Hello, and welcome to the Hub Group First Quarter 2024 Earnings Conference Call. Phil Yeager, Hub's President, Chief Executive Officer, and Vice Chairman, Brian Alexander, Chief Operating Officer, and Kevin Beth, Chief Financial Officer, are joining the call. At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow the prepared remarks. 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 first quarter earnings call. Joining me today are Brian Alexander, Hub Group's Chief Operating Officer, and Kevin Beth, our Chief Financial Officer. Market conditions have remained soft despite improved demand trends and inventory restocking, largely due to excess truckload capacity that is yet to exit the industry. This trend is counter to many prior cycles and has led to a prolonged trough in the spot market. This has, in turn, driven a competitive start to bid season as carriers attempt to deploy latent capacity and spot market pricing is pressuring contract rates. We are seeing some positive signs in the market, with capacity exits and many customers orienting their purchasing decisions to value both service and costs. However, this capacity attrition is not occurring at a pace that is leading to more stability in the broader truckload environment. Despite these market challenges, we continue to execute well on our strategic priorities. Consistent with our focus on diversifying our service offerings to expand value to our customers, the integration of our recent Final Mile acquisition is performing ahead of expectations, and our strong balance sheet and robust pipeline of opportunities positions us to drive growth via strategic acquisitions. We also deployed our capital allocation strategy due to our strong free cash flow generation, issuing our first-ever cash dividend, completing our stock split, and opportunistically repurchasing shares in the quarter. We are executing these initiatives while enhancing our operational discipline and delivering premier service to our customers. The challenging broader industry fundamentals have more heavily impacted our intermodal and brokerage services. However, we have outperformed expectations in early bid season as we focus on utilizing our improved rail and chassis agreements, enhanced street economics, better fleet utilization, healthier network velocity, and extremely strong rail service to convert business from over the road in both short and long-haul segments. We remain focused on execution in bid season, and our deliberate approach is helping to drive improved costs through our velocity and balance-oriented growth plan. Along with this, our brokerage continues to grow load count as customers recognize the value of our multiple service offerings, scale, and superior service. The diversification of our services and focus on cost management has led to enhanced stability in our earnings through this elongated cyclical downturn. We have a high-service, integrated, and cost-competitive value proposition across all of our contractual solutions. In Final Mile, the expansion of our capabilities and high service levels is helping us deliver improved cross-selling and growth. Our warehousing solutions are flexible and have a growing national footprint, which brings enhanced value to our clients. Within Managed Transportation, our continuous improvements, technology, and purchasing power is driving customer retention and organic growth. Last, within dedicated, despite short-term headwinds due to startup costs and increased claims expense, we are utilizing our award-winning service to grow with our existing clients. We have a strong pipeline of opportunities across all of our service offerings, which we believe will drive growth through the remainder of the year and position us well as the market recovers. We are excited about the progress we have made in our strategic plan, while delivering enhanced execution and excellent service for our customers. We believe that there will be a broader market transition in the future, driven by capacity exits and inventory restocking, and we remain focused on positioning Hub Group for long-term success through our consistent investment approach and relentless focus on delivering for our customers, team members, and shareholders. With that, I will hand the call over to Brian to discuss our service line performance. Thank you, Phil. I will now discuss our reportable segments, starting with Intermodal and Transportation Solutions. ITS revenue declined 22% in the first quarter, driven by softer intermodal volume that declined 10%. Transcon volume was down 6%, Local East volume declined 2%, and Local West declined 16%. While year-over-year volume declined in the first quarter, sequential volume growth was up 3%, with the Local East growing 6%, Local West up 1%, and Transcon declining 2%. In addition, the first quarter, month-over-month, illustrated growth, with January up 5%, February up 9%, and March up 5%. This monthly and quarterly improvement is showing the early results of the enhancements that we have made to our bid strategy. The first quarter represents about 40% of our annual bid activity, and we have recognized early wins that started late in the first quarter and will continue throughout the year. We are being successful in taking share and converting from over-the-road, while also creating balance and velocity in our network. In addition, we are seeing strong volume growth with cross-border activity as we continue to invest in a superior solution to support our customers' north and southbound volume. Our improved cost structure is helping to support more competitive pricing while maintaining yield discipline. From a cost perspective, our rail agreements are moving with the market, and improved rail service has helped us better manage our equipment costs. In the West, we completed the implementation of a new hub-controlled chassis program that is improving our cost and service reliability. Our in-source dray was 77% throughout the first quarter, compared to 74% in the previous year, and improved driver productivity initiatives are further enhancing our cost per dray, which will expand as we grow volume in 2024. Finally, our new bid awards are creating network balance that is reducing our empty repositioning costs. We are pleased with the start of the second quarter, with April showing volume growth over March and year-over-year. Our bid strategy and improved cost structure are expected to have continued incremental wins throughout 2024. While our dedicated trucking team finished 2023 strong, they entered the year with some headwinds