Q4 2023 J B Hunt Transport Services Inc Earnings Call
Good afternoon, My name is Krista and I'll be your conference operator today at this time I would like to welcome everyone to the J B Hunt fourth quarter 'twenty to 'twenty three earnings conference call.
All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question and answer session. If you would like to ask a question during that time simply press star followed by the number one on your telephone keypad, we ask that you limit yourself to one question only with no follow up.
Speaker Change: I would like to ask an additional question please re queue.
Speaker Change: If you would like to withdraw your question again press Star one. Thank you I would now like to turn the conference over to Brad Delco Senior Vice President of Finance, Brad You May begin your conference.
Brad Delco: Good afternoon before I introduce the speakers I would like to provide some disclosures regarding forward looking statements.
Brad Delco: This call may contain forward looking statements within the meaning of the private Securities Litigation Reform Act of 1995 words, such as expects anticipates intends estimates or similar expressions are intended to identify these forward looking statements. These statements are based on J B Hunt's current plans and expectations and involve risks and uncertainties that could.
Brad Delco: Cause future activities and results to be materially different from those set forth in the forward looking statements for more information regarding risk factors. Please refer to J B Hunt's annual report on Form 10-K, and other reports and filings with the Securities and Exchange Commission.
Brad Delco: Now I would like to introduce the speakers on today's call. This afternoon I'm joined by our CEO John Roberts our.
Brad Delco: Our President Shelley Simpson, our CFO John Kuo.
Speaker Change: Nick Hobbs, our COO and president of contract services.
Speaker Change: Darren field, President of intermodal and Brad Hicks President of highway services and EVP of people.
Speaker Change: Now I'd like to turn the call over to our CEO, Mr. John Roberts for some opening comments John.
John: Thank you, Brian and good afternoon, I would like to hit on a couple of topics before I turn it over to our team to discuss our results and how we are investing in managing the business. We remain long term focused and we will continue to do so while being disciplined in our approach.
Speaker Change: I'm a believer in taking the bad with the good and the good with the bad so let's start with the bad as well as the obvious on.
Speaker Change: On the topic of insurance, we have been routinely covering with you the inflationary cost headwinds, we faced as a company as well as an industry in the areas of professional driver and non driver wages health care benefits and equipment cost.
Speaker Change: However, as an industry. We are also seeing unprecedented pressure in the area of claims cost or settlements as.
Speaker Change: As you saw in our release, we incurred $53 million of additional costs in the quarter largely related to higher claims costs and exceeding coverage limits in certain insurance layers.
Speaker Change: And this despite 2023 being the company's best performance in history on safety measure by having our lowest D O T preventable accidents per million miles.
Speaker Change: We remain one of the safest carriers in the industry, yet our insurance rates continue to increase as the industry experiences higher verdicts and as a result higher litigation settlements.
Speaker Change: Jerry verdict, and trucking cases, where the verdict exceed $1 million has seen an 867% increase in the average size of verdict from 2010 to 2018. This is according to the U S Chamber of Commerce Institute for legal reform.
Speaker Change: Given that the majority of motor carriers in the industry carry only $1 million in coverage just above the legal minimum of $750000 and coverage. It's the larger carriers, who bear the broad or disproportionate share of the escalating insurance and claims cost and ultimately these <unk>.
Speaker Change: Inflationary costs get passed on to customers and consumers.
Speaker Change: As you've heard from US repeatedly we are continuously focused on our safety performance and you've heard updates from Nick on our latest investments in this area.
Our intense focus on safety and our investments in the latest safety technology and compliant equipment helps to protect our drivers the motoring public the environment, our customers and your investments we remain steadfast and committed to the safety of our people and the motoring public and we will continue to invest in the latest technologies.
Speaker Change: And training to support these efforts.
Speaker Change: On the freight environment, we have turned the page on 2023 Goodbye and good returns as you are aware 2023 presented many challenges, but I am very proud of our team and their perseverance and how they responded to these challenges the experience of our leaders and the investments made during.
Speaker Change: This downturn I am confident we will drive long term value for the company.
Speaker Change: While the new year has begun in the calendar has flipped another pace not much has changed in regard to the freight environment, while we see opportunities across all of our business. It's good work is needed in the areas of revenue quality controlling cost and execution to earn an appropriate return while delivering value to our customers we remain.
Speaker Change: Committed to our focus on return on invested capital and managing for the long term, but the freight environment remains a challenge state.
Speaker Change: With all of that another way I am truly encouraged by our team's collective efforts and the opportunities presented across all of our businesses and for our relative performance in this market through 2023 intermodal is seeing some momentum on the volume side. The last few quarters and our work with BNS EFS and our other rail providers presents.
<unk> for growth in our future dedicated continues to be a steady performer and along with final mile. Both had record years in segment operating income performance.
Speaker Change: And while our CSM JBT is faced with broader market challenges, we still see great opportunities to scale, our investments in technology to drive efficiency in our customer supply chain in both our brokerage and power only offerings.
Speaker Change: Now I'd like to turn the call over to our President Shelley Simpson Shelley.
Shelley Simpson: Thank you John and good afternoon.
Shelley Simpson: As we have navigated through 2023, we remain committed to our strategic areas of focus including investing in our people technology and capacity.
Shelley Simpson: Our people have and always will come first and I'm proud of the commitment to our people while continuing to invest in capacity for our network as we prepare to grow with our customers to meet their demands over the years ahead.
Shelley Simpson: The experience and talent of our people and our capacity to deliver our connected and enhanced by our technology investments, which combined together are what allow us to deliver exceptional value for our customers.
Shelley Simpson: As we have discussed the past couple of quarters and as John discussed we remain in a challenging environment, but we continue to see some signs of improvement, especially related to intermodal volumes.
