Hello and welcome to the Hub Group Fourth Quarter 2024 Earnings Conference Call. Phil Yeager, Hub's President, Chief Executive Officer, and Vice Chairman, 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. Statements made on this call and in the other reference documents on our website that are not historical facts are forward-looking statements. These forward-looking statements are not guarantees of future performance and involve risk, uncertainties, and other factors that might cause the actual performance of Hub Group to differ materially from those expressed or implied by this discussion and therefore should be viewed with caution. Further information on the risks that may affect Hub Group's business is included in filings with the SEC, which are on our website. In addition, on today's call, non-GAAP financial measures will be used. Reconciliations between GAAP and non-GAAP financial measures are included in our earnings release and quarterly earnings presentation. 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 welcome to Hub Group's fourth quarter earnings call. Joining me today is Kevin Beth, our Chief Financial Officer. The last year was one that remained challenging with excess capacity and balanced demand. Despite these challenges, I am proud of our execution at Hub Group and how we closed the year with significant momentum. We focused on controlling what we can through effectively managing costs and executing efficiency enhancements across our organization while utilizing our value proposition of service and savings to deliver for our customers and shareholders. We maintained our focus on performance, delivering a year-over-year improvement in adjusted operating margins in the fourth quarter, executed a strong peak season for our customers leading to intermodal volume and earnings growth, completed our warehouse network alignment, driving improved service and costs, while investing for the future through our joint venture with ASO. Along with those actions, we returned nearly $100 million to shareholders through share purchases and dividends. As we look ahead to 2025, we are optimistic about the trends in the broader industry with capacity continuing to exit and the consumer remaining resilient while inventories have become more balanced. These trends and the actions we have taken to improve our cost structure, maintain excellent service levels, and improve growth across all of our offerings, we believe will lead to improved revenue and earnings in 2025. I will now discuss our segment performance for the quarter, beginning with IPS, where we delivered a 50 basis point improvement in year-over-year operating margins due to our focus on network beneficial growth, peak season surcharges, insourcing our drayage network, enhancing driver and container productivity, and providing excellent service. In intermodal, we had strong peak season shipping demand driven by seasonal inventory builds and diversions from the East Coast ports to ensure supply chain fluidity. We and our rail partners delivered record service levels despite the large influx of demand, and this enabled us to capture surcharges while creating the opportunity for conversions from over the road as we enter 2025 bid season. Intermodal volumes increased 14% year-over-year in the fourth quarter, with local east up 25%, local west up 11%, transcontinental down 2%, and significant growth in Mexico given our organic efforts and investment in ASO. Revenue per load declined 9% year-over-year due to headwinds related to mixed fuel and pricing, but was up 4% sequentially due to peak surcharges and an extended average length of haul. We anticipate year-over-year revenue per load will improve as we move through bid season and have more balanced network growth. We are focused on enhancing our cost structure and efficiency, decreasing our cost per dry at 3% year-over-year through better driver productivity and improving container utilization 6% through our focus on network balance. Empty repositioning costs increased by 3% in the quarter to support peak demand, but we were able to more than offset that with surcharges. I am pleased with the momentum in our intermodal business. Our service, scale, and improved cost structure are putting us in a great position for further growth this year. In dedicated, we closed the year delivering year-over-year earnings growth and meeting the surging demand of our customers. We increased revenue per truck per day by 13% while improving our cost structure and surge capabilities. We have a strong pipeline of opportunities and are focused on driving growth in 2025. In logistics, we delivered a 20 basis points improvement in year-over-year operating margins due to excellent performance in our final mile and e-commerce businesses. This was offset by headwinds in our brokerage due to less spot market demand and seasonal slowness in our managed transportation and consolidation services. In brokerage, load count declined by 6%, with revenue per load down 12%, partially due to mix. We delivered growth in LTL, which helped offset a loose spot market for full truckload services. We focused on ensuring we handled the correct volume, reducing our negative margin shipments 9% on a year-over-year basis. To begin the year, we are seeing improvements in demand due to weather events and increased emphasis from our customers on shipment security and small carrier exits. We are utilizing our scale, service, and multimodal expertise to compete and win in bids while positioning us to