related to startup costs. We have already seen yield improvements in the second quarter that we expect to continue throughout the rest of the year. Now turning to our logistics segment. The successful integration of our Final Mile acquisition, our strong pipeline, and continued brokerage volume growth improved our logistics revenue by 2% year-over-year and 10% over the fourth quarter. Our acquisition synergies and leverage purchasing strength helped improve our operating income 60 basis points when compared to the fourth quarter adjusted operating income. The integration of our Final Mile acquisition is ahead of schedule, with several new customer and organic implementations in the first quarter and confirmed wins to implement in the second quarter. We have also started to leverage the combined non-asset-based operating model to improve our cost structure. Despite market headwinds, our brokerage team continues to build momentum with its fifth straight quarter of sequential volume growth. The team continues to improve productivity that will expand as we further implement our brokerage IT initiatives throughout 2024. While we continue our logistics growth, our leveraged spend of LTL has generated several transactional and contract wins in the first quarter, with volume up 16% and confirmed wins that will onboard in the second quarter. We are also continuing to expand our multipurpose logistics locations with the addition of our largest facility in the Northeast that will open this summer and be close to 100% utilized at opening. The integration and diversification of our logistics solutions are playing out well, and we expect continued growth in 2024. With that, I'll hand it over to Kevin to discuss our financial performance. Thank you, Brian. I will now walk through our financial results before commenting on our outlook. I've reported revenue for the first quarter of $1 billion. Revenue declined 13% compared to $1.2 billion last year, but was in line with fourth quarter revenue. ITS revenue was $552 million, which is down 22.2% from prior year, as expected, due to the challenging market conditions. Lower fuel revenue of approximately $32 million contributed to the decrease, as did lower asset-based revenue and lower intermodal volumes of approximately 10%. Logistics revenue increased to $480 million, an increase of 2.4% year over year, as the contribution of the new final mile appliance business more than offset revenue per load declines in our brokerage business. In addition, the January storm hindered overall performance with an estimated 1.5 days of volume loss in the quarter. Moving down the P&L. Purchased transportation and warehousing costs decreased compared to the prior year due to lower volumes, partially offset by cost management efforts. Purchased transportation costs decreased as a percentage of revenue, partially due to decreases in our ITS segment, as equipment, rail, and repositioning costs were all lower than last year. As anticipated, salaries and benefits increased year-over-year due to the Final Mile acquisition and increased merit and incentive compensation expense, partially offset by a 9% decrease of our legacy headcount. Depreciation and amortization expense increased as compared to prior year due to the acquisition. Insurance and claims costs were in line with last year as we continue to make safety a top priority. G&A costs increased by approximately $1.7 million, due to an additional $2.7 million of costs related to the acquired Final Mile business versus last year. Gain on sale was minimal in the quarter, whereas the prior year benefited from strong used truck pricing. This change created an earnings headwind of $3.5 million. As a result, our operating income margin was 3.7% for the quarter, which is an increase over adjusted Q4 of 20 basis points. ITS operating margin was 2.4%, down slightly from Q4's adjusted OI percent of 2.6%, due to the impact of the January storms, dedicated startup costs, and a larger-than-expected auto claim settlement in our dedicated business. Logistics operating margin of 5% increased 60 basis points from the Q4 adjusted OI percentage of 4.4%, due to strong results from Final Mile, offsetting a lower brokerage margin. Interest expense and other income totaled $2.7 million, an increase of $1.1 million from last year. Although our debt balance is comparable year-over-year, interest expense increased due to an increase in our average interest rate. Our tax rate was 21.5%, slightly below our estimate of 24%, due to tax expense related to our restricted stock program. Overall, this translates into earnings of $0.44 per diluted share for the first quarter. Now, turning to our cash flow. Cash flow from operations for the first three months of 2024 was $80.5 million. First quarter capital expenditures totaled $18 million, with the majority of spend related to $11 million of tractors. The remainder is technology projects and warehouse equipment. We are lowering our full-year outlook for CapEx and now expect it to be between $45 million and $65 million, as we have no additional container purchases planned and lower tractor replacements than last year. Our balance sheet and financial position remain strong. In the first three months of 2024, we purchased $26 million of stock at a weighted average price just shy of $44 a share. We also issued our first quarterly dividend of $0.125 a share. Through the first quarter, we have returned $33 million to shareholders through dividends and stock repurchases, and we ended the quarter with cash on hand of over $195 million. Net debt is $142 million, which is 0.4x the EBITDA, below our stated net debt to EBITDA range of 0.75x-1.25 x. We continue to expect EBITDA less CapEx for full year 2024 to be greater than the $257 million generated in 2023, demonstrating HUB's cash resiliency as we expect cash earnings growth in a challenging freight environment. Additionally, we remain confident in our ability to execute on our capital allocation plan, which includes paying quarterly dividends, stock repurchases, and strategic acquisitions. Next, I will conclude my remarks with a few comments on our 2024 guidance. The macro environment remains challenging, and while HUB performed well in the first quarter, we anticipate a prolonged competitive pricing environment impacting our intermodal and brokerage line of businesses. We now believe that the market inflection point has shifted further out from our Q4 assumptions. We expect full-year EPS in the range of $1.80-$2.25 a share, and revenue of $4.3-$4.7 billion. In our ITS