Shelley Simpson: You said that I think it's important to reiterate that volume is historically, a leading indicator while price is typically a lagging indicator with uncertainty around the timing of any potential inflection.
Shelley Simpson: Going forward, our focus remains on how we deliver value for and grow with our customers over the long term by finding ways to improve efficiency and drive waste out of the supply chain as we look to 2024 and the uncertain market dynamics, our focus as an organization has not changed.
Shelley Simpson: We continue to manage our business to put us in the best position for long term growth.
Shelley Simpson: Well, we have a long term focus we are not satisfied with the current results and our business, especially the return performance across our business segments.
Shelley Simpson: Intermodal ethane positive volume growth, but the impact of pricing during the last bid season will be with us through at least the first half of this year.
Shelley Simpson: Dedicated margins were resilient in 2023, but the impact of truck count losses, and lack of fleet growth will make top and bottomline growth more challenging this year.
Shelley Simpson: Final mile is holding up well despite tepid demand in our end markets our brokerage at power only businesses are under significant pressure on both volume and price and continue to feel the brunt of the freight market as evidenced by their performance.
Shelley Simpson: We are focused on controlling what we can control while remaining flexible to deliver the best value for our customers.
Shelley Simpson: This is where our go to market strategy and mode and different service offering can help customers lower cost.
Shelley Simpson: We can save customers money by converting over the road shipments to intermodal, which is cheaper and less carbon intensive way.
Shelley Simpson: We can create the most efficient dedicated fleets.
Shelley Simpson: Or leverage our technology through our J B Hunt 360 platform just source the most efficient capacity to drive value and differentiate the end experience for our customers customer and our final mile network.
Shelley Simpson: In closing I would like to highlight our areas of strategic focus for 2024.
Shelley Simpson: First we are focused on operational excellence to deliver exceptional value to our customers.
Shelley Simpson: Service levels are strong, we believe consistent and quality service will further differentiate us from peers and support our ability to win market share at acceptable returns.
Shelley Simpson: Second we will continue to scale, our long term investments in our people technology and capacity.
Shelley Simpson: This is something new for us and our commitment to investment in these three areas further position us for long term growth with our customers as the market recovers.
Shelley Simpson: And third we want to remain focused on driving long term compounding returns for our shareholders.
Shelley Simpson: We operate in a cyclical market with ups and downs, but over the long term, we believe our mode in different approach offers customers. The most options to deliver the greatest value and sulfur their needs ultimately supporting our vision to create the most efficient transportation network in North America with that I'd like to.
Shelley Simpson: Turn the call over to our CFO, John Philip John.
Shelley Simpson: Thank you Shelly and good afternoon, everyone. My comments will cover a high level review of the quarter and fiscal year and will include more color on the insurance expense impact on the quarter as well as provide an update on our capital plan for 2024.
Shelley Simpson: As a general overview outside of intermodal and to a lesser extent final mile. We didn't see many signs of a peak season in the quarter.
Shelley Simpson: Starting with our fourth quarter results on a consolidated GAAP basis compared to last year revenue declined 9% operating income declined 28% and diluted earnings per share decreased 23% the.
Shelley Simpson: The declines were primarily driven by lower freight volumes and order yields combined with inflationary cost pressures.
Shelley Simpson: Our fourth quarter results include a $53 million charge or <unk> 38 per diluted share related to higher insurance and claims expense primarily related to negative developments of claims and exceeding coverage limits in certain insurance layers.
Shelley Simpson: This charge is similar to a charge we incurred in the fourth quarter last year as certain claims from prior incidents continued to settle at much higher amounts than we have historically experienced.
Shelley Simpson: For the full year 2023 on a consolidated GAAP basis revenue declined 13%.
Operating income declined 25% and diluted earnings per share decreased 24%.
Shelley Simpson: These full year results include the impact of the insurance charge I outlined previously.
Shelley Simpson: Looking to 2024, we expect inflationary cost pressures to continue in the areas of insurance premiums capital and people costs.
Shelley Simpson: Part of the increase in insurance relates to increases in underlying premiums largely due to market conditions, but also to provide greater coverage across the businesses.
Shelley Simpson: We are focused on maintaining a strong balance sheet to provide us with ample liquidity to deploy capital as needed to drive long term value for our shareholders.
Shelley Simpson: We have navigated this challenging freight environment, while remaining conservatively leverage below our target of one times debt to trailing 12 months EBITDA and maintain flexibility with our credit facility that has ample borrowing capacity if needed.
Shelley Simpson: Looking to 2024, we are planning for net capital expenditures between $800 million and $1 billion.
Shelley Simpson: Going a level deeper our 2024 capital plan assumes 250 million to 300 million for new power equipment, primarily in intermodal and dedicated and $250 million to $300 million for new trailing equipment, which includes containers chassis and trailers.
Shelley Simpson: We also expect to deploy $300 million to $350 million for real estate and other investments including technology.
Shelley Simpson: In addition, our capital allocation plan in 2024 contemplates continued support of our dividend and we expect to take advantage of opportunities in the market to repurchase shares when they present themselves all while maintaining our leverage ratio around one times EBITDA.
Shelley Simpson: This concludes my remarks and I'll now.
Speaker Change: Ill turn it over to Nick.
Thanks, John and good afternoon, I will provide an update on our dedicated and final mile businesses and give an update on our areas of focus across our operations.
Speaker Change: I'll start with dedicated during the fourth quarter I am pleased with the strength and resiliency of our results. Despite the approximately $20 million of insurance related expense incurred in the segment.
Speaker Change: Even with the challenging freight environment in 2023, our dedicated business had a record year in both revenue and operating income.