support our customers as projects and spot opportunities become available. In our managed solutions, we successfully supported our customers through the close of the year. We also completed our warehouse network alignment, which has improved our utilization and service levels. We have a strong pipeline of organic and new customer wins we are onboarding in the first and second quarters across our services, which will support further growth and drive incremental volume to our other service lines. We are excited about the opportunities we have in 2025 and believe we are well positioned given our continued strategic investments, exceptional service levels, strong balance sheet, and productivity enhancements. With that, I will hand it over to Kevin to discuss our financial performance. Thank you, Phil. As I walk through our financial results, my comments will focus on our go-forward results on an adjusted basis. As a reminder, reconciliations between GAAP and non-GAAP financial measures are included in our earnings release issued prior to this call. For the full year, Hub generated revenue of $4 billion, a 6% decrease over prior year. For the fourth quarter, Hub reported revenue of $1 billion, a decline of 1% over last year's quarterly revenue. IPS revenue was $570 million, which is down 1% from prior year, as intermodal volume growth of 14% and surcharge revenue of $5 million partially offset lower intermodal revenue per load and slightly lower dedicated revenue in the quarter. Additionally, lower fuel revenue of approximately $22 million negatively impacted the top line. Full year IPS revenue was $2.2 billion. Logistics revenue was $429 million compared to $438 million in the prior year, as the contribution of the final mile business was not enough to offset lower revenue in our brokerage, CFS, and managed transportation businesses, and lower fuel revenue of $22 million in the quarter. Full year logistics revenue increased to $1.8 billion. Moving down the P&L, for the quarter, purchase transportation and warehousing costs were $719 million, a decrease of $24 million from the prior year due to strong cost controls as well as lower rail and warehouse expenses. This results in a 150 basis point improvement on a percent of revenue basis when compared to Q4 of 2023. Salaries and benefits of $148 million were $13 million higher than the prior year due to the final mile and the asset transactions, which was offset by lower headcount across the rest of the organization. Depreciation and amortization and insurance and claims expense both decreased $4 million, which was slightly offset by higher G&A expenses from recent transactions. As a result, our adjusted operating income margin was 3.9% for the quarter, an increase of 40 basis points over the prior year. For the full year, our adjusted operating margin was 4%. IPS quarterly adjusted operating margin was 3.1%, a 50 basis points improvement over prior year, and a 40 basis points improvement over Q3's OI percentage of 2.7%. IPS adjusted operating margin was 2.6% for the full year. Fourth quarter logistics operating margin was 4.6%, a 20 basis points improvement over last year. Logistics adjusted operating margin was 5.3% for the full year. Interest and other income was a $2 million expense, and our tax rate was 18%, below our Q3 rate of 23%. For the full year, our tax rate was 22%. Overall, Hub earned adjusted EPS of $0.48 in the fourth quarter and adjusted EPS of $1.91 for the full year. We are pleased with our adjusted cash EPS of $0.59 in the fourth quarter and $2.34 for the full year. The spread between EPS and cash EPS was $0.43 for the full year, a 26% increase over the $0.34 spread in 2023. In total, we returned nearly $100 million to our shareholders in dividends and stock repurchases in 2024, and we ended the year with cash of $127 million. Our full year CapEx was $51 million, in line with our estimate of $45-$65 million. EBITDA less CapEx was $298 million for the full year, an increase of 16% over the $257 million generated in 2023, demonstrating Hub's cash resiliency even with lower revenue for the year. Net debt was $167 million. Our leverage was 0.5 times post-DAAC transaction, below our stated net debt to EBITDA range of 0.75 to 1.25 times. Turning to our 2025 guidance, we expect EPS in the range of $1.90-$2.40 and revenue to be between $4 billion-$4.3 billion for the full year. We project an effective tax rate of approximately 25%. We also expect capital expenditures in the range of $50 to $70 million as we integrate the asset into our financials and continue to focus on replacements for tractors that have reached their end of life and technology projects. We do not plan to purchase containers in 2025. For our IPS segment, we expect high single-digit intermodal volume growth and low single-digit price increase for the full year. Pricing in the first half of the year is expected to be comparable to Q4 rates, with increases materializing in the second half of the year as we reprice contracts as part of the annual bid cycle. We expect dedicated revenues to be comparable to 2024 as new customer wins are partially offset by lost customers late in 2024. For logistics, excluding our brokerage business, we expect low to mid-single-digit revenue growth due to new business wins and organic growth. For brokerage, we expect mid-single-digit volume growth with potential upside if we see continued momentum in the truckload environment. Other factors to consider in our 2025 guidance are the forecasted margin improvement in our