segment for the full year, we continue to expect intermodal volume growth in the high single digits, but price to be down mid-single digits for the full year due to our updated fuel revenue and market recovery assumptions. For logistics, we continue to expect low to mid double-digit growth, driven by the addition of the acquired Final Mile business, which is offsetting their suppressed brokerage revenue. Our managed transportation, consolidation, and fulfillment lines of businesses are expected to show growth driven by new customer wins. There continues to be upside potential in our guidance if retail inventory levels decline, leading to a restocking demand and more typical shipping patterns, including a traditional intermodal peak season and surcharge revenue during the peak season. Another market condition that would push results to the high end of the guidance is truck conversions to intermodal, helping to increase intermodal volume growth and increase margins. When there is a tightening of the truckload market with capacity exiting, we are well positioned to capitalize in increasing intermodal and truckload rates. As mentioned at the beginning of the year, we are facing some headwinds on guidance, including higher interest costs, the normalization of incentive compensation, our tax rate being closer to 24%, and minimal gain on sale. This quarter, we updated assumptions to assume that the challenges that we have experienced the last few quarters will continue into the fall. We do expect earnings growth in Q2 compared to Q1 due to seasonal improvements, resulting in stronger intermodal volume and continued momentum in the Final Mile business, helping grow operating income. Generating cash is an important goal of management, and we are pleased with our cash EPS of $0.55 and our free cash flow of $63 million in the first quarter of 2024. While forecasting the market recovery has been difficult, I'd like to point out that we expect our 2024 OI to be more than double our performance from the last downturn cycle in 2017, when the company's OI was $67 million, or 2.1% of revenue. We believe this trough-to-trough growth is a good example of how HUB is positioning itself for more stable financial performance in the long term. With that, I'll turn it over to the operator to open the line to any questions. Thank you. As a reminder, to ask a question, you will need to press star one one on your telephone. I would also like to remind participants that this call is being recorded, and a replay will be available on the Hub Group website for 30 days. Our first question comes from Scott Group of Wolfe Research. Please proceed with your question. Hey, thanks. Afternoon, guys. So can you just walk us through the monthly year-over-year volume trends and any color on April volumes? And then I think you said intermodal price for the year down mid-single digits. Can you just give us what, what Q1 was? Sure. Yeah, Scott, this is Phil. So on the year-over-year volumes, January was down 16, March was down six, or February was down six, March was down eight, and then April, month to date, is up 16. So, you know, a good trend that we're seeing there. I think we've outperformed our initial view of what we'd be doing on volume, but, as you mentioned, pricing has been more challenged to get that volume, and so we revised the guidance where we assumed prior that we would see an inflection in positive pricing in the second half. We're assuming that's going to be more flattish, which leads us to more of a mid-single digit sort of price for the full year. But a higher volume guide, which we've adjusted up to high single digits for the full year. Yeah. Scott, this is Brian. Just one thing to add. Those, those year-over-year numbers, if you look at it month-over-month, we saw January, as I mentioned, at five, February at, at nine, March was at five, and then April, through yesterday, is at 11% over March. So we're seeing good momentum, coming into Q2. I guess, so we've got volume momentum, but we're talking about competitive pricing. In order to get that +11 on volume, how much incremental price have we had to give up? Yeah, I don't think it's material. I think it has been more competitive. We're really focused on managing costs and the velocity that we're able to generate in the network. So, it's just not really all that different than what we had guided to initially. We're just not thinking that we're going to see a turn in the back half. So it's not really incremental price. It's just, we think it's going to continue to be competitive. You look at the broader landscape, I think capacity just is not exiting as quickly as we'd like. We're not seeing a real ramp-up in the spot market. It's continuing to really compress contract rates. And so that's really the driver. We're just kind of revising the back half guidance where it was an increase in price to probably more flattish in those back half bids. Yeah, I'd like to add, this is Kevin. In our bids, we actually were. The prices is, we were winning at what we were expecting. And want to point out that last year at this time, don't forget, you know, I think we felt that we were above market. So, you know, we understood going into this bid process that we were going to have to come down because we were already above market to begin with, you know. So the results of the bids and our pricing strategy were in sync. Okay. Maybe just to ask it a little differently and before I pass it on. So if I just think about like on a sequential basis throughout the year, do you assume your price goes higher or lower from here? And then, you know, depending on that, what happens to your rail costs, you know, from where we are in Q1? Higher. Sure. So, yeah, we aren't assuming rates really go down from here. They're pretty well in line with where we were bidding last year. So, that's why, you know... But we don't think they're going, that the back half bids, the price is going to be going up, right? So, it might be slightly down, might be flattish, but we don't see an opportunity, at least right now, where we're going to be taking up price. Likely, we will see, and we're not going to go too far into to rail costs and contracts, but we will likely see for the full year, rail purchase transportation down on a year-over-year basis. Okay. Thank you, guys. I appreciate the time. I'll get back to you. Thank you. Our next question comes from Jon Chappell of Evercore ISI. Thank you. Good afternoon. One thing I'm trying to understand about the timing here. If 40% of the bid season was in the first quarter, bid