Speaker Change: Demand for professional outsourced private fleet solutions has held up well and we sold approximately 300 trucks with new deals during the fourth quarter.
Speaker Change: Bringing our full year sales number to approximately 1150 trucks, our pipeline remains strong, but we do have some visibility into fleet losses, and or downsizes throughout 2024 and are working hard to backfill these by executing on that pipeline.
Speaker Change: Fortunately, we are remaining disciplined in pricing new opportunities to ensure we maintain our required rates of return.
Speaker Change: While 2023 was a challenging year from a fleet growth perspective, I want to put some context around the work we've done to improve the overall strength and durability of our business.
Speaker Change: While we have experienced downsizing a lot of our fleets, we even lost a handful of accounts over the last year the percent of portfolio churn in 2023 was about half of what we saw in 2009 during the great recession.
Speaker Change: Our focus on private fleets and our customer value delivery process CVD that was established from our experienced during that time set us up for better performance. During this downturn as we look to 2024, our strategic focus includes continuing to scale the business create value for customers and to lead.
Speaker Change: Average our density to help offset inflationary cost pressures all while executing on behalf of our customers in the safest manner possible.
Speaker Change: Moving to final mile.
Speaker Change: We have made good progress on improving the revenue quality of our portfolio and our strong service metrics highlight the value we create for and on behalf of our customers are year over year change in profitability continues to outpace the change in revenue. Despite incurring 3 million in additional insurance related expense in the quarter.
Speaker Change: Demand for big and bulky products overall remains muted, particularly in furniture, but we did see a seasonal lift in demand for exercise equipment around the holidays. Our focus in this business remains on providing the highest quality service for the delivery of big and bulky items into the homes of our customers customer.
Speaker Change: This service oriented focus resonates well in the market and we are seeing new brands engaging in discussions with our team.
As we move into 2024, we're focused on growing and scaling the business and building on the solid foundation that we have we will also remain disciplined on revenue quality, while focusing on operational excellence and execution for our customers and their customers in a safe secure manner.
Speaker Change: Similar to last quarters, I'll close with some comments on safety in our equipment aligning with our company foundation of taking care of our people, but also the motoring public we want to continue to invest in employee training and new equipment and technologies to enhance our safety performance, we are over 60% complete with rolling out <unk>.
Speaker Change: Facing cameras in our fleet with the goal of being 100% complete by the end of the third quarter.
Speaker Change: As a company we had our best safety performance in our history of 2023 measured by having our lowest <unk> per vehicle accidents per million miles as you have heard the cost of claims continues to move up exponentially. So we continue our efforts to find new innovative ways to enhance our safety performance and further mitt.
Speaker Change: Again risk where possible.
Speaker Change: We own equipment, we've cleaned out our older equipment and three of our fleet is refreshed in a good position heading into 2024, you heard John who will give you a range on capex, which reflects our better position on equipment age. This concludes my remarks, but we'd like to now turn it over to Barry.
Barry: Thank you Nick and thank you to everyone for joining us. This afternoon on the call I'll review the performance of the intermodal business during the quarter give an update on the market and service performance and highlight the continued opportunity we have to deliver value for our customers and all our stakeholders.
Barry: I'll start with intermodal performance as you heard we remain in a challenging freight environment, but we have been seeing improving trends in intermodal since the spring, which continued as evidenced by our 6% increase in volume for the quarter. In fact, we have seen an improvement in our year over year monthly volume.
Barry: <unk> since April or for nine consecutive months by months in the fourth quarter. Our volumes were up 6% in October 6% in November and up 8% in December.
Barry: During the quarter, we saw a peak season in intermodal that neither we or our customers nor our rail providers were expecting yet we were able to solve for our customers capacity needs, while maintaining high service levels, highlighting the strength and flexibility of our network. While we are encouraged by the volume trends we are seeing.
Barry: It is worth reiterating that volume is historically, a leading indicator while prices typically a lagging indicator. We continued to see a large amount of freight that we believe should be converted from over the road to intermodal and we have the capacity and people in place to grow with our customers and recapture.
Speaker Change: Sure from the highway.
Speaker Change: During the quarter, we saw margin pressure, both year over year and sequentially largely related to the impact of bids priced in prior periods and also our results in the fourth quarter included approximately $16 million of higher insurance related expense.
Speaker Change: We're currently in the early innings of bid season for 2024 and believe it is too early to comment on our expectations with the success of bids so far given our strong service levels and the unique value of our intermodal network can provide we are working with customers to ensure this value is realized and net.
Speaker Change: We earn an acceptable return on our investments to meet and serve their capacity needs with regard to our rail service providers. We have been pleased with the service from each of our providers their commitment to the intermodal offering and growing the overall market.
Speaker Change: We remain encouraged by the work we are doing with BNS fs in the west and the collaboration between our companies.
Speaker Change: We announced our new quantum offering during the quarter. We are very excited about this service and the potential to expand in the intermodal market by working with customers that have service sensitive freight during the quarter. We also announced our new intermodal service out of Mexico with <unk> through the Eagle pass Gateway.
Speaker Change: Connecting with BNS Seth this gives our customers more options to solve their cross border capacity needs leveraging the networks of both GM ex TSB NSS.
Speaker Change: In closing our focus for 2024 will be on regaining share from the over the road market scaling our business to better leverage our assets and investments and delivering excellent operational execution for and on behalf of our customers. We strongly believe in the strength of our intermodal franchise.
Speaker Change: Our customers Trust us and we continue to find new and improved ways to better serve their transportation needs. We have the people technology and capacity in the network to handle significantly more volume than what we are handling today and remain excited to work with our customers to meet their growing demand.
Speaker Change: And with an efficient cost competitive and more environmentally friendly solution.
