J.B. Hunt Transport Services, Inc. (NASDAQ:JBHT) Q4 2022 Earnings Call Transcript

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Ken Hoexter: Great. Good morning. Shelley, just can we revisit some of the comments there on bid season? I think you noted that bid season was fully loaded by July 1. So, are we still looking at a March through May industry bid season for part of the business? And if it is then coming up, I guess Brad and Darren, you’ve each talked about maybe fourth quarter demand weakness and outlook into the New Year. Maybe can you talk about how you’re thinking about where contract stands versus spot levels?

Shelley Simpson: Hey, good morning Ken. I would say our customers in general are going to be implementing between now and July 1. We still have a smaller portion of our business that we’ll implement from July 1 all the way through the end of the year, but the bulk of the business, we tend to look at our business in that July 1 through the next year as how we think about revenue quality, our growth plans. Although we budget for a full-year at the calendar year, we actually review what’s happened from a bid season at mid-year. And I would say our customers are largely in-line. We do have a few customers that might have changed some of their bids start, but for the most part, they’re in-line with what we’ve historically seen, and I’ll let Darren and Brad comment if there’s anything else there.

Darren Field: Well, I’m going to ask Brad to comment on the spot versus .

Brad Hicks: Ken, I’ll make a few comments here. We’re still very early in bid season, but our strategy is clearly focused on winning contracted business. The spot market and what we’ve seen in that over the last several months and we can’t necessarily count on when or if that may return or if and when it does, does it get back to what it used to be? Is it something less? And so, we are optimistic about our early feedback in bids and what we’re seeing there, meeting our expectations in terms of volume growth of contracted business. So, from a €“ on the transactional side, on highway, that’s our predominant focus. I think in years past, we will move around the percentages of what’s published versus spot and I would anticipate us being on the highest end of that from a contract standpoint versus spot in highway. Intermodal certainly a little different. They don’t play the spot market nearly as much. And so, I’ll let maybe Darren comment what he’s seen.

Darren Field: Well, I think Intermodal contract prices should continue to provide in most corridors a significant saving against highway contract rates, fuel inclusive. And that’s been the case forever and there’ll be no difference this year. Certainly, there’s a handful of markets out there where I think truck spot prices may be applying some pressure at the customer level around their mix of highway and intermodal and we’ll watch that and we’ll try to adapt and we’ll talk to our rail providers and look for ways to take cost out of our systems so that we can be competitive, but at the same time, we’re going to be disciplined about our returns and our margin profiles and everything about our business that has been the case forever at J.B. Hunt.

Operator: Our next question comes from Todd Fowler from KeyBanc Capital Markets. Your line is open.

Todd Fowler: Great. Thanks and good morning. I think this has been touched on a couple of different ways throughout the call, but maybe just bringing it together. How do we think about the shape of the quarters and earnings as we move through 2023? It seems like that the volume environment is going to start-off weak in first quarter, but there’s an expectation for some inflection mid-year, but at the same time, contract pricing is going to come in. So, how do we think about seasonality? And then if the demand environment doesn’t inflect up, what are some of the cost levers that you have that can offset weaker demand? Thanks.

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