season was disappointing, you know, for everybody in the industry, does that basically lock in, you know, 40% of the portfolio at these depressed rates, even if there is a spot market upturn in the back half of the year? Or was there any shorter duration associated with some of the bids that could give you more of the leverage if and when the spot market were to turn before next year? Yeah, I don't think we've seen a change to a shorter timeframe for commitments on bids. What you typically see is overflow and additional freight start to come in when the market really turns. And I think what we do is make commitments on that capacity, but then when there's anything above that, we have an opportunity to earn a higher return, and that's what Kevin was referencing on potential for surcharges in the back half if we see typical seasonality. So I would say certainly, you know, we want to honor the commitments that we've made, but there's always opportunities to drive additional yield when you see that tightness. Okay, thanks, Phil. And follow-up, may be difficult to answer, but is there any way to kind of gauge the competitive landscape of other intermodal providers versus truck? Just thinking about it the way of, you know, if you need excess capacity to come out of the market, feels like trucks getting to that pain point, and you may be starting to get some acceleration of truck removals, whereas maybe some of the intermodal overcapacity may be a bit stickier. So maybe talk about that in the context of that two-part question. Yeah, sure. So I'll start, and then Kevin and Frank can add in. You know, I've been really pleased with our ability to compete with truck, in particular in the shorter haul segment. A lot of the growth, and you'll see this trend, as we talk about numbers moving forward, we'll be seeing significant growth in the local East. I think a big part of that is service. We're seeing really the best rail service that I've seen, at least in my tenure at Hub, but also we're seeing a nice economic benefit for our customers. And so to me, that typically indicates you're winning share back from over the road. Typically, the longer haul segments are already moving intermodal and could be shifting between providers. So, you know, I'm pleased with that. I think the local east also can drive some really nice velocity and balance, and that'll help us keep driving costs down, and improving the turns on our containers. So, to me, you know, we're executing well on that portion of bid season, and it's a good opportunity as we look ahead. Yeah, I'll just add to that, too. In addition, we're finding cross-border conversions from over the road, and Q1 was up 18% over Q4, and we're getting more momentum with our superior service as we go north and southbound with Mexico. Okay, great. Thanks, Brian. Thanks, Phil. Thanks. Thank you. Our next question comes from Bascom Majors of Susquehanna Financial Group. Following up on the cadence questions from earlier, if we look at the last two years, as the markets decelerated, you have had the second half of the year come in lighter than the first half. But if we back that up another 10 plus years, I think that's only happened once before. And I think you said the second quarter will be above the first. That gets you pretty close to halfway to your guide. Just any color on the amount of conservatism or just a complete flatness in the back half versus your typical seasonal lift that's keeping the guide where it is? And, yeah, I'll leave it at that. Yeah, I'll start, this is Phil. I do think, you know, we're certainly trying to be conservative, just given how aggressive the front end of bid season has been. And that's why we assumed there would be kind of very little pricing power in the back half. And that is likely, you know, conservative, but you know, I think we didn't want to bet on a huge back half recovery at this point, given the surplus capacity that's still out there. So, you know, I think that's really the conservatism to it. And but there, as Kevin mentioned, there's certainly upside, as volumes come on. We've got some really great awards that we're about to start up in the next few weeks, and some great wins in our logistics business that could drive upside as well. So, you know, I think we're just trying to be balanced based on what we know today. Yeah, I would just add to that, this is Kevin. You know, certainly, you know, like you said, when you look historically, the seasonality comes into play, and we do see our ROI increase quarter-over-quarter throughout the year. And, you know, that is what we're expecting this year, just not to the degree, you know, as Phil mentioned, you know, it's just really hard to predict right now what that peak surcharge availability is going to be. But we do see, you know, sort of sequential increases each quarter. From a higher level, if I could follow up. If we look back 30 years, intermodal has been a tremendous secular growth story. If we only look at the last seven or eight years, it's performed more like a capacity outlet and with a lot of cyclical volatility tied to truckload pricing and capacity. You know, how do you push back on the idea that intermodal has just become less secular and more cyclical? And, you know, what do we need to do, or how far do we need to get along this cycle to maybe prove that wrong and really sell the idea that this is a business that should really outgrow trucking year after year after year? Thank you. Sure. I'll start. This is Phil again. You know, I think a few things that have changed, at least recently, that I think are gonna enable some of that, you know, strong growth that we've seen historically. First is the service resiliency that's being put into play. You know, there were some pretty significant storms in January that could have, in the past, given how lean things were run, really disrupted overall service and taken some of the momentum out of the conversions that we were making. But instead, we were able to pop back to some of the strongest service levels I've ever seen, extremely quickly. I think the other piece is how the rails look at intermodal now. It used to be, you know, inflation plus pricing every year, not looking at the broader truckload market. That changed to focus on long-term growth as the growth engine for the rail industry, I think is a huge shift, and that's been more recent, if you think about it more broadly within the industry. I think the service levels that we're seeing right now, and we did talk about it, is the short-haul conversion is a huge