Speaker Change: That concludes my prepared remarks, and I'll turn it over to Brad Hicks.
Brad Hicks: Thank you Darren and good afternoon.
Brad Hicks: I'll review the performance of our integrated capacity solutions and truckload segments as well as provide an update on J B Hunt 360.
Brad Hicks: Starting with Ics, the overall brokerage environment remains very competitive from both a volume and rate perspective.
Brad Hicks: Segment gross revenue was down 25% year over year in the quarter, driven by a 12% decline in volume and a 15% decline in revenue per load.
Brad Hicks: These figures include the contribution from the acquisition of the brokerage assets of BNS up logistics.
Brad Hicks: The acquisition contributed a little over $90 million of revenue to our performance in the quarter.
Brad Hicks: Similar to prior quarters overall truckload demand, particularly in the spot market remains depressed versus the same period last year.
Brad Hicks: While we arent pleased with the current results and Ics, we are taking steps that will position us for better success in the future.
Brad Hicks: We have focused our efforts on improving the revenue quality of our portfolio and culling, some unprofitable freight which contributed to the lower volume in the quarter.
Brad Hicks: We believe we are out in front of the market with some of our work on rates.
Brad Hicks: But it is too early in the bid season process to fully gauge our performance.
Brad Hicks: We are investing in areas to mitigate strategic theft and enhanced capability in our platform, while right sizing resources with our current demand through attrition.
Brad Hicks: Overall, we do believe these changes will position us for better long term growth and success.
Brad Hicks: Looking at 2024, and Ics, we are focused on quality volume growth that recognizes the value and quality service, we provide in the market and right sizing our cost structure further to align with activity levels either through scaling or attrition.
We're also focused on premier execution across the business through reliable excellent service high on time performance and further strategic theft mitigation.
Brad Hicks: Moving over to JBT, our truckload segment gross revenue was down 19% year over year, driven by a 13% decline in revenue per load and a 7% decrease in volumes.
Brad Hicks: Overall demand for our J B Hunt 360 box service offering is outperforming the market as.
Brad Hicks: As volumes in the quarter were up once again versus the prior year.
Brad Hicks: The flexibility that we can provide customers by combining drop trailer capacity with the ability to source the carrier to move the load on the J B Hunt 360 platform is key and resonates well with our customers.
Brad Hicks: Going into 2024, we're focused on improving the efficiency of our network through increased trailer turns essentially creating additional capacity on our network without having to add a significant amount of assets.
Brad Hicks: We are also focused on maintaining balanced across the trailer network to ensure our assets are in the correct place to meet customer demand and continuing to grow while making sure. The overall revenue quality of our portfolio remains healthy.
Brad Hicks: I'll close with some comments on 360.
Brad Hicks: Our investments in our company foundations, our people technology and capacity remain a focus for us.
Brad Hicks: <unk> technology enables our people helps drive productivity and also drives efficiency and how we source and serve customers with our available capacity.
Brad Hicks: Despite the challenging freight environment and depressed demand, we continue to see improved productivity in our people driven by 360 platform.
Brad Hicks: It is just math to some degree by the current market conditions.
Brad Hicks: That said as our cost structure is becoming more aligned with current demand. We continue to believe our technology will drive productivity and efficiency gains as the market recovers, allowing us to meet higher customer demand levels without having to add as many resources, while providing high levels of service for our customers.
Brad Hicks: We know that investing in our people technology and capacity is key to our success and remain confident that these investments better position us for long term growth with our customers and allow us to create greater value for our stakeholders.
Speaker Change: That concludes my comments, so I'll turn it over to Brad Delco to provide instructions before the operator opens the call for Q&A.
Brad Delco: Thanks, Brad Hey, Christa, let's.
Open the call for just one question without follow ups given the time. Thank you.
Your first question comes from the line of Brandon Oh, Glenn Ski from Barclays Capital. Please go ahead. Your line is open.
Brandon Robert Oglenski: Hey, good afternoon, and thanks for taking the question.
Brandon Robert Oglenski: I guess, Darren or Shelley you guys mentioned, a couple of times about how pricing is just a lag indicator in volume being the lead here I know your volumes did accelerate in the intermodal <unk>.
Brandon Robert Oglenski: Business this quarter I guess, how can you help us think about the progression on operating profitability through 2024 are you going to have the ability to get that value and greater yield from your customers as the year progresses.
Brandon Robert Oglenski: So Brandon I'll start this is Darren.
Brandon Robert Oglenski: Yeah.
Darren Field: I'm not going to guide you into 2024, and what I will say is.
Darren Field: Pricing will forever be worth more than volume in terms of margin performance and return performance. We are under immense cost pressure and certainly we believe the value proposition we represent to our customers.
Darren Field: Should the <unk>.
Darren Field: Two a return position that justifies our investments there's a lot yet to be determined and as we go through the bid cycle and so the answer to your question is.
Darren Field: We will play itself out in 2024, and and we're all going to have to wait and see what the environment is like.
Speaker Change: Your next question comes from the line of Ken <unk> from Bank of America. Please go ahead. Your line is open.
Ken: Hi, Good afternoon, Hey, Darren just a follow up on kind of the cost pressures just to understand kind of margin impact you talked about pulling containers out as you get growth maybe walk us through how we should think about the cost implications of bringing those containers back in the business when that should slowdown when we could see the I guess than them.
Ken: Margin I guess benefit as you slow down bringing those costs out and then to understand the insurance impact. If that's if that's not an ongoing cost are you raising that that part I'm trying to understand the cost inflation, we should expect in the business. Thanks.
Speaker Change: Sure well I don't know that I'd highlight cost pressure. So I wasn't intending to just highlight taking containers in and out of storage I mean, just inflationary cost pressures from wages for our drivers are higher rates with our railroads are higher certainly just all.
