Q1 2021 Echo Global Logistics Inc Earnings Call
Good day, and thank you for standing by welcome to the Echo Global Logistics first quarter 2021 earnings call.
Time, all participants are in a listen only mode. After the speaker's presentation, there will be a question and answer session.
The asked the question during the session you will need to press star one on your telephone. Please the advice of todays conference is being recorded if you require any further assistance. Please press star zero I would now like the hand, the conference of which your speaker of today, Pete Rogers Chief Financial Officer. Please go ahead.
Yeah.
Thank you.
And thank you for joining us today to discuss our first quarter of 2021 earnings.
Hosting the call are Doug Waggoner, Chairman of the Board and Chief Executive Officer, Dave Menzel, President and Chief operating Officer.
Pete Rogers Chief Financial Officer.
We have posted presentation slides to our website that accompany management's prepared remarks, and the slides can be accessed in the investor Relations section of our website at Echo Dot com.
As outlined on slide two of that presentation. During the course of this call management will be making forward looking statements based on our best view of the business as we see it today.
Our SEC filings contain additional information about factors that could cause actual results to differ from management's expectations.
We'll also be discussing certain non-GAAP financial measures the definition and reconciliation of each non-GAAP financial measure to its most directly comparable GAAP financial measure is contained in the press release and the form 8-K, we issued earlier today.
With that I'm pleased to turn the call over to Doug Waggoner.
Thanks, and good afternoon, everyone I appreciate all of the joining today and I'll start on slide three of our presentation and hit some of the highlights for the quarter.
Okay.
The first quarter represented the continuation of the positive trends from recent quarters in terms of demonstrating echoes performance and value in the midst of both strong demand and continued supply.
Constraints.
Our team executed at a very high level and delivered for our customers during the quarter. The soft freight markets turned on their head by winter storms.
Storms hobbled numerous parts of the country and set rates again, the whole time highs.
So all of the disruption and shippers supply change of carrier networks Echo achieved record breaking revenue adjusted gross profit adjusted EBITDA and adjusted EPS in Q1, 2021.
This marks our third straight quarter of record setting revenue.
The credit goes to all of our employees continued to deliver for both clients and carriers.
Now I'll take you through some of the highlights of the quarter.
We had record revenue in Q1 as total revenue was 801 billion, representing a 45 per cent increase from last year.
We had record brokerage revenue of 600, the $17 million.
<unk> managed transportation revenue of 180 for buying.
The record truckload revenue of $576 million and record LPL revenue of 100 of 90 million.
Record adjusted gross profit of $120 million, representing a 34 per cent increase from last year.
Record adjusted EBITDA was $28 3 million of 90 per cent increase over the prior year.
And non-GAAP fully diluted EPS was also a new record at 61 cents compared to 19 cents in the year ago period, reflecting the 217% of increase.
Again, a record breaking quarter across the board of I'm really proud of our team and our overall execution for this quarter.
Please turn to slide four.
Last quarter, we discussed the strong progress we've made over the last five years and highlighted our success growing market share.
And profitability through our own combination of people process technology and data science this unique mixture, which helped to improve efficiency and productivity for our employees.
Given continued growth in truckload accelerated growth in managed transportation offering and strengthened our digital marketplace.
When you look at the results of the first quarter, it's clear that our approach is driving value for both us and our clients.
For example.
The Q1, we continued to demonstrate increased productivity per client what percentage.
Our productivity and brokerage increased by 5% on a year over year basis.
Our truckload volume grew by 13% again this reflects our ability to continue capturing share at a time when the spot market surged in the final months of of the quarter.
Our managed transportation revenue grew by 50% on a year over year basis, and we continue to win new clients or the highways and bring on new business on board for the quarter.
We continue to focus on enhancing our digital marketplace of continued to see increases in freight book directly from the automated channels of carrier stocks of the echo drugs.
Bottom line, we had a great quarter in Q1, the more importantly, we executed our business strategy.
Our focus remains on building an organization that demonstrates disability over the long term true up full flight cycles for.
For the quarter with significant disruption of shippers again trying to watch the competitive price break.