opportunity that's been untapped because of the service constraints. And right now, we're seeing evidence that that is shifting, and that there is a customer preference to moving intermodal, and the commitments along capacity are there. I think you think about sustainability and the importance to the supply chain going forward, it's a great opportunity, not something that has been- -front and center in purchasing decisions, but it's certainly a driver. And the last piece that I would just reference is with nearshoring as a trend, and the investments going into Mexico and the implications for cross-border freight growth. I think that's something that was a factor before, but is now a new factor that could drive, especially given some of the congestion issues there, even further outsized growth versus the broader truckload market. Yeah, just one piece to add to that, too. I think what we've also been building out within our logistics network is where we can capture freight and convert that into intermodal, whether that was LTL originally or Final Mile originally, converting that into intermodal has also been a good area of growth. Yeah, and I'll just add, you know, one final thing. I think as a company, you know, I'm not necessarily answering your question, but as a company, you know, our acquisition strategy and investing in the asset-light businesses that we have, you know, that's stickier and that OI has been more steady. And, you know, I think that's really what I was trying to point out in our trough-to-trough look, and, you know, that more than doubling of our OI from 2017. Thank you, all. Thank you. Thank you. Thank you. Our next question comes from TD Cowen. Your question, please, TD Cowen. Hi. Great, thanks. This is Elliot Alper on for Jason Seidl. Curious if you can speak to the capacity you currently have in your network. Your peers spoke to 20% excess capacity, really looks to hold on to that despite the market softness. Just how is Hub thinking about that capacity and kind of any additional cost takeouts within your network? I know you touched on a couple in your prepared remarks, but any other color would be helpful. Sure. Yeah, no, what we've been able to do is start to unstack, and we started that in January, in late January, but that continued throughout the first quarter. So we actually reduced our stack by about 15% to support more of the volume. We've also seen our boxes turn faster on the rail, so picking up about an 8% improvement in the turn of our boxes, which helps, helps improve our cost, generates more capacity for our customers. We do, we do see, as volumes grow, to continue to unleash more of that capacity to support that. But then you did mention our other cost, our cost outs, our focus on our rail cost improvements, what we're doing on the street. We had one of our record levels of our driver productivity on the street, and we see that improving as that volume grows, and we get more throughput through that. And then we also mentioned our chassis program, right? That ramped throughout Q1, so it wasn't in full effect throughout Q1. Kind of finished out in mid-March, but we'll get full effects of that in Q2 and throughout the rest of the year. Just to add one thing, you know, that not having or having that capacity available, you know, we're not going to be purchasing additional containers, and that's adding to our free cash flow. I'll just add, I think on the street, we've done a much better job. Our cost per drive is down 15% year-over-year, and that was mostly driven by productivity enhancements. Our loads per driver per day were up over 20%. So, we're doing a great job, but a part of that is also attributable to just increased density, and that's what when we talk about the benefits of volume, driving better velocity and balance, I think that, that street economics is a big part of it as well. Got it. Thanks. And then maybe just to follow up, curious to hear your thoughts on the first few months of the Forward Air Final Mile acquisition? Sure. Yeah, no, we're off to a great start. We're ahead of schedule with our synergies, and a big part of that is our cross-sell. So we have new customer wins that we're bringing on board, as well as organic growth with some of our existing customers. And then we're leveraging the models that we have within our Final Mile to really take the best of and drive cost improvement as we go and execute. So very pleased with it. The team's been great, and there's more of that to come. Yeah, just to add, I think culturally, it's been a great alignment, and both of our organizations focus on service, and the great reputation that we have together, I think is enabling a lot of that cross-sell. So it's been great, great, right off the bat. Great. Thanks, all. Thank you. Our next question comes from Brian Ossenbeck of J.P. Morgan. Hey, afternoon. Thanks for taking the question. So maybe just coming back to intermodal specifically, can you talk about just how the progression of margins we should expect throughout the year? Because, you know, typically when you have pricing down mid-single digits, that's going to be a lot more impactful than volume up high single digits. So does this kind of stay where it is now, margin-wise, for the segment, and then improve from here as you get some of the things that Brian was mentioning in terms of the chassis and the density? Or is there something else I'm missing here? Because again, it usually feels like pricing down that much is going to make it hard to improve margins. Yeah, Brian, yeah, you're definitely correct. You know, price definitely moves the needle much quicker than volume does. We do believe that some of the costs are still in middle innings of the cost takeouts. You know, we'll also be seeing that the rail contracts are also more often changing as we move along during the quarter. So at the end of the day, you know, we do think it should be stable and, you know, maybe fluctuate a couple points one way or the other throughout the year. Yeah, I think a lot of it depends on realization rates as well, and, you know, do we see kind of a typical seasonality there? As Kevin mentioned, there's just upside. If we see more typical seasonality, it would be three years in a row now without a real peak, which I think would be odd. You know, there's certainly some factors that are out there that could drive some increased West Coast imports. You know, we're watching that closely and aligning with our customers around what peak might look like. But certainly, that's upside potential. But as Kevin also mentioned, you