Speaker Change: Employment costs maintenance of the equipment itself costs more just across the board we have cost to increases in that inflationary cost list across our enterprise not just intermodal certainly and so those are those are challenges that we're all faced with it certainly the same thing that our customers are.
Speaker Change: Faced with and that's why we're working with our customers to deliver more value and look for how do we partner together and take cost out of each other system as we move forward and in terms of when you get to see that just like the last question. We're just going to have to wait and see until we can get.
The volume growing on a steady base and get the pricing cycle behind us we don't know exactly what to expect in that we know that the service quality. We built in 2023 has earned us the right to really dialog with our customers around these cost challenges we're faced with.
Speaker Change: Hey, Ken This is John Cool I'll, just add on the insurance.
Speaker Change: Cause pressure that we're seeing.
John: Our general approach to risk management is to maintain coverage and insurance policies for our exposures and as we reset the premiums going into 'twenty four we saw upwards of 50% to 60% increases in those premiums and so when we talk about the inflationary pressures that we're seeing in 'twenty four.
John: Mostly around our premiums so we've done a great job this year in and working and focusing on safety to try to bring those incidents down but the claims cost of the individual claims is what's driving a lot of the inflationary pressures.
Speaker Change: Your next question comes from the line of Boston Majors. Please go ahead. Your line is open.
Speaker Change: Sure.
Bascome Majors: So if you add back the charges for insurance and the losses on equipment sales you actually saw a pretty nice seasonal lift in operating income versus your history for the fourth quarter.
Speaker Change: I know you don't give guidance, but as we think about just level setting expectations for next year is the typical <unk> to <unk> seasonal decline a decent place to start maybe if you could just sort of talk about puts or takes to that from that adjusted $270 million or so operating income adding back those charges.
Fourth quarter. Thank you.
Speaker Change: Hey, Bascom this brand I'll give a shot at this one.
Speaker Change: You guys treat insurance, how you won I think the intent of <unk>.
Speaker Change: Tearing the $15 million change in <unk>.
Speaker Change: Net loss on sale of equipment was more of a year over year comment versus sequential and I don't have that in front of me to share.
In terms of.
Speaker Change: What you should expect from <unk>, while there is still a lot of <unk>, we don't typically provide guy.
Speaker Change: Guidance, So I'm sure over the course of the quarter, you and the market will.
Speaker Change: All informed.
Speaker Change: Itself on kind of what's happening, but as you've heard from our executive team.
Speaker Change: A lot of things that we're working on making sure we're delivering value for customers and making sure. We're focused on getting ourselves to earning the right return on our investments and that will be the focus going forward and we'll just have to compete in the market that's given to us.
Speaker Change: Your next question comes from the line of Scott Group from Wolfe Research. Please go ahead. Your line is open.
Scott H. Group: Hey, Thanks, good afternoon. So.
Scott H. Group: Darren I heard you talk about taking share from trucks didn't hear you talk about your about west coast Port share gains I guess I'm wondering how you think you may or may not benefit from that and then on the intermodal pricing side.
Speaker Change: Guessing youre not saying much thought maybe I'll ask it. This way do you think we need to wait for truckload pricing to start going higher for intermodal pricing to go higher to where just given this improved intermodal demand environment can we see a decoupling where intermodal.
Speaker Change: <unk> goes up.
Speaker Change: Without with before truckload pricing starts to go up.
Speaker Change: Okay.
Speaker Change: Okay.
Speaker Change: Thanks for the two questions Scott.
Speaker Change: So when it comes to volume and looking to regain share from the highway certainly.
Speaker Change: That feels like.
Speaker Change: Some of the lowest fruit for us given the loss of share over I'm going to call. It several years back into <unk> time window, even through certainly in pandemic I think intermodal lost some share due to weakness in velocity and as we gain velocity in 2020.
Speaker Change: Three we feel like we can better compete for our customers on consistency in the transit model that the customers need. So that's why we largely highlight highway conversion certainly growth of import traffic through the west coast ports is an absolute benefit to J B Hunt certainly I think we are.
Highlighted in the earnings release that we grew transcon, 13% in the fourth quarter. So that I would think highlights at least some advantage of that effort from from growth of imports as it relates to decoupling highway pricing to two.
Speaker Change: Two intermodal pricing I think that between our transcon networks in our eastern networks. There is already some decoupling not 100% certainly the influence of the intermodal market out west is a bigger factor in pricing there than highway rates, but in the eastern network.
Speaker Change: Work.
Speaker Change: I can't imagine a world, where intermodal pricing would ever decouple from highway pricing in the eastern network there really.
We will be tied together.
Speaker Change: Your next question comes from the line of Jon Chapelle from Evercore ISI. Please go ahead. Your line is open.
Jonathan B. Chappell: Thank you good afternoon, Dan I'm going to stick with you you mentioned that the fourth quarter volume number surprised everybody yourselves your rail partners sounds like even your shippers maybe the most surprising part is the fact that December accelerated more up 8%, which kind of goes contrary to what we've heard from all the others in the segment.
What kind of happened in December that you think was kind of unique to J B Hunt on that for that last question was it more kind of your new services new services with BN.
Jonathan B. Chappell: Or just an easier comp just trying to figure out why the acceleration when it sounded like December was soft for everyone else.
Speaker Change: Okay. I appreciate the question I think that certainly the new services. We're excited about I don't want to the Mexico service announcement was a conversion from business. We were handling through a different method. So I don't want that to be portrayed as a an immediate growth.
Speaker Change: Movement, but as we move forward it solidifies our capacity plans for Mexico to allow us to grow further in the long term over the long term future.
Speaker Change: When I think about December.