Very reliable service and our cash went in search of freight that optimize their networks.
Given our size scale and agility, we are well positioned to execute and we delivered so now let me turn it over the day a couple of additional details by mode.
Thanks, Doug as we discussed last quarter of Q4, 2020 was characterized by strong freight demand and tight capacity, which resulted in truckload rates hitting all time highs.
That environment persisted into Q1 NIM of further exasperated by the winter storms that impacted much of the country in February.
The net result was the further tightening of capacity of New records in terms of truckload rates.
Frequent discussion topic, you've had with investors over the years has been centered around what point in the freight cycle. It's the most favorable operating environment for Echo.
Fundamentally one of the advantages of our business model is its flexibility, we can and must adapt to change in freight cycles, our business requires constant adjustment in.
Our people are prepared to deal with constant change.
The current environment is obviously quite favorable for carriers, there's more freight and trucks or maybe I should say than drivers the ports or backlog demand is strong so rates are high.
On the other hand shippers are dealing with high rates tight capacity and disrupted supply chains. In this environment, we provide significant value by utilizing our unique blend of touch and technology combined with the robust multimodal network that enables us to bring solutions to shippers.
Bottom line I also want to acknowledge our people and our partners for doing everything they can they can do to deliver quality service and solutions. During this unprecedented time.
This backdrop I'd like to now cover our results in more granular detail because.
As indicated on slide five.
We delivered another record quarter with truckload revenue of $576 million.
An increase of 57% over the prior year. This increase was driven by a 13% increase in volume of 39% increase in the revenue per shipment.
The strong volume growth was driven by a very robust spot market is not in guidance of remained under pressure due to the persistent increase in truckload rates.
In Q1, our spot volume grew by 45%, resulting in a mix shift versus the prior year.
<unk> business represented 53% of our overall volume in Q1, 2020, one as compared to 41% a year ago.
Turning to our less than truckload business. We also delivered another record with revenue of $190 million in Q1, the 21% increase over the prior year.
Our growth in LTE L was again, a combination of volume and rates.
L T O shipments grew by 10% and our revenue per shipment increased by 10% the.
The increase in L. T. L rates was the largest we've seen in a long time since Q3 2018 to be specific and driven directly from rate increases from carriers.
LPL carriers are operating at capacity levels, well above historic norms and this has an impact on both price and service.
Becoming common to see terminal embargoes and the frequency of rate increases continues to accelerate.
From a volume perspective, the majority of our increase was driven by our managed transportation business as new business wins from 2020 continued to go live.
The brokerage business was impacted by the February weather, but resumed growth in March and it's continued to show even stronger growth in April as we're now facing more favorable L. T. L comps due to the impact of the pandemic. This time last year.
Continuing on slide five we delivered record brokerage revenue of $617 million in Q1 was an increase of 44% over the prior year.
Growth was driven by the combination of increased volume and the rates as I just highlighted.
Our March 31 of our sales organization totaled 1675 people an increase of 29.
People from the prior year, we continue to maintain the productivity gains achieved over the last several quarters the number of shipments per sales and operational rep.
Increased by 5% on the year over year basis from Q1. This marks the seventh consecutive quarter of increases and this productivity metrics.
We'll continue to invest and enhance the technology and tools that enable our sales personnel to be more efficient and ramp faster as we accelerate hiring into 2021 after pausing for portions of 2020.
In terms of our progress with the ramping of our digital freight capabilities. We continue to see meaningful progress of carrier bookings from Echo drive increased by 270% over last year and continued to accelerate the book.
October 10000 loads in Q1 from our digital channel.
Yeah.
We've continued to integrate with our shippers for spot quoting utilizing our E. P is the data science deliberate of electronic quotes and net revenue continues to grow at an impressive rate in fact, we booked over $5 billion in revenue in Q1 from our API integrations.
Finally, we launched Echo ship rewards of March and our small and medium sized shippers can now earn rewards as they execute on our self service platform.
This is an example of ways in which we are enhancing our digital channels to be more valuable to our partners and thereby improving customer loyalty.
Our managed transportation business also hit another record as new business wins from earlier this year have been integrated and shipping volume continues to accelerate.