know, we are anticipating operating margin dollar improvement quarter to quarter through the year. Okay. Thanks for clarifying that. So, the other question I had was just on the local East conversions, and you're seeing what sounds like some pretty good truckload conversion. What are sort of the spreads that you're seeing there? Because from what we're tracking, it's still pretty competitive, which obviously you're seeing in the market as well. But I wouldn't have expected to hear, you know, that much success, considering just how competitive that market is, especially in the short haul. So, what are you seeing there, and how are you getting those deals done? Yeah, we're seeing intermodal spread to contract truckload in the high 20%. Some of the spot pricing compresses that into the single-digit level, but that's still where we're able to compete. And in those shorter lengths of haul, we're still able to compete against truck within those ranges. So, I think it's again a focus on our cost. And to your earlier question, too, just to add to that as well, we intend to stay balanced, right? That was a big effort within our bid season, is to maintain balance within our network. And as we see things grow and shift throughout the year, we'll be disciplined in our approach to maintain those balances. I think, you know, to add, I think we're providing truck-like service, which Mm-hmm. It's been highly consistent. And, you know, I know I've referenced this a couple of times, but it's the best service levels I've seen in my tenure at Hub. And, so I think that's a huge factor in building customer confidence. So yeah, we think that will progress and throughout the year, and you'll see, as we mentioned, with April being up 16%, a large portion of that will be local volume. Okay. Thanks very much. Thank you. Our next question comes from Justin Long of Stephens. Thanks. This is Justin Long from Stephens. Sorry if I missed it earlier, but did you give the intermodal yield number for the first quarter? And then also on ITS margins, I know you mentioned there was a claim settlement. I was curious if you could quantify the impact from that. Yeah, Justin, this is Kevin. Yeah, so, OI for ITS was 2.4%. And, you know, we're not going to give the actual numbers on any claims settlements, but, you know, a couple of basis points between the three factors that I noted on the OI percentage, and the three factors, again, were the January storm. We had start-up costs in the dedicated, as we were growing in the Pacific Northwest, and we had that claim as well. So across the board, you know, they're all a couple of, you know, brings a couple of basis points back to where we were on OI, adjusted for Q4. And, rounding out the question, yeah, I think revenue per load was down 15%, in intermodal. I think two things Kevin referenced in his prepared remarks were, fuel and accessorials. The other thing I would just highlight is, that mix impact from local east, really outperforming those longer haul segments, certainly with the revenue per load, headwind in the quarter. Okay, got it. So that intermodal yield number you said was down 15%? Correct. Okay, thanks. And I guess shifting to the logistics segment, you know, you talked about the growth you're expecting this year. Could you talk about the growth you're expecting from an organic standpoint, if you were to strip out the Final Mile acquisition? And any updated thoughts on what you view as a normalized margin for that segment, pro forma for that deal? Sure. Yeah, I'll touch on the growth, Justin. This is Brian. You know, we're really pleased with what we have set up within our logistics network as we've built it out. I think within our brokerage, we continue to be a standout, as I've mentioned, with five sequential volume growth quarters in a row, and we don't intend to break that streak by any means. But what they're really good at doing is adding new logos and then progressing that down a cycle of cross-selling to where we can organically offer more services to those customers. So we see that continuing. We win that volume based on leveraging our price, having a diversified service offering within our brokerage, and then being able to, as I mentioned, cross-sell those into other offerings. You know, I think as we do that, we do see our yields improve, and the pricing becomes less of a topic, the more we cross-sell, and the business becomes stickier. So we do anticipate that continued growth, and I'll let Kevin maybe mention or speak to the margins. Yeah, on the margins, you know, unfortunately, right now, the brokerage margin is really dragging down- Mm-hmm. - the logistics segment. You know, the truckload and the spot market are much lower than our overall margins. So, you know, I think we're really probably at the trough as far as that goes. And, you know, I think they're only upside as the truckload, both contract and spot market, would inflect upwards. I would just round it out with, I think, you know, the brokerage revenue per load is the big headwind, if you thought about the logistics business organically, ex the Final Mile acquisition. If you look at the other businesses, they're actually performing quite well. And we've got, as Brian mentioned, some new warehouses that we're bringing on that we think are going to drive some nice top line organic growth. And, I think our team's doing a great job, in particular, in, selling the LTL solutions, and our cross-docking network continues to expand as well. So a lot of really good things happening there. I think, you know, brokerage, I would tie more to, you know, we're dealing with market conditions, and a lot of our growth is in LTL, which is a lower revenue per load. But if you look at those more, contractual services, those are growing, quite nicely on the top line. Okay, that's helpful. Thanks for the time. Thank you. Thank you. Our next question comes from the line of Thomas Wadewitz of UBS. Yeah, good afternoon. Wanted to ask a little bit about the, I think you were just talking about brokerage and obviously pressure on revenue per load. What's the mix you have in terms of contract and spot? I don't know if you mentioned that, and I missed it, but are you, you know, heavy towards spot, or is it 50/50? Where are you at right now on contract and spot and brokerage? Yeah, Tom, this is Brian. It's stayed pretty consistent. We're right about 50/50, 48, 52, and I think that helps us position, right? We're able to leverage our contracted capacity and freight with carriers to be able to then position that for improved spot pricing