logistics segment from our network alignment efforts, the normalization of incentive compensation expense, and a higher tax rate. We expect earnings to step down slightly from Q4 to Q1 due to lower peak season demand, followed by an increase in profitability as the year progresses. As we exit 2024, we are pleased with the progress the team has made, with Q4 operating income growth in both segments: IPS with a 17% or 50 basis points and logistics with 3% or 20 basis points of growth, resulting in a 9% increase in consolidated operating income or 40 basis points of growth on a percent to revenue basis. We also reported Q4 intermodal volume growth of 14%, the completion of the network alignment initiatives, execution of the asset joint venture, disciplined financial management, and a strong balance sheet. Over the past several years, we have made important strategic changes to our business, including our focus on yield management, asset utilization, and operating expense efficiency, which has significantly improved profitability and returns. We've also completed several acquisitions to build out our offering and drive more stability in our earnings. While we compete in a cyclical marketplace, these actions have accelerated trough-to-trough results, with the operating margin growing from 2% in 2017 compared with the 4% reported for the full year. Adjusted EBITDA less CapEx improvement of 16% over last year, despite a lighter top line, showcases the impact of our portfolio changes in recent years. These strategic changes have positioned Hub Group for success in both the short and long-term horizons, as well as in soft and strong demand environments. With that, I'll turn it over to the operator to open the line to any questions. As a reminder, to ask a question, you will need to press star 11 on your telephone. Thank you. 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 the line of Scott Group of Wolfe Research. Your question, please, Scott. Hey, thanks. Afternoon, guys. Maybe just a little bit of help in terms of shaping the year. I think you said Q1 down a little bit from Q4. I don't know if that was an operating income or an earnings comment, but yeah, just maybe starting with a little bit of help shaping the year. Yeah, sure. Scott, thanks for the question, Kevin. While we don't give quarterly guidance, I think I could help you out there. While we're expecting intermodal volume to be comparable to Q4 and increases in our logistics segment operating income due to the network alignment initiative, these tailwinds are offset by lower intermodal peak season surcharges and a seasonal decrease in our final mile business, as well as headwinds related to compensation due to merit and incentive expense increases, higher taxes, interest, and insurance costs. Also, I'd like to point out that EASO is included in our intermodal volume numbers, but recall that we only get 51% of that to our EPS. So on an EPS basis, while we do expect to be far better than the normal seasonality EPS step-down that has occurred each of the last two years. Yeah, and Scott, this is Phil. I'd just highlight, as we think about the full year, we're anticipating a ramp from Q1 to Q2, Q3 being our highest earnings quarter, and then a slight decline in the fourth quarter. Okay. Sounds like you're ready for that Q1 question. Can you just talk about how intermodal margins sort of ramp throughout the year and your views around pricing? I think there's maybe some concern or view that truckload rates are going to be going up more than intermodal rates, and intermodal is going to lag on the way up as maybe people focus more on volume growth. But how do you think about that and what you're seeing so far early in bids? Yeah, so yeah, Scott, this is Phil. I'd say it's a little early in bids, but I think we're in a really good position. So we did a really good job supporting our customers during peak. It was good to have a solid peak season as well. One other trend we're seeing right now is that customers are pulling forward bids to try to lock in some lower rates, which is typically a good indication of a turn in the pricing environment. So we're definitely not anticipating that we're going to see lower rates, and we're certainly not seeing any irrational behavior out there, but it certainly is remaining competitive as well. Our focus continues to be on winning business that's going to be network-friendly, taking rates up in operationally challenging lanes as well as head haul lanes. And we also know that price is the largest driver of our earnings power, so we're very focused on gearing up for that. In our guide, we've looked at the midpoint. We've anticipated kind of a low single-digit price increase in intermodal that should ramp throughout the year. So that's really embedded in that guidance. And I'll just add, Scott, I think on the OI side, the guidance is a very similar pattern that you saw here in 2024, right? So because of the bid season timing, we're expecting that same type of reaction in our OIs as well. Just last thing, real quick, if I can, any views on rail purchase costs this year? Sure. Yeah, thanks, Scott. Yeah, we're anticipating rail PT to be down low single digits. We have pretty good visibility to that. And then we're focused on cost across the board, though. We are really focused on insourcing more drivers, insourcing maintenance and repair, getting more productivity out of our drivers, reducing empty repositioning costs. All are opportunities for us, and everybody is very focused on them