We delivered revenue of 184 million of Q1, an increase of 50% over the prior year.
Currently we signed $19 million of new business in Q1, and renewed a significant portion of our business at a 93% renewal of late.
Again I appreciate the efforts of our managed transportation team sort of truly on the frontline, helping our shippers deal higher rates and capacity challenges.
Turning to slide six we generated a record $120 million and adjusted gross profit.
The 34% increase over the prior year.
The increase was driven by record revenue, but offset by a 133 basis points of margin compression.
And the adjusted gross profit margin of 15%.
The adjusted gross margin compression was driven throughout our business as we experienced a 123 basis point decline in truckload and of 111 basis point decline in LCL.
Both of these declines were due to the increases in the cost of capacity.
Despite the margin squeeze our adjusted gross profit per load is up year over year and relatively consistent with levels.
With the levels, we saw back in the capacity squeeze in the mid 2018.
I'd like to now turn it over to Pete.
Thanks, David.
On page seven of the slides, you'll find the summary of our key operating statement line items.
Commission expense was $36 $3 million in the first quarter of 2021, increasing 33, 2% year over year as a result of the increased adjusted gross profit.
Commission expense was 32% of adjusted gross profit essentially flat when compared to 33.
<unk> three per cent for the first quarter of last year.
Non-GAAP G&A expense was $55 $4 million in the first quarter of 2021, increasing 16, 1% from the first quarter of 2020. The main drivers of the increased expense, where head count increases and incentive compensation depreciation.
The expense was $6 $1 million in the first quarter of 2021 down from $7 million a year ago.
Cash interest expense was <unk> $7 million during the first quarter of 2021 compared to $1 3 million in the first quarter of 2020, when our convertible debt was still outstanding.
Our non-GAAP effective income tax rate was 25 per cent for the first quarter of 2021.
As Doug mentioned non-GAAP fully diluted EPS was <unk> 61, increasing from 19 cents in the first quarter of 2020.
As a reminder of the primary differences between our GAAP non-GAAP fully diluted EPS in the first quarter of 2021 or $2 $6 million of amortization of intangibles from acquisitions and $5 million of stock compensation expense.
Turning to slide eight contains selected cash flow balance sheet and liquidity data.
We ended the quarter with $57 $4 million in cash on hand, and $500 million of accounts receivable, which is the basis for our ABL borrowing base.
In Q1, 2021, we had free cash flow of $19 million in operating cash flow of $27 $2 million.
Capital expenditures totaled $8 $2 million in the quarter compared to $5 $1 million in the prior year. This growth was impacted by some timing, but overall consistent with our previous plans and is related to continued investments in technology.
On slide nine we have highlighted the components of our strong balance sheet and liquidity position.
As I said previously at the end of the quarter, we had $57 $4 million of cash on hand, we had an available borrowing base on our ABL facility of $349 million that.
Net borrowing capacity is calculated as <unk> 85 per cent of our eligible accounts receivable with the maximum loan facility of $350 million.
Net borrowings of $135 million on the ABL, leaving us with net debt of $76 $7 million, our combined cash on hand and available borrowings on the ABL leaves us with net liquidity of $272 million at the end of the first quarter.
Now I'd like to walk you through our guidance for the second quarter and the full year 2021, which we've highlighted on slide 10.
As usual, we also want to give you. Some recent trends through the early parts of April which this quarter is 17 business days of activity.
Yeah.
Per day revenue in April was up 86% over the last year trucks.
Truckload volumes are up 33 per cent and L deal volumes are up 49 per cent compared to last April it.
It is important to remember that April of 2020 did see the biggest impact from the pandemic last year.
Adjusted gross profit margin in early April was around $14 five per cent.
Now for the guidance around some of the main drivers of performance for Q2.
We expect revenue to be between 830, and $870 million, a range, which would be an increase of 65% at the midpoint.
This outlook reflects our belief that demand remains strong and capacity constraints persist as we enter produce season.
We anticipate commission costs to be approximately 30% of our adjusted gross profit.
G&A costs are expected to be between $57 million to $60 million.
The increase from Q1 is largely due to increased incentive.