Speaker Change: Comp was certainly easier I think that is a factor I also believe that our mix of customers and that particular group of shippers. We serve had a more significant peak season that they even predicted and that's really why we've highlighted that.
Speaker Change: The peak season was a surprise.
Speaker Change: And I'll, even I'll, even go as far as to say.
Speaker Change: Our capacity, what I, what I called the coiled spring for many quarters.
Speaker Change: <unk> for us this fourth quarter and that peak season, it really allowed us to execute for our customers at a very high level and we're really really proud of that I am extremely proud of my team and I want to make sure and say that.
Speaker Change: Your next question comes from the line of Justin Long from Stephens incorporated. Please go ahead. Your line is open.
Justin Long: Thanks, and maybe I'll pivot and ask a dedicated question for Nick I know there are a lot of moving pieces with some.
Nick Hobbs: Complete losses, and downsizes and in the last year or so but dedicated has been pretty resilient.
Nick Hobbs: As well when you put it all together any initial expectations on the level of fleet growth for dedicated this year and anything outside of insurance that we should be aware of as it relates to swing factors on costs with depreciation startup costs or anything else.
Nick Hobbs: Yeah.
Speaker Change: Yes, I would say just as I was thinking about reflecting back on this year that.
Speaker Change: I think we performed much better than we did in a way no non I've talked about that just the structure of our deals CVD and <unk>.
Speaker Change: 18% of our fleet in Oman, and we're going to lose 9% or we did lose 9%.
Speaker Change: So I think through that we've got a better base of business better diversified so I feel we've come out of that pretty good sets up well I would say, though that when I think about our sales I'm just going to give you. Our standard line of we're going to sell 1000 1200 trucks, just like we did last year and are really.
Speaker Change: Tough year, we're going to plan on doing that again and as I said, we've got some visibility to some fleet losses coming up.
Speaker Change: And so there's a lot of moving parts in there, but when I look at the market and what we're after their private fleet market.
Speaker Change: It's really pretty stable.
Speaker Change: Some of the losses have been and are more what I would call our own.
Speaker Change: Business that we've had legacy business for quite some time.
Speaker Change: And so I think our.
Speaker Change: Beth will get more solid as we move forward with more product tweaks.
Speaker Change: Your next question comes from the line of Amit Malhotra from Deutsche Bank. Please go ahead. Your line is open.
Amit Malhotra: Thanks, Operator, hey, everybody Darren I, just wanted to understand that volume momentum question Youre talking about volume momentum, obviously intermodal loads were up 3% sequentially <unk> to <unk> you.
Usually they go down.
Amit Malhotra: For Q2, <unk>, but obviously there is a momentum you're adding the quantum service do we think that that momentum can continue where you can build.
Amit Malhotra: All you sequentially as we move through this year and I'm really talking about the first quarter, because obviously, it's a seasonally tough quarter and then just related to that.
Amit Malhotra: I assume your customers were talking about expectations for March and the spring selling season.
Amit Malhotra: There's a lot of disruption in the Red Sea and maybe <unk>.
Amit Malhotra: Customers are rethinking their supply chains.
Amit Malhotra: Panama Canal Suez Canal were down basically felt so just talk to us about that momentum building as we move.
Amit Malhotra: Over the next three months from where you are today and then what are your customers telling you from expectations on March and the disruption that's happening right now in the west.
Amit Malhotra: Okay.
Speaker Change: That was impressive.
Speaker Change: I think then.
Speaker Change: Look as volumes came at us in the fourth quarter and like we've highlighted many times our customers were even surprised by that so I think that the volume momentum that built during that quarter was largely related to activities that those customers had going on in the fourth quarter.
Speaker Change: And again, because they were surprised but I think thats why.
We feel a little bit more unclear right now about what.
Speaker Change: The early part of this year holds certainly.
Speaker Change: Traditionally the first quarter is a drop down from the fourth quarter.
Speaker Change: Would say that for my entire career Thats been the case and so I don't know that I'm going to guide you on what will happen, but certainly.
Speaker Change: Our customers inability to tell us about the peak season.
Speaker Change: Continues to be a challenge for us to get good solid information about what to expect.
Speaker Change: Yeah.
Speaker Change: Okay.
Speaker Change: Your next question comes from the line of Chris Wetherbee from Citigroup. Please go ahead. Your line is open.
Christian Wetherbee: Hey, Thanks, I guess I wanted to ask about cost inflation and maybe tie it into the insurance and so I guess I'm just trying to understand we've got two years with fourth quarter hits.
It's from the insurance side.
Christian Wetherbee: Guess I'm trying to figure out what that means for the go forward periods. So does the charge that you've taken this fourth quarter mean that there is some degree of incremental accruals that are required for 2024, and then maybe if we could just tie that into a broader cost inflation. If you look at the portfolio of the businesses. What do we think cost inflation is kind of running as we're getting into 2024.
Speaker Change: Chris I'll take that again as John Kuo with respect to the insurance.
John Kuo: We did have a charge last year in the fourth quarter.
John Kuo: This really relates to continuing to see.
John Kuo: What we referred to as unprecedented settlements in our prior year claims.
John Kuo: Had a situation where we ran out of our coverage limits in those periods and so we're effectively self insured each.
John Kuo: Each quarter, we go through and we assess our reserves.
John Kuo: <unk>.
John Kuo: Working with our actuaries.
John Kuo: We needed.
John Kuo: Determined that we need to take up our reserves.
John Kuo: Can't say that this will never happen again, but we do believe that the charge that we took for our reserves.
John Kuo: Make some properly valued now.
John Kuo: As I mentioned before we do our approach is to.
John Kuo: <unk> maintained coverage for all of our businesses.
John Kuo: And we are taking that up and we did a little bit in 'twenty, three and taking that up in 'twenty four and going forward.