right now across the organization. So we anticipate some cost tailwinds. Thank you, guys. Appreciate the time. Thank you. Thank you. Our next question comes from the line of Bascome Majors, of Susquehanna Financial Group. Please go ahead, Bascome. Digging into logistics, can you walk us forward from the comments you made last quarter about seeing a point of margin expansion in that segment from some of the restructuring activities you took in 3Q and 4Q? What's your conviction in that today? What is the pacing of that? And how, if any, does the seasonality of that business change after what you've done? Thank you. Yeah, that's a great question, Bascom. Thank you. Yes, we do expect to achieve this 100 basis point improvement that we called out in third quarter, and that's based on the Q3 run rate. We are seeing a little change in the mix of revenue in the logistics segment. So the 100 basis points is still a good number that we're aiming for, but we definitely feel that we are expected to reach and probably slightly overachieve the cost savings. We spent $18 million, excuse me, and we more than expect to make up for that $18 million that we spent. There will be a little ramp up as the year progresses, and we also believe that there's a good chance if there's momentum in brokerage that we'll be able to see even further improvement in the logistics a lot. Yeah, and this, Bascom, this is Phil. So once again, I feel really good about the OI improvement. I think what Kevin was referring to was we spent about $13 million on the consolidation, but the annual benefit we gave was about $18 million. And so a less than one-year payoff period. So we feel very good about achieving that, and we do anticipate seeing strong sequential margin improvement to start the year from Q4 to Q1 in logistics. Thank you for that. And on the capital deployment front, I mean, you've recently done an acquisition. You told us a little bit about what you expect there. How is the M&A pipeline looking? Will that be a use of capital that could move the needle again either later this year into 2026, or do you feel pretty good about the portfolio today? Yeah, Bascom, this is Phil. I feel like we have the right legs of the stool. We have the right service offerings. It's about continuing to build scale, differentiation, and broadening our customer base so that we can cross-sell into those clients, and we have a really good pipeline. I think we're going to see an active year for M&A, and we'll certainly be looking at opportunities. We're always selective around what we move forward on, but we've got a very good pipeline, and it'll mostly be focused on the non-asset logistics segments and then opportunistic in our more asset-based offerings, but yes, we're very much still focused on that, and I feel as though it's something that has proven to be very valuable through this cycle and been a big part of our trough-to-trough or earnings improvement that we've been able to drive. Thank you both. Thank you. Thank you. Our next question comes from the line of Bruce Chan of Stifel. Please go ahead, Bruce. Hey, good afternoon, everyone. Thanks for the questions here. Maybe just a question on the intermodal volume side. One of your competitors had talked about the possibility of some demand pull forward. Obviously, you saw a strong number in Q4, and I think I heard you say that you were expecting flat sequential volumes. So I guess, would it be fair to say that you haven't seen any of that pull forward? Sure. Yeah, this is Phil. We have continued to see pretty strong demand off the West Coast. Just to give you kind of month-by-month, October volumes were up 13%. November was up 13%. December was up 16%. But January, on a year-over-year basis, we're up 18%. So our volumes continue to be quite strong. I think you will see some pull forward just to ensure fluidity of the supply chain, but none of our customers at this point are making any huge changes. I think they're just monitoring the situation closely, just like we are. Okay. Yeah, and then I guess I just have to ask and follow up on that. You obviously have a lot of exposure via Mexico, via intermodal. Anything changing as far as customer demand or customer needs or positioning? Sure. Yeah. We are watching it closely. I would say if you think about our cross-border business, Mexico and Canada, that's about 6% of the total intermodal volume. It's around 3% of total company revenue. We're certainly exposed to it, but we're not overly concerned about the situation. I think we are going to see our customers probably pull forward some demand, potentially divert some manufacturing capacity to the States temporarily in order to just ensure that they continue to meet the demand of their customers. But we also think that within Mexico, cross-border intermodal is very underpenetrated. We have a significant opportunity for conversion given the fluidity we can provide at the border and the cost savings. We feel very good regardless about share gain opportunities. Then, more of the U.S.