The sound compensation increased head count and a full quarter impact of our annual merit process.
In Q2, we will continue to invest in our future through the addition of new sales and operations individuals along with the expansion of our technology teams.
Please reference the slide deck for guidance on some of the other cost line items.
Given the strength of the first quarter and our continued confidence in the power of our business model. We are also raising our full year guidance.
We expect revenue to be between 315, and $3 335 billion up 29% for over fiscal year 2020.
That's the 15 that is also a 15% increase to our prior outlook at the midpoint of our previous guidance.
Consistent with our belief in continued strength in Q2, we believe similar conditions will exist throughout 2021.
Commission expense should be approximately 30% of gross profit.
G&A costs are expected to be between 230 and $238 million up 4% at the midpoint of.
The increase was primarily driven by increases in head count and technology operations and sales throughout the rest of 2021 and increased incentive compensation.
We continue to believe that 2021 is the year to invest in the automation and development of our digital freight marketplace. While also modestly increasing our sales headcount to drive growth over the long term.
With that I would like to turn it back over to Doug.
Thanks Pete.
I think from the first quarter record breaking the results speak for themselves and the speed highlighted with our guidance. We anticipate these conditions to persist throughout 2021 and into 2022.
With our recent results indicate the.
We're well positioned to capitalize on these for a long times of supply chain disruption, but also view it as a unique opportunity to further differentiate ourselves for growth and our scale.
Last quarter I highlighted some of our top organizational opportunities for the future.
API connectivity automated.
Automated pricing.
That could drive the echo ship technologies.
And total patient technology and managed transportation growth.
We've made some great progress from the first quarter against many of these initiatives, but this is all of the beginning.
Buoyed by strong financial performance the goals of opportunities for continued investment remain even more promising.
Our focus is resolute.
You need the combination of people technology and data science will continue to be the reason for our success with our shippers of our carrier partners debt.
Concludes our prepared remarks and at this time I'd like to open up the call for questions.
As a reminder to ask the question you will need to press star one on your telephone the withdraw your question press the pound key.
Please standby, while we compile the Q&A roster.
Okay.
And your first question comes from the line of Jack Atkins with Stephens. Your line is open.
Hey, everybody you've got weight on for Jack This afternoon, congrats on the quarter.
Thanks, I wanted if I could start I wanted to ask about API integrations with the larger shipper of load boards.
How is that process coming along obviously, you mentioned $5 million in revenue stems from that this quarter I'm wondering how much of that or how.
How much of that.
Initiatives contributing to the strong April and second quarter guidance, and where do you want that $5 million to be down the line.
So.
The way the this is Dan this is Dave the.
The April numbers, I mean, I think there's a couple of key things first of its Barry.
The progress has been fantastic, we've got a handful of clients integrated and we've got a pipeline of more coming so we see that as a nice growth opportunity in the 2021 and into 2022 and beyond so I think that there's a big long term opportunity for growth in this area, which creates both.
Revenue growth as well as productivity.
The improvements as we move forward.
In terms of the impact of it has on the April results I'd say, that's pretty minor I mean today, it's still a very small portion of our overall spot business and our April results are still driven.
Primarily by the core of what we're doing so we do see it accelerating as we move ahead.
I see it as the long term opportunity, but it's not.
The hugest of needle movers in terms of April results.
Okay, great. Thank you I wanted to stick on that large shippers subject if I could as you guys sort of look to reshape the business to be more competitive with the large contract shippers in the bidding process.
The right.
Mix of spot versus contract.
And of that initiative.
What we're seeing today.
Yeah.
A great question and one that we've never been able to successfully answer.
Got net plenty of times over the years for.
For Echo.
Our our spot to contract mix is kind of.
Ebb and flow as you would expect with great cycles, and we've seen as high as about 60% of our business being contract business.
And of cycle that has a very static.
Supply and demand our balance of let's call it of supply and demand dynamic.
And then we've seen it as low as 40% when the spot market has kind of gone crazy we.
We don't have a formula to say what exactly the right mix is I think it's one of the unique things about Echo is we've got a very broad mix of customers who've got many.
