Hub Group, Inc. (NASDAQ:HUBG) Q4 2022 Earnings Call Transcript

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Phillip Yeager: This is Phil. We haven’t had any large customer changes. We typically do have some churn within our consolidation programs as customers are acquired or they get large enough to insource their own warehousing footprint, but nothing really material there. I think we’ve done a really nice job of setting a long-term warehousing space plan with our partners both on the 3PL side as well as some of our real estate partners. We don’t really foresee any out of market sort of increases in overall costs. Obviously, industrial capacity remains very tight from a warehousing perspective, not at historic levels, but coming off of those. We’re going to – as we look at new space and renewals, try to take that into account, but we also want to take a long-term view and continue to grow and invest in expanding that footprint.

So we feel like we have a great team that works on that, very pleased with the process thus far and feel very good about our ability to keep growing there. As Brian noted, the cross selling has been phenomenal to start and we’ve exceeded our expectations already.

Brian Alexander: And Bruce, I’ll just add to that as well. With that, it’s helped us retain our customers. So we’re adding and Phil mentioned this our existing contract new service offerings and that helped us with customer retention and contract renewals. But it’s also really in that strong pipeline. I mentioned it before just to elaborate to it as well is that it helped us improve our deal size and we’ve seen that deal size really increase. Our close ratios are improving. And while shippers are still priced, very focused on price, they’re less sensitive to it when we have diverse service offerings that we can offer to them. So we’ll continue to see growth there.

Bruce Chan: Okay, great. And just to follow-up real quick, what sort of renewal rates do you typically see in that business if you can comment on that?

Brian Alexander: Yes, we’re seeing mid-90s for that renewable. And there’s, some of those factors and some of the items that I think Phil mentioned as well that there may be some acquisition components that are more uncontrollable, but we’re typically in that mid-90s.

Bruce Chan: All right. Very good. Thank you.

Operator: Thank you. Our next question comes from the line of Thomas Wadewitz of UBS. Your line is open, Thomas.

Thomas Wadewitz: Yes. Great. Thanks, good afternoon. I’m not sure if I missed this, but you talked a little bit about December volumes, but I didn’t hear kind of by month. Can you give us what the Intermodal volumes were year-over-year by month in the quarter?

Geoff DeMartino: Sure. Yes, October down 9%, November down 14%, and December down 13%.

Thomas Wadewitz: Okay. All right. When I think about the, I guess, the 12% down for the full quarter, it’s — obviously, it’s a weak market. But I’m wondering, how do you think about pricing — your approach to pricing against that backdrop? Is it something where you say, okay, we can kind of stay reasonably disciplined pre down 10%, down 12%. But if we end up going down 20% and someone else pushes harder on price, then we got to kind of push back more. I’m just trying to think about what happens with the Intermodal competitive environment and just how we think about the pricing dynamic in the contract season for ’23.

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