in intermodal for the quarter? Yeah, it was down 21%. A couple of things to reference there, was we had a fuel headwind, as well as overlapping accessorial and over $5 million of surcharge revenue from last year. So, I, I think along with that, I had mentioned earlier, you're going to continue to see a little bit of a mixed impact as we bring on more shorter length of haul business, and that obviously impacted us in the Q4 as well. Thanks, very helpful. I don't want to pick too much at the scab that Brian had gone after, but just a little bit of understanding for us. On the way down, our perception was you held the line on price maybe a little too long, and it cost you on the volume side. Have you changed at all how you're thinking about pricing or anything you're looking at for pricing or algorithms or anything that will help you maybe be more, you know, prevent you from being not aggressive enough, I guess, on the upside, and not taking advantage of a rapidly moving pricing market? Yeah, I did... Yeah, we have, absolutely. We've changed our entire pricing organization and philosophy to be able to adjust to that. We have a new chief marketing officer doing an excellent job in making sure that we are winning in the market and able to go out and price to win, and that's what we've been doing thus far. So, yeah, we've made some significant changes within the organization and to our approach, and feel as though it's working. Yeah. And then just to add to that as well, on price, too, it's also targeting what we go after to make sure that we're building the balance across our network, as well as the velocity in the areas where we need it. And that aligns with the cost takeout that we've also been able to do within our intermodal operation. And last point I'd just add is, Phil, I think right now is the timeframe where we lost that volume last year, right? So we are in the process of recapturing that, which is why we laid out in the guide that we were going to be down in Q1, but then start to see year-over-year growth. Thanks. Super helpful. And then on the brokerage side, could we get your thoughts on spot versus contract? You know, how you're trying to set yourself up to be able to take advantage of a potentially positively inflecting market there, and, you know, how you plan on handling customer relationships. Sure. Yeah, this is Brian. I'll touch on that. As, you know, when we, when we finished out the year, we were 53% of our brokerage volume being contracted, 47% on the spot side. And I think what we've been able to do is take a lot of that volume that's coming in, and that we're buying low on the spot, and, and move that into contracted, so that we're able to secure that pricing as pressure starts to come in through the, through the later parts of this year. So that we maintain that, that lower cost of purchase transportation, and then we translate that back into the price that we give to our customers, which then creates more of that volume. So we're structured really well with a good balance and a, and a good strategy for that. Thanks, Brian. And then if I could just get a last cleanup. Could I get the non-driver employee count? Yeah. Non-driver without new final mile is 1,900 versus 22 at the end of last year. That's your 15% decrease. Thanks so much. Thank you. Our next question comes from the line of Allison Poliniak of Wells Fargo. Your question, please, Allison. Hi, good evening. Could you maybe talk to on ITS margins, you know, as you're looking towards growth in the H2, any impact in terms of, or if you can quantify how unstacking the boxes would impact that margin in the H2? Is there a cost there, and just any holding costs that are near-term to be mindful of? No. Yeah, Allison, I think a very good question. But you know, when we're unstacking, we're very much looking at it from a returns perspective. So we want to make sure that the business we're bringing on is going to be helpful to margin. So it shouldn't be a large impact in one quarter or another, or anything likely worth calling out. Where we might you know give you a little bit more is if repositioning costs are increasing. I think that would be a larger driver than any unstacking costs. Yeah, Allison, I think one of the things we, we do pretty well is, you know, we stack close to the markets that we anticipate are going to have the deficits, so, you know, that allows us to react quickly. And, there isn't a lot of cost to get those boxes, revenue producing as quickly as possible. Yep. Got it. Then just in terms of M&A, maybe a little color on kind of where your pipeline stands and, you know, you just did the Forward Air in the process of that. Just management capacity to handle future M&A, just given your ability to do that on the financial side. Thanks. Yeah, no, this is Phil. Yeah, we do have a strong pipeline. You know, we're very focused on kind of those core non-asset logistics areas, adding scale and specialization that bring, you know, a higher margin profile. Yeah, we're continuing to look for opportunities. We want to be thoughtful. Obviously, priority one is being successful and getting back to growth in intermodal, as well as successful integration of the final mile acquisition. So, those are the top two, but then certainly out looking for more, and as you mentioned, we have a significant capacity to do so. Great. Thank you. Thank you. Thank you. Thank you. I would now like to turn the conference back to Phil Yeager for closing remarks. Sir? Great. Well, thank you for joining our call this evening. As always, if you have any questions, Kevin, Brian, and I are available, and we hope you have a great evening. Thank you again. This concludes today's conference call. Thank you for participating. You may now disconnect.