Small and mid market clients that we would love to grow that share of the market a lot of that business as you know in <unk>.
<unk> in nature of it would be classified the spot business because of those type of companies don't tend to run.
<unk> guide and RFP processes in the same way so.
It's difficult to answer that question I would just say that it kind of ebbs and flows with the freight cycle and we'd like to see growth in volume across all of those channels and so we continue to pursue of both small and mid sized companies as well as the larger clients share.
Alright that makes sense, one more and then I'll turn it over I know you guys don't comment specifically on route guide depth.
I'd be curious to get your thoughts on potential for routing guidance to start breaking down again as we moved through May and June even without difficult.
The comparisons are.
We'll be getting you know as the mine.
Goodbye, just given how tight capacity is out there right now I'm just wondering if there's any potential for that debt.
Yeah.
Yeah. It's a good it's a good question of hard to predict I think.
We obviously have a very robust spot market was it which is indicative of the fact that many of the routing guides are not performing the shipper expectations.
I expect that to continue as of.
Freight demand continues to increase through the summer months. This is the.
Yeah.
I would say that.
February March and April are pretty unique February being impacted of course by the huge winter storm, which then through a lot of disruption in the marketplace, which which are created.
A spike in rates in March and and then has the persistent I'd say as we go into April but now we're getting into what I would call as a traditional heavier freight cycle season. So my expectation is moving to routing guide you can kind of can.
Turning to see pressure, it's hard for me to predict whether that gets a little worse or a little better, but I would definitely expect that to continue we're seeing that in April.
Great. Thanks, so much.
Got it.
And your next question comes from the line of Bruce Chan with Stifel. Your line is open.
Good afternoon, nice results and thanks very much for the question.
Doug Dave I know you both addressed the question about structural pressure on gross margins at various points over the past.
A few years, but if I look kind of cycle over cycle of where gross margins are now versus back in the kind of late 2017 to early 2018 timeframe.
You are clearly seeing more pressure now.
So maybe just wanted to get your thoughts on what's driving the differences versus.
For the previous cycle is it something to do with competition or the nature of the capacity market today or how shippers are behaving or is it just a function of your size and how much you've grown.
And then maybe you can speak to some of the offsets and then where they might be in your model.
Yeah.
Yes for instance, Dave Thanks for the question.
The biggest factor is the significant increase in rates truckload rates. So its kind of interesting when you look at.
Adjusted gross profit per load, which I know, we don't disclose that specific metric.
But you know I.
I think that's probably.
More of a.
Interesting indicator as to whether competition or all of these factors of really changed the game I think it's a bit misleading to just compare the margin when rates are so much higher today than they were.
Two or three years ago and so.
Over the long term I, certainly understand and can.
Can appreciate how automation and efficiencies.
In our business driven by both changes that we make as well as competitors make may in fact overtime reduce.
Some of the.
Of the gross margin in the business, but we haven't seen that.
Frankly in the last five to 10 years, it's it's kind of just cycling through freight cycles, and again I'm a little more focused on what the gross profit is for per load that we moved in the than the specific margin.
And so I think that's because of the high rates of seen what looks to be margin compression, but in reality.
It's more of a function of the higher rates that makes sense to you.
Okay. That's very helpful and then.
Yes.
You give the color but.
Any maybe visibility.
Ability on how those gross margins trended through the through the quarter by month.
Let me take a look the.
Yeah.
You know the they kind of bounced around a little bit I would say the.
The the three the February margins kind of took a dip I think with the freeze in the real spike in rates and then the spot market activity in March did exactly what you would probably expect it to do which is lift that those margins a little bit when spot activity kind of increased in March so I would say it.
It took a little dip in the middle month is hell of a trend that up.
Got it and then just a last quick one here, obviously, a nice volume performance on the truckload side.
If you kind of split that out between spot versus contract I don't know if you mentioned it but how did each of those two kind of sub segments of truckload trend through the quarter.
Our spot business was up.
I think around let me double check my metrics here, but I think around 45% and of our contract business was down just over 10% I believe in the in the quarter.
Perfect.
For helpful and I appreciate the time of the answers.