that we can go to market with and continue to win that volume. We think that'll kind of continue to stay, and we saw some early signs in Q1 of January spot pricing inflection. It did fade kind of throughout the quarter, but as that picks back up, we'll look to maintain some of that balance in our brokerage. Okay. Yeah, great. Thanks, Brian. I think there's... I mean, you're getting growth coming in pretty significantly in intermodal. What do you think the impact is of the ocean carriers? Because I think, you know, while you're doing well, maybe some of the other domestic players aren't doing as well, and if you look at the way the railroads are commenting, they're seeing stronger growth in international intermodal than in domestic. Do you think that, I don't know if it's like, you know, excess boxes in international, and they're happy to see the boxes go to Chicago versus the approach two years ago or what it is. But do you think that you see competition from international and, you know, capacity available in international? Or is it more so, you know, where people want to keep the inventory, and there's inventory in the Inland Empire? Just trying to figure out the different pieces, setting aside competition within domestic. Thanks. Sure. Yeah, no, I think it's a great question. Yeah, it's certainly a competitive set right now. You typically see your point, you know, if things are busy in cross-border trade, they want to pull that capacity back. But given, you know, how slow things are right now, I think they're very happy to see those boxes go inland and be taking on some revenue. And so, you know, I think our customers are, if it's West Coast oriented, the economics still point to utilizing transloading most of the time. Although, you know, if pricing continues to drop, they might just use those boxes going inland, but the utility, you get an extra freight you can fit into a big box, obviously is impactful. We see less transloading on the East Coast, more IPI competition there, I would tell you. But yeah, certainly something we're seeing right now and, but long term, and the commitment to capacity that we have, we typically find that's used more temporarily by our customers when rates are very low. And then, as things pop back and, and you see the steamship lines start to want that capacity, back, they, they'll flip that, that back to us very quickly. Do you think there is some negative effect of maybe the international player behavior at the moment? What about Red Sea disruption impact? Does that help you at all in terms of pushing a little more to the West Coast or not necessarily? No, it certainly does. Yeah, I think, you know, the potential East Coast labor disruptions is going to be another driver of volume. Yes, I would say, though, that right now it's certainly a piece of competition that we're dealing with IPI. Right. Okay, great. Thanks, Phil. Appreciate it. Thank you. Thank you. Our next question comes from Bruce Chan of Stifel. Thanks, operator, and afternoon, everybody. Just to follow up here on the commentary on Final Mile, wondering if it's possible to parse out what the organic growth might have looked like in that business, and, you know, maybe how far you're into that cross-sell push that you talked about as an opportunity. Just if I'm understanding, you're asking of their revenue, how much was organic growth of the acquisition? Yeah, I think, well, I'll take a shot at this. I think the organic growth on our existing business would have been probably mid-high single digits on a year-over-year basis. And we've seen some spring surge, which has been great. Obviously, with the addition of the acquisition, that's, it's been much higher and a very large incremental growth. When we think about cross-sell, you know, we are ahead of schedule. We had some overlapping customers that we're getting deeper with, and then we were able to open some doors with new clients where we did not have an appliance offering before. Some of those wins have already started, others, I would say and the vast majority are still kind of in that contract phase, and we're in a startup process right now. So, we'll start to really see the benefits of the cross sell, I think, as the year progresses, and we get into kind of the Q3, Q4 timeframe. Okay, perfect. Yeah, that was exactly what I was looking for. And then just, you know, maybe a little bit more broadly, I know diversification of the model has been, you know, a real focus for you recently, and I know that we're still somewhat fresh from Final Mile, but, you know, when you think about additional M&A, you know, are you back in the market at this point? And if so, are there any areas that you've identified as, you know, focuses maybe on the intermodal dray side, if, you know, properties become available there? You know, maybe more on the retail consolidation front. Any color there would be great. Yeah, I think if you look at our, our free cash flow generation and balance sheet and, and, we've gotten, quite good at, at integrations at this point, or at least we feel we have. And so, you know, I think we are back in the market. We're certainly looking and are active. You know, there's-- we're always gonna be opportunistic when it comes to intermodal. That's a, a core part of our business, and anything we can find to drive strategic growth there, we would, be very interested in. But, the focus, continues to be on, really building out that non-asset logistics platform. We feel as though we have the right services, but it's now about adding specializations or scale to those, and I think that will, continue to be the focus, for us. So certainly, you know, you mentioned retail consolidation, Final Mile. I think intermodal obviously is very interesting. You look at brokerage, I think, you know, we're kind of at a bottom here in the market, which could be very interesting for us. So, we're a lot... we have targets that we are really focused on, but you know, really have a great pipeline, and I'm pretty pleased with how our team's doing in identifying new opportunities and vetting them very quickly. That's great. Thank you. Thank you. Our next question comes from Ravi Shanker of Morgan Stanley. Hey, great. This is Christyne McGarvey on for Ravi Shanker. Thanks for taking the question. I wanted to touch on your comment earlier in the call about kind of trough-to-trough earnings being double. Maybe just taking a step back, I think there's been a lot of changes at the company, and the cycles have been so volatile in the last couple of years, that it gets a bit difficult