-Asia lanes, I would tell you most of our customers have already diversified their supply chain, so could have a pull forward there. But we also built into the guidance that we've established here a pretty light estimate on peak season surcharges, and that was intentional, really assuming that some of that pull forward could occur. But at this point, we're continuing to see strong demand. It'll be interesting to see what happens really after the Lunar New Year and what demand looks like coming out of that. But for us, we feel very well positioned at this point, and big conversations are going well. Okay. Great. That's really helpful. Thank you. Thank you. Thank you. Our next question comes from the line of Daniel Imbro of Stephens. Your question, please, Daniel. Yeah. Hey, good evening, guys. Thanks for taking our questions. Maybe I want to follow up on the intermodal pricing discussion from earlier. I think the guide you mentioned assumes that pricing builds through the year. I guess if pricing is being realized to cover your elevated costs, is it fair to say it's going to be easier to get priced maybe in the West or where things were congested this year, and it'll be harder to get priced in the East or where maybe the networks weren't so congested? And then are you seeing any pockets of competition as others look to maybe fix their network balance that got a little thrown out of balance in the fourth quarter? Sure. Yeah, this is Phil. Yeah, I would say we are in those backhaul lanes. It is still competitive, and those are valuable to our network. So we're certainly trying to be in front of our customers to protect that and continue to gain share versus trucks. So we're definitely on the front foot there. I would tell you on head haul lanes, yes, there continues to be pricing opportunities given the tightness that we had this year. We're also very focused on if we're seeing operational inefficiency, and if that's embedded in that business and it's not going to allow us to turn our equipment or drivers as quickly as we need to to have a fluid network, we will be taking pricing up there. We're not seeing anything irrational or overly aggressive at this point. I would tell you we're performing pretty well across the board. Our locally used volumes to start the year continue to perform well. You'll see those growth rates start to normalize throughout the year just as we overlap some of the significant growth there. Our West Coast demand, as we mentioned, continues to be very strong. And we did very well during the fourth quarter on West Coast to Southeast and back. We think there are some opportunities on Transcon lanes going to the Northeast. So we've done very well and are very directed in our bid strategy. And so we're just trying to focus on continuing to control costs and winning network-friendly lanes. Got it, and then I'll ask a follow-up on the logistics side. I think logistics margins at 46 were a bit lighter than you expected after 3Q. I guess, Kevin, can you talk about what maybe went worse during the quarter within that segment? And then Phil, you mentioned you expect these margins to improve in 1Q. Just given the tightening brokerage margin backdrop that others have talked about, what are the sequential good guys that help offset that in the first quarter? Thanks. Sure. I'll start with, yeah, versus forecasts, you're right. Logistics did take a little step back than we were expecting. And really, brokerage was the main reason for that. But there was also some softness in our managed trans business. Final Mile actually performed better than our expectations. And with the CFS changes that we're making in the initiative, that was a little bit of an unknown. And while the team did a great job of getting through that, we expect that going forward, we're positioned well to work the increases in margin there and perform better in RFPs. Yeah. And the Q1 sequential improvement in logistics, as Kevin mentioned, the warehouse alignment, having that behind us will be a tailwind of recognizing that benefit. But we're also anticipating a rebound in demand, and we've seen this kind of since the turn of the calendar in managed trans and in our consolidation volumes. Both of those had a lighter end of the year, kind of the last two weeks there than we had anticipated with customers just kind of shutting down a little bit earlier than we thought. But then we saw, as January, as we turned the calendar, more of a pickup, which was good to see. Great. Appreciate the color. Best of luck, guys. Thanks. Thank you. Our next question comes from Elliot Alper of TD Cowen. Your question, please, Elliot. Great. Thank you. Yes, Elliot Alper for Jason Seidl. Can you guys maybe talk about the assumptions for the high and low end of the guidance for the year? And then maybe just to follow up on the Q1 commentary, I mean, do you expect earnings could grow in the first quarter? Understand there was some challenging weather. Curious how that impacted you guys, but also some strong intermodal volumes. Sure, so as far as the high end and the low end, I think the high end certainly is we see a truckload change, capacity tightens, and we start to see more spot business and more profitable truckload. It's certainly one of the big changes between the low end and the top end. Additionally, if that comes true, we could see additional pricing on the intermodal as the bids come around, and the other big thing is, I think Phil mentioned it already, on the surcharges, we only baked in about half of what we saw this year in the guidance. So that is certainly a positive as well. I think on the low end is the tariffs is certainly a possibility. Just the overall consumer, if they get squeezed with higher prices and inflation, it would keep us into that low end. On your question on the short term there, I think with the weather, we did see a couple of days impacts, but not anything material that we'd call out. I think that's just kind of normal for Q1. You're going to have some weather challenges, whether