You got the Bruce experts.
Our next question comes from the line of Jason Seidl with Cowen Your line is open.
Thank you, operator, Hey, Doug Hey, Pete good afternoon.
Wanted to focus a little bit on the on the contract type of business what percentage of your contract business right. Now would you consider at market rates and how should we look at that as it moves throughout the rest of this year.
No.
That's an interesting question I think that.
Here's what I would say is that over the last.
Three quarters, we have seen an increase in the amount of <unk>.
Negative loads negative business.
Primarily of course associated with our contract business.
And to be honest, it's been it's been kind of steady because rates have continued to go up every quarter and so.
It's hard for me to put a number on it but you know you'd probably like we don't look at it that way, but I think that you know it infers to me that probably 80% of the businesses is price.
It's reasonably at market rates and Theres, probably another 20% or so of the business that that is.
You know I'm not going to use the word under water, but maybe either temporarily or currently.
Below what we think the current rate is in the market and the.
You know and it causes us a challenge to the service and it's just the it's the nature of our business I mean, we've always had that it's not it's more than probably in the past for sure because of the steady increase in rates.
But it's not unique so.
Good question I don't have of like I said not specific but it's probably something like the 80 20 rule probably be fair sure.
As you guys also going into this next question throw more money at sort of.
The more digital operations is there any way to look at sort of the margins on moving of digital load versus the more traditional way to do it or is it just too hard to split out.
Yeah, I mean, we're not going to get into the specifics today about how what the margins are on different.
The micro segments call it within our business I think over the long term you know as we get more and more automation operating margins can be would be the probably the thing that will start to look at more carefully but that's that's probably a three to five year kind of kind of view and not something that were overly focused on today okay.
Okay and last question, maybe maybe this one can be for for Douglas who is around.
You guys of raising your guidance Youre kind of generate good free cash flow in the past you've talked a lot about you know.
Tuck in type of acquisitions that could be additive to your service offering in the marketplace.
How does the market look where do you guys stand on that just curious.
Yeah.
Continuing to be very interested in M&A, we think it's probably the best use of our cash.
Certainly we have financial capacity to do deals.
<unk>.
We're active in the market, we're looking at opportunities on a constant basis I would say that the bigger deals are probably.
A little hard to make sense of other times in this market with cheap debt from a whole lot of private equity money. If the the opportunity is big enough to be a private equity platform.
We're seeing 14 X multiples and.
Six to seven times leverage to get the deal done and that's the that's just the.
Not that attractive to us at this time, so that tends to refocus our thoughts on the smaller tuck in type of deals and you know those.
Those are those of the kind of things where you've got a.
Look at a lot of opportunities to find the ones that are of good fit by that I'm talking about.
The management team that can fit into our culture and a company that can utilize our technology to make sure that we don't have too much overlap with what the customers of carriers and.
The other out there, but you've got a you've got to look at a lot of opportunities to find those right deals and we are active but it's just hard to predict where we're going to get one across the finish line.
That makes sense and I think.
Even though the multiples that you just cited Doug I think the market would agree with you guys are looking for the more tuck in types.
Listen I appreciate the time as always are my best to everyone, there and echo and stay safe.
Thanks Jade.
<unk>.
And your next question comes from the line of Allison <unk>.
Andrew <unk> with credit Suisse.
Thanks, Good afternoon.
I sort of ask a longer term question.
And sort of curious to get your thoughts on.
Longer term changes in supply chains, and inventory management post COVID-19 and whether you guys have contemplated or start thinking about whether there could be of change in how you view the spot versus contractual business, you know to the extent that freight stronger for longer.
And Shepherd, probably become more of Earth too I'm running out of inventory and maybe this is even a question as it pertains to how you think about the the enterprise business as well so just love to get your high level thoughts on all of that.
Well I think al from there.
There is some dialog going on in the industry right now about how the shippers.
Get whipsawed in these markets and.
When the capacity tightens up and the rate spike in the routing guidance breakdown and then they have the overly rely on the spot market and pay up quite a bit and so yeah. There's still some of the ongoing industry discussions I would call it.
Is there a better way.