to triangulate, to kind of normalize earnings power. So maybe you can just talk to us a little bit how you guys think about the normalized earnings power of the company as it stands today. Well, sure. I think, and I totally agree with you. I think the, COVID, obviously, and the pandemic there, led to some supply chain disruptions that I think, would, you know, really led to some, some overearning, right? And I think that's okay to say. I mean, you look at how our boxes were being used basically for storage, and there wasn't enough warehousing space. I mean, that, that was, you know, I think an anomaly. But at the same time, I think it has led to what is now a prolonged, down cycle, and so we feel as though the highs were higher and the lows are lower, so there is a normalized order, earnings, that is, that is likely, in the middle, and higher than where we are today. If you think about mid-cycle margins, you know, we think our ITS margins could get back into that, you know, mid- to high-single-digit level in a normalized sort of market. And then our logistics margins will stay in this kind of mid- to higher-single-digit margin level, so while revenue is increasing. And so I think the other piece that we've tried to highlight, though, is just the cash earnings power of the business. And that puts us in a position to make some strategic investments, but also, as we've highlighted, return more capital to shareholders. Great, thanks. That's really helpful to think through. If I could just squeeze in one more near term. You called out also at the beginning of the call, the capacity. I think that's probably been one of the bigger surprises of this cycle, just how long capacity has been able to hold on here. So, just would be curious, you know, what you guys are seeing there, a little bit more color. You know, some data actually suggesting net additions right now, which seems hard to believe. So would just be curious, you know, what you guys are seeing on that and what you think kind of finally pushes some of that capacity out of the market. Yeah, I mean, we are seeing capacity exits, at least, you know, in what we're looking at. I think, not at a rate that we would have anticipated at this point in time, which is, I think, a big part of why we said, you know, we just don't think that the opportunity to raise price is gonna be there really in the back half of the year, as we had originally hoped. So, you know, I think that we will see more capacity exits. I think, you know, in the intermodal space, we're remaining disciplined on redeploying stacked capacity. I don't think anybody's chasing that. I think it's more about, are you gonna get the right business at the right return? So you know, I think for us, we're also really only investing in our tractor fleet right now, just to make sure we maintain the age of our fleet. And any driver additions are really around making sure we maintain share of our drayage percentage as we drive growth. So, you know, I don't anticipate you're gonna see a whole lot of capacity entering the market, at this point in time. And you'll likely see CapEx constrained from large carriers like us for the next couple of years, just because of the excess that is still out there. Great. Appreciate the thoughts. Thank you. Thank you. Our last question comes from David Zazula of Barclays. Hey, this is David Zazula from Barclays. Appreciate you taking the question. I just on the incremental volume you're getting in intermodal, if you could just talk at least qualitatively about the operating income per unit profile relative to kind of the existing book of business you were laying on top of. I'm just trying to get a feel for, you know, what you're getting in the incremental volume. And you mean more broadly on it, you know, how you think of the returns you're getting on assets and, you know, kind of what would make you think of investing in additional assets, you know, as the cycle turns? Thanks. Sure, yeah, I'll get us started here. This is Brian. You know, I think you know, as we went into this bid season, we went in with our approach that we're gonna continue to be focused on cost improvements on the rail, on the street, with our container turns. And a big part of that, too, was maintaining balance in our network and letting the velocity continue to have a good flow-through. You know, I think, as a part of that, too, we stay focused on a margin per load day, and that helps us go after the over-the-road conversions that we need to, and we've mentioned in the Local East. So, you know, we feel that we've got the right discipline around it, and we've stayed focused on the cost to maintain the yield discipline, to approach those competitive bids with the right price to win. As far as, you know, purchasing more capacity, we definitely have our ROIC goals, and we stick to those and make those decisions. You know, we do have a great partner as far as our manufacturer of our containers, and, you know, we do believe we can get those pretty quickly if we needed to. So, you know, until we see an inflection in the market, no, we don't anticipate any additional container purchases. Very helpful. And if I could just get a follow-up, you did talk a little bit about the cost programs. I'm wondering if you could give a little more color on the employee costs. It seems like you're doing actually a pretty reasonable job, given the inflation we're seeing in the market, in keeping employee costs low. So anything you're doing as far as trying to keep that in check and keep the margin up? Yeah, sure. You know, one of the things, you know, our tech, we develop tech with a purpose, and one of those purposes is certainly employee efficiency. And really, across the board, all of our different lines of businesses, we've been able to use less employees and handle more loads per employee. So if you were to look at our legacy, headcount year-over-year, so this would be without the new Final Mile business, our non-driver, non-warehouse employee count actually went down 9%. You know, so we do think that, those efforts have paid off, and we're able to, to control costs on an overhead basis. Great. Appreciate it. Thanks very much. Thank you. I would now like to turn the conference back to Phil Yeager for closing remarks. Great. Well, thank you very much for joining our call this evening, and Kevin, Brian, and I are available, as always, to answer any questions. Have a good evening. Ladies and gentlemen, this concludes today's conference call with Hub Group Incorporated. Thank you for joining. You may now disconnect.