it shows up in one month or another. Not anything really built in there. Then on Q1, we'd have to see a ramp in demand to see a growth quarter to quarter, but we're still pushing very hard to maximize earnings. I think March is always a big swing factor in Q1, and so we'll have more to talk about as we enter that time frame. Still a little unclear at this point on how we come out of Lunar New Year. Okay. Great. And then maybe on the dedicated side, I believe you spoke to flat expectations this year. I mean, give a little more color on what you're expecting to see, maybe tractor count and pricing. Sure. Yeah. I mean, I've been really pleased with the results in our dedicated business. That team has done a fantastic job improving asset efficiency. I think you heard the 13% increase in revenue per tractor per day. So really happy with that. We're seeing some really nice organic growth and spring surge demand from our existing customer base. So we're having some pretty significant hiring needs to support that spring surge. So if that comes to fruition, that could be some nice upside for us. I think the demand backdrop from a new business pipeline, we're doing a really good job continuing to grow new sites with existing customers as well as getting some new customers online. We won't have any big headwinds for startup costs. We don't think in the first quarter that could start to show up in the second quarter as some onboardings come online. But pricing is pretty well locked into contractual frameworks that are long-term in nature. So likely seeing pricing up this year. And I think we feel very good about our positioning and dedicated right now. Great. Thank you, guys. Thank you. Thank you. Our next question comes from Jonathan Chappell of Evercore ISI. Please go ahead, John. Thank you. Good afternoon, guys. Phil, I think we can kind of back into this a little bit, but when Kevin gave his guide details, low single-digit pricing increases, one-half flat, second half going to be up. Volume, you've already said January is up 18% and really kind of accelerated over the last four months. So do we kind of take that pricing commentary and flip it on its head? Is intermodal volume in the first quarter, the first half, still expected to be double digits? And then whether it's a slowing rate of change or more difficult comp, you expect that to kind of go to the lower or high single or I'm sorry, mid-single digits for the back half of the year? Yeah, you got it. Yeah. I would say high single-digit volume for the full year. We're anticipating Q1, Q2 is higher, and then we see overlapping comps and more difficult comparables, and that's what we built into the guidance. Yeah. Q1 specifically is a much lower comp on the volume side. So you got that right. Okay. As far as the bid season's concerned, I know it's still early, only the first week of February. You guys have noted 70% of the book is to be repriced in the first half of 2025. Someone mentioned it earlier too, and some of the fears that by the time the truckload market appropriately tightens, especially in the contract market, maybe we're into the middle part of this year and you kind of miss this bid season. So is there any way to say that 70% of the book in the first half is kind of split between 1Q and 2Q? Is it very much April, May weighted? So there's still a chance that you can get some inflection in price. So you've not kind of stuck with this lower market for another year into the next bid season? Yeah, I think there's a couple of things there. Yes, there is the majority of the bids will be Q1, and that's typical for us. And but effective dates are typically later in the quarter, typically near the end in March. And then you see the Q2 bids mostly be implemented near the May, June time frame. So a little bit of a lag effect on that. So I do think that we'll get that opportunity. I think the other piece just to highlight though is that regardless of bid framework, we're constantly assessing our book of business and whether it is network beneficial or is generating the right returns. And we're constantly having dialogue with our customers around that and giving them transparency to what is working for us, and we want to hear what's working for them. So we will constantly be assessing that book. If we see a ramp in the truckload market and there is inbound freight coming to us at higher yields, we will certainly have discussions with our customers and really work with them to assign valuable trade-offs and come to a conclusion that's beneficial for both parties. All right. That's very helpful, Phil. Thank you. Thanks, Kevin. Thank you. Our next question comes from the line of Brian Ossenbeck of JPMorgan. Your question, please, Brian. Hey, afternoon. Thanks for taking the question. So you mentioned that the peak season was pretty strong. It seems like it's maybe a little bit of pull forward, but going still into the first part of this year. Are you seeing a pickup of trans-loading? International was obviously really strong for a while then. But have you started to see any of those things start to tip over more meaningful into domestic and to give you more shots on trans-loading? Yeah. Yeah, Brian, this is Phil. Yes, we are seeing that. I would tell you, obviously, international Intermodal demand surged in Q4, but we're seeing our West Coast volumes continue to be very strong, which is obviously an indication that trans-loading activity is continuing. You'll likely see that ramp, and I think people will be watching