And potentially that could be more of a cost plus arrangement, but in order for that to work you know you've got to have the mechanism.
Of Trust, where you know you're basing your cost plus some.
On an index or something of that debt.
The shipper has the confidence and faith in and believes that the the broker is doing their best to get the best cost in the marketplace. So I think that that has some work to do but there are certainly some shippers are open to exploring things of that.
And caused them to get better service performance and not missed their budget. So badly. So that's part of the biggest thing that I'm thinking about I think for us.
Got a great business model that can ride the wave of the cycle and as Dave mentioned earlier.
Sometimes that means more spot for it sometimes it means more contracts right and and.
And we just adjust.
Okay and then.
Maybe this is sort of along the same lines, but just maybe in the last year at the U.
Add more interest from customers and wanting to adopt our sort of use that the push at all price platform in D C debt.
Accelerating in the next 12 20 per month.
Yeah I think.
Been talking a lot about our API integration.
That's really an exciting opportunity for us because with these very large shippers with the the big load boards.
Especially when there's a lot of spot for it in the market you know, it's a lot of work to respond through their website or whatever mechanism, they're using to give them quotes on all of their loads. So what we've found with our initial integrations that were first of all of all we're able to quote on the 100 per cent of of the loans, which is more than we were before of annually.
And the arc our win rate is higher and our margins are better.
So you add all of that up and we want to automate as much of that as we can through api's.
As Dave mentioned we.
We've got the first.
Batch under our belt, but we've got a pretty big pipeline of additional API integrations that are coming along and we're also doing Tms integration. So you know that.
That would be where we're integrating to a third party of Tms platform.
And the users of that platform have the option of.
Flipping a switch in that software and being able to see echo of rates on all of their truckload shipments.
Okay perfect that was very helpful. Thank you guys.
Thank you Allison.
And your next question comes from the line of Stephanie Benjamin with the Truest. Your line is open.
Hi, good afternoon.
So Stephanie good afternoon.
It would be a great day here, just kind of your thoughts on the broader competitive environment not only from some of the digital players, but also the competition from some of these traditional asset based play a players who are building out brokerage businesses kind of your thoughts.
The new throughout the quarter.
Yes.
It's it's always competitive on the one hand on the other hand, it's such a huge marketplace.
And so I would say over these last few quarters.
We've just really got our heads down focused on the opportunities that are in front of us with our existing clients of our existence share. So.
We went into our competition, we did against them in Rfps.
We bid against them on spot freight, but but we don't.
Put that much of our energy on evaluating the just because we're trying to execute our own business.
Yeah.
Absolutely no. That's helpful. And then switching gears to your I'll tell the business I think another another record quarter here with all the nice volumes and rate, but would love to hear a little bit more on just kind of what was the main driver of such a strong volumes. What are you seeing any particular vertical.
Due to the growth in E Commerce industrial recovery, you know anything that you can kind of point tail for out of just that performance in the corner.
Sure I think I think there's two two kind of key things here one is where.
Definitely and especially in the March and into April for sure are seeing the impact of industrial recovery.
Impact the L. T L business as you know our client base on the <unk> side is much more small and midsized companies versus very large shippers and so they were probably disproportionately impacted during the early phases of the pandemic and starting to see some of that recovery as well as you know hitting favorable comps in.
April for the second Big driver has been the success, we had in the managed transportation business. So that's driven a pretty significant amount of growth in <unk>.
The T L. The.
The only.
Kind of interesting setback, if you will was the freeze event in in Q1.
So that creates really some big service challenges on the <unk> side and lots of delayed deliveries. So we did have a kind of like a dip in volume growth in February but again like I said earlier accelerated in March accelerated even further in April so.
We've you know we've always been a strong.
L T L SMB market provider, we feel really great about echo ship, our ability to handle customers' online pursue micro shippers SMB shippers in a multimodal way and I think that's a big reason.
The reason that we're having continued success from the LTE outside.
Great. Thank you so much.
Thank you.
And your next question comes from the line of Alex Johnson with UBS.
Hey, good afternoon, it's Alex on for Tom Waterworks.
Oh it is.