John Kuo: Just to give.
John Kuo: <unk>.
With respect to the current environment and how we're seeing the settlements claim so or how do we see these claims settled.
John Kuo: So that's really where we're seeing the most pressure.
John Kuo: We are again continuing to look at our reserves on a quarterly basis.
John Kuo: But I feel like most of the inflation that we're seeing is through the cost premiums that we have from our underwriters.
Speaker Change: Your next question comes from the line of Allison <unk> from Wells Fargo. Please go ahead. Your line is open.
Hi, good evening.
Allison: Wanted to go back neck to dedicated.
Allison: Three downsizings and with less than sort of the 2009, but what's your visibility on being able to reallocate that capacity fairly quickly and then you also talked along with the pipeline of opportunity anything specific about the verticals of those opportunities.
Allison: Maybe more defensible or is it people just sort of preparing for whatever might come here just any thoughts.
Allison: First of all I would say on our ability to replace them.
Allison: Clearly the way our business works is we usually have waves when we get startups. So we incur the cost and so with us losing some of our trucks.
Allison: 'twenty three we don't have the momentum we normally have gone into 'twenty four.
Allison: So we replaced them quickly, but it just takes a little time to kind of get the momentum we can get the revenue and the profitability up and going so.
Allison: That's the reason that were.
Allison: Talking about 24, the way we are now as far as any vertical we look through our book I would say.
Allison: The furniture side, we hold a little bit of that in dedicated it's impacted some but I would say the one that's probably been the strongest in the grocery side of things we've just been consistent.
Allison: Throughout.
Allison: And then the others, it's kind of.
Allison: Just as the economies going there kind of go and nothing really sticks out anywhere else.
Speaker Change: And Alex Brad Delco, I'm, sorry, I, just wanted to add touch to that on your question about kind of the churn that Nick shared before we share each quarter. The success that team has selling new fleets and so.
Speaker Change: Nick kind of shared a churn number of 9% on our bet on the base of the fleet in 2023.
Speaker Change: Team was very successful and back filling some of those losses by selling that equipment into into new deals and so on.
Speaker Change: I think that what mixed messaging is effectively hey, we have some.
Speaker Change: <unk> side into some downsizing of some fleets in 2024 and I think in his prepared remarks. He said hey, the strategic focus is going to be out there selling to backfill some of those losses.
Speaker Change: Your next question comes from the line of Ravi Shanker from Morgan Stanley. Please go ahead. Your line is open.
Ravi Shanker: Thanks, Good afternoon, everyone.
Just regarding those insurance Federation, obviously, it seems a little bit frustrating given how much it's outside of your control.
Ravi Shanker: Legislation in Congress the only answer to this do you think some of the technology. We're putting in place is going to have a tangible impact on where do you think some of these claims.
Ravi Shanker: And is there anything you guys can do as a large carrier to maybe avoid some of the disproportionate impact on large carryover was the small ones.
Ravi Shanker: Yes.
Ravi Shanker: Jump in and then this is Nick.
Nick Hobbs: Clearly, we think we had a record safety year, when we look at the Ot preventable for the entire organization and we're very pleased with that we're doing things like inward facing cameras are about 65%.
Nick Hobbs: Played on that rollout, we will have all of those.
Nick Hobbs: Other trucks retrofit by the end of Q3.
Nick Hobbs: So we clearly think that will help us with our accidents.
And then if you think we're also get 65% of our fleet that Scott sidebar to assist that helps us on the rock side. Those we can't retro so it's going to take US. Another couple of years. So we think we're leading well on the safety side, but the fact is that the individual claims are just going through the roof on the <unk>.
Nick Hobbs: Cost of those and quite honestly those are in state courts.
Nick Hobbs: And so it's a state by state that's got to be addressed we're working with the American Trucking Association.
Nick Hobbs: And trying to go state by state to get tort reform.
Nick Hobbs: So it's going to be a long battle there unless there is some federal legislation that would kind of help us Interstate truckers out there so John I don't know.
John: Ravi I'd just add that it is frustrating, but we are focused on the areas that we can control and as Nick said, we're working to do everything we can.
John: To improve our safety to make sure that the incidents themselves are down and then there needs to be something done with respect to the settlement charges.
John: Okay.
Speaker Change: Your next question comes from the line of Jordan <unk> from Goldman Sachs. Please go ahead. Your line is open.
Jordan: Yeah, Hi, maybe sort of switch it up a little bit on the brokerage side of the equation obviously.
Jordan: A lot of pressure there profit wise I mean, what what do you think needs to happen to get back in Black is it is it purely a cycle thing price and volume or insurance or some things you need to do structurally to.
Jordan: Whether it be cost or technology, I know you've made a lot of investments in the past, but maybe talk a little bit to truck brokerage and your thinking on return to profitability.
Jordan: Yes, Jordan. Thank you this is Brad Hicks.
Incredibly difficult brokerage environment as we will know throughout the entire year, we did spend a tremendous amount of time focused on our cost as we saw volume decline and revenue quality.
Jordan: Back up significantly maybe.
Jordan: Maybe it's extremely difficult through the bid season to really pick your spots and an ever so declining rate environment.
Jordan: And do feel like the last quarter quarter and a half we've been just kind of tried to along that bottle.
As Darren mentioned in his opening.
Jordan: Question around we're taking this wait and see approach through bid season, but we do feel like things need to inflict the one thing I would mention that if you really look at the growth that we experienced through the pandemic.
Jordan: We were there for our customers in their greatest time of need and really felt like we were strategic and really what we saw from a behavior standpoint.
Jordan: From several of our customers throughout 'twenty three is that they really acted more transactional in the backend of that pandemic.