that very closely. So yes, we feel there's a lot of transloading activity right now, and we hope to see it continue. But our West Coast volumes are very, very strong. When you think about capacity in the system, how many boxes do you have as a% of the total? Now, you said you're not going to buy any more for this year, but what does it look like in terms of excess capacity with boxes, with people, and I guess with drayage? Thanks. Yeah, so with boxes, we still have capacity to take on 30% incremental growth. That's through utilization and turn-time improvements and also just what we have stacked, and we feel very good about that, so we feel as though we actually have a few years where we're likely not going to be purchasing any containers, so that's obviously positive. On the drayage side, we're very focused on returning to that 80% insource drayage number. In the fourth quarter, we were around 73%, but we've had a really good start to the year on driver hiring, so we have some more opportunities to in-source there and continue to take control of that, and then I think from a just overall managerial and office headcount, we're in a very good position. We've been methodical in our approach there and feel as though we've positioned the company to be able to move quickly as the market rebounds but also run very efficiently. Just to add a couple of things, Brian. One is on the stacked containers. I think we're very excited. We had over 25% decrease on what we've stacked versus last year, and then to give a little color on the efficiencies, across the board, we measure each of our lines of businesses, how many loads they're handling per employee, and we've seen increases in each of those, so we think that the tech that we've been providing our team has been paying off, and we continue to see that efficiency. In terms of the percent of the fleet is stacked, is that still around 10% or 12%, or is maybe a little bit lower at this point? No, it's higher than that. It's closer to 20%, so yeah, we have still a lot stacked. We brought that down quite a bit during Q4 to support the peak demand, but had some restacking, and as you know, that goes towards offsetting some of the surcharge revenue. Right. All right. Okay. Thanks very much. Thank you. Thank you. Our next question comes from Mike Triano of UBS. Your question, please, Mike. Hi, good afternoon. This is Mike Triano on for Tom. So I think you mentioned in the prepared remarks opportunities for truckload conversion. So just wondering, with the recent tightening in the truck market and expectations for improving demand, are customers starting to inquire more about converting truck volume to intermodal? Yes, absolutely. We are having really constructive discussions with our customers as we enter bids and conversions across the board, beneficial obviously for them to lock in that capacity. But I think we really proved our service product during peak, and that's giving a whole lot of confidence to our clients on the resiliency of the service product as well. I think when you look at some of the demand influx that our rail partners dealt with, as well as some of the weather events and the resiliency and ability to then rebound quickly and get back to fluid service, that's building that confidence with our customers. And so yes, there's a price differential. There's capacity locked in, but there's also the strong service product behind it. Got it. And then just a follow-up question on inventory levels. I think you mentioned in the prepared remarks that they're kind of back into balance, but we've had this pretty strong import activity. Unit sales, I think, have even been up kind of low to mid-single digits. So I'm just wondering from any customers if you're hearing that there is some inventory build taking place and just how widespread it might be. No, we're not seeing that at this time. I think most of our customers are watching the tariff situation. That might be the impetus to pull forward, but I don't think anybody's building up in anticipation of some strong consumer bump. I think mostly they've been trying to right-size inventories to get back into balance. So no, nothing to report on that quite yet. Okay. Thanks very much. Thank you. Thank you. Our next question comes from Ravi Shanker of Morgan Stanley. Please go ahead, Ravi. Hey, great. This is Christine McGarvey on for Ravi. Thanks for taking the question. Maybe for my first one, just want to touch on the brokerage volume guidance of, I think, up mid-single digits. Can you just parse out a little bit more what you're seeing there in terms of anything in bid season that's sort of giving you line of sight to that and kind of what that mix might look like? I know the LTL volumes in particular have been strong, but it also sounds like maybe you're walking away from some unprofitable business. So how do those kind of layer into next year? Yeah, good question. Yeah. So volumes, we had a lot of improvement in our LTL volumes this year. We did a really nice job. So we are anticipating that that continues, which is part of why I was highlighting on a revenue per load basis. We'd have a little bit of a headwind there. Obviously, it's just a mixed headwind. We are seeing some nice wins come online with some of our strategic customers. We need to make sure in brokerage that we stay relevant in the routing guide via the bid. So as we see these spot market and project opportunities present themselves, we're really that first call. And so that's been a big focus for us early in bid