Hey, Dave got so close to answering my question with that last answer.
You have multiple parts of the business.
And whether it was a it was an impact in first quarter of just curious if there's a way of sort of directly measuring what the impact was positive negative or neutral or just how you would sort of think about that.
Yeah, its really its really tricky.
I would say this.
You know kind of interesting dynamic we had we had 12 per cent.
This is not the biggest part of our business, but I think this gets to your question our growth rate in LPL was about 12, 5% in January it was 1% in February and it was almost 20% in March and so the question about how much.
It almost looks like it all came back in March right in terms of what we lost in February the.
The truckload dynamic was pretty pretty similar.
The 20% growth of January 10% growth in February and then again 20 in March So we didn't really make up for the truckload piece as much as we did the L. T. L piece, but again I think part of that March comp on the L. T. L was the pandemic, which really kind of.
The hit home I'd say mid March of 2020, so some of that some of Thats the favorable comps on the <unk> side, because we did see I don't know if you guys remember last year in March we saw kind of an acceleration in advance of all of the shutdowns. So theres a lot of moving parts of their it's good question I don't.
Think that it was a very significant impact overall in the quarter. It just kind of shifted things around a little bit.
Okay, Great. That's super helpful and I appreciate you sharing those specific numbers by month second question would be.
You know obviously a lot of discussion on the call about Oh.
Patient costs, but.
Any inflation, maybe like in the SG&A line that we wouldn't be thinking about you won't you.
We're thinking about that you would you would point out to us.
Inflation, obviously being a.
The topic that a lot of people are talking about these days.
Not that I would point to specifically I think that.
We provided a range there.
And there are different scenarios, where you would get to those but when I think of inflation of the different cost of of things at the G&A line.
No.
I think adding head count.
And then a set of capital would be the two biggest drivers wouldn't point to anything beyond that.
And maybe for <unk>.
Full three months of the merit cycle in Q2, yes.
The first day.
But nothing nothing beyond that.
Okay. Thanks for the time this afternoon.
Okay got it.
And for your last question, we have David Campbell with Thompson Davis Your line is open.
Thank you for answering the questions in.
I was there any sense of Glen great job and run the business.
I really appreciate it.
Say that.
One of the questions I had was what's the visibility of your of.
The growth there.
Is.
There's always sort of concern that the.
These numbers are so strong in end of it.
It will not be able to sustain the growth.
And for the end of the year.
Oh, you don't seem to be concerned about the what what gives you the.
Confidence.
The growth rates will continue.
Well David Good question I think you know.
We're seeing continued strong demand we know inventories are at record lows the.
Stimulus money, that's coming into the economy.
The continuation of what we saw last year and we saw a package of the man.
We're coming into the seasonal uptick that we would share it with.
The produce season in a normal build of the summer building into the peak season, and so you know all the indicators on the demand side of our strong over the coming out of the the industrial recession that we were in over the past couple of years and then on the supply side.
I think you know the capacity of somewhat capped the others.
Not that many trucks coming in the market and if there were the drivers to drive them. So.
Actually seems to be capsule between supply and demand. We believe that the volume is going to be there and we think the price is going to remain elevated and the.
You add those together and we're going to see continued growth.
Right.
Uh huh.
That's the that's a good possibility.
The all of the reopening of the Renault adherent experience.
Uh huh.
All of it would be helpful Juniors.
He was small.
So the shippers.
Most of whom I speak some of these reopening of the must be helping your business.
Is that true.
Yes, I think that's true email of the whole service for the hospitality.
Part of the economy is presumably coming back in.
As a multiplier effect of the stimulus money so.
I just don't see any signs that are not bullish.
Right.
Alright.
Well, thank you very much a book.
The answers in your comments on the.
Look forward to another quarter of coming up.
Thank you David.
Thank you speakers I'm showing no further questions at this time I will now hand, it back over to Mr. Doug Waggoner, Chairman and Chief Executive Officer for the closing remarks.
Yes, just wanted to say thank you for everybody, making time to listen to our first quarter results to date, and we will look forward to talking to you again in three months.
This concludes today's conference call. Thank you for participating you may now disconnect.
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