season, but we are getting a lot of wins given our specializations as well. I highlighted LTL, refrigerated, partial truckload. dedicated, and power only are all areas where we've excelled, and I think that's been more resilient than our dry van truckload business, but we're continuing to see opportunities to win. And I would also just highlight that if there is an inflection and a tightness in the truck market, our guidance on brokerage is, in my view, quite conservative. It basically just states from Q4 sequentially through the entire year, we see that pattern remain. So there's some strong upside to the logistics segment if we see that. Got it. That's really helpful. And if I can put my follow-up, staying on volume, but circling back to the dedicated conversation, through the down cycle, it does seem like shrinkage or churn has been a bit more of an issue maybe for the space than previous down cycles. But I'm curious your thoughts on if the cycle does inflect, does that provide some additional operating leverage as well that's not typically there? How easy it is for you guys to add back a couple of trucks to an existing contract, and can you do that at more of a market rate when that happens? Sure. Yeah. So those contracts are mostly set based on a driver wage, right? And we move those contractually over time as part of that, and we try to make sure that it's adjusting with inflation. So those are long-term contracts. As they come up for renewal, we're able to, if the market has moved upward, obviously take advantage of that. And sometimes customers, when they're up for renewal in a down cycle like this, will try to test the spot market. So we've done a good job with retention. I think we've really positioned ourselves well with our customers and the service that we're providing. Our ability to bring on incremental capacity is certainly there. So we feel actually really good about the positioning in an up cycle. We think people will push back into dedicated. That'll allow us to bring on more and more capacity to support them and drive some revenue growth, along with, if we keep servicing them well, bring new markets and opportunities to us. So I've been really pleased with the performance of that team. Thanks. Appreciate it. Thank you. Thank you. Once again, to ask a question, please press star 11 on your telephone. Again, that's star 11 to ask a question. Our next question comes from the line of David Zazula of Barclays. Your question, please, David. Hey, thanks for squeezing me in here. If we think back to when intermodal rates started falling, my recollection, and maybe it's just my perception, was you guys tried holding the line on price maybe a little more aggressively than some, and as a result, got a hit in volume, which it seems like you guys have corrected and done really well with volumes in the period since then. So with the pricing cycle starting to turn, does that influence your decision on pricing strategy moving forward? Are you thinking, as pricing comes up, of trying to lean in and drive volume and utilization, or are you thinking more of trying to protect and build the margins that Phil had kind of talked about towards the beginning of the call? Yeah, great question. I think it is, yes. We feel as though in an up cycle, it is far better to have the volume and have the ability to start to raise rates as an incumbent that's providing good service levels, which is why we made that pivot. And as I mentioned, right now, we are very focused on protecting that network efficiency-driving business. Don't add incremental costs into the network that could take away driver productivity or increase empty repositioning expenses. But in the lanes that aren't very productive or are in head haul lanes, we are certainly looking for yield expansion and are finding opportunities to do that. Then, as a follow-up to that, I mean, you talked a little bit about it. It sounded like some tailwinds in the backhaul environment. I mean, as the network maybe becomes more balanced and you have your repositioning costs are less of a factor, I mean, is that a potential further tailwind to margins if you can just balance out the network and get better utilization on the backhaul? Absolutely. It's a constant focus for us. I would tell you when we shifted our bid strategy, we had found that that is where we lost a lot of market share, and it wound up damaging our network. So we want to continue to drive that network-friendly business into the network. It creates efficiency not only in our empty repositioning costs, but also with our driver productivity and loaded miles and utilization there. So yes, it is extremely important to us and will continue to be a factor. And we'll be targeting really that across the board to drive that network efficiency, whether it's in short-haul local east markets. But the biggest factor is really in the western portion of our rail network where with Southern California surge and with that continuing right now, we need to make sure we have the inbound to support that outbound demand. Awesome. Thanks so much. Thank you. Thank you. I would now like to turn the conference back to Phil Yeager for closing remarks. Sir. Great. Well, thank you so much, everyone, for your time this afternoon. And as always, Kevin and I are available to answer any questions. So we really appreciate your time and hope you have a great evening. Thank you. Ladies and gentlemen, this concludes today's conference call with Hub Group. Thank you for joining. You may now disconnect.