Jordan: Multiple round bids driving down to that lowest price and so we do have to recalibrate, how do we think about how we step forward, but I can tell you is we're focused on growing but we're focused on growing at the right rate.
Jordan: We can add value to our customers networks.
Jordan: Okay.
Your next question comes from the line of Jason Seidl from TD Cowen. Please go ahead. Your line is open.
Jason H. Seidl: Thank you operator, and thank you all for taking the question can we focus a little bit on reported yields in terms of the outlook. It seems like there is going to be.
Jason H. Seidl: Mix changes coming with the move back to the West Coast ports, how should we look at that as a closed loop model for 'twenty four.
Jason H. Seidl: Well.
Jason H. Seidl: Certainly.
Jason H. Seidl: I mean, the pricing environment just has.
Jason H. Seidl: Too much too many unknowns today really to highlight.
Speaker Change: Anything there, Jason what I would say is it certainly.
Speaker Change: The longer length of haul loads that the west coast represents Ken represent higher revenue per load, but that doesn't.
Speaker Change: <unk> necessarily mean that there is pricing increases there and so I'm not going to be able to fill out sort of the mix for you I mean, we don't even know what that mix will be just yet.
Speaker Change: Certainly there is an opportunity for growth on the west coast that we're hearing about as more and more customers are talking about.
Speaker Change: A shift of their imports to the west coast.
Speaker Change: Your next question comes from the line of Tom <unk> from UBS Financial. Please go ahead. Your line is open.
Tom: Yes. Good afternoon, I wanted to ask you a little bit about intermodal margin in the fourth quarter. If we take out the insurance you saw about 80 basis points of sequential improvement.
Tom: In intermodal margin and I just wanted to see if you could give a sense of what drove that was that.
Tom: Less repositioning expense was that.
Tom: Something helpful on the revenue side it didn't sound like there was a change on price and then I guess related to that.
Tom: When you have a longer length of haul and some favorable mix does that affect you like price does that help the margin a bit so.
Tom: Really just a couple of things on intermodal margin.
Speaker Change: Thank you.
Speaker Change: Well I think that certainly the fixed.
Speaker Change: Fixed costs that we're carrying is is material and we highlighted that at least for the fourth quarter.
Speaker Change: The coiled spring unlocked a little bit and we were able to spread go.
Speaker Change: Growth volume over more loads and that certainly was a contributing factor behind that no. There is certainly was not a price improvement during the quarter.
Speaker Change: Pricing will continue to be and forever will be the fastest way to repair margin, but certainly volume in our current state is worth more to us than it ever has been in our past given the asset count that we currently own and so volume is worse.
Speaker Change: More than it used to be.
Speaker Change: Certainly the fourth quarter was able to show that.
Speaker Change: Your next question comes from the line of Brian <unk> from Jpmorgan. Please go ahead. Your line is open.
Brian: Hey, Thanks for taking the question.
Brian: You don't want to talk about rates given all the uncertainty at this point, but maybe you can talk more about just the conversations with the shippers and some of that momentum and a surprise upside in the fourth quarter is that really carried into the conversations that they unfold here are they looking for longer durations are they looking for back half locking in some capacity.
Speaker Change: Darrin I'd love to hear if there's actual truckload conversion that's happening.
Speaker Change: And then maybe Brad you can just give us a sense in terms of what you see in the truck market itself from a capacity spot rate improvement would you expect here standing at the first part of the year looking for the rest of it. Thank you.
Speaker Change: Okay. This is darrin I'll start and just and then hand, it off to Brad I think that from a pricing conversation perspective.
Brad: It's really a wide variety of results there in terms of I think there is universal acknowledgment for our service performance and we feel good about that there is a universal hesitancy to offer rate increases and competition is real there is comp.
Brad: Petition out there.
Brad: And that will always be a factor our customers are under tremendous pressure not to have their costs go up and so that's going to be a factor.
Brad: But at the same time, we really were not far enough into these conversations to be able to.
Brad: Make heads or tails of it theres a lot of work to be done.
Brad: I think that I am proud of the way that customers are responding to the quality of our service and we're going to lean in on that.
Brad: Yes, Brian I would just add this is Brad Hicks.
Brad Hicks: Similar to to where Darren says.
Brad Hicks: Way too early in the bid cycle to see what's.
Brad Hicks: What's ahead of us there, but at least from our perspective from a trucker standpoint rates have to go up.
Brad Hicks: Can't tell you exactly when that's going to happen, but the cost the inflation when we look at the operating cost of not just our own fleet.
Thats lease in general and where rates plummeted.
Brad Hicks: In the truckload space, which are down more than two X. What they were in terms of a percent reduction than we see in intermodal over the last 12 or 14 months.
Brad Hicks: Something is going to have to give there we obviously pay real close attention on what's going on with truckload capacity.
Brad Hicks: And we do start to see exits.
Brad Hicks: The marketplace there.
Brad Hicks: At some point, that's going to have to inflect.
Brad Hicks: We'd like that to be sooner than later.
Brad Hicks: Aaron mentioned customers are still under tremendous pressure. They are just not going to give it to you.
Brad Hicks: But I do feel like something will turn at some point.
Brad Hicks: A matter of if not when.
Brad Hicks: And so that's how I would respond.
Brad Hicks: Yes.
Speaker Change: Your next question comes from the line of Bruce Chan from Stifel. Please go ahead. Your line is open.
Bruce Chan: Hey, Thanks, operator.
Bruce Chan: Maybe just sticking with you here on the Ics side.
Bruce Chan: Noticed that sequential gap down in the contractual business percentage I was just wondering if that's due to maybe capturing some seasonal spot opportunity was that more of a function of mix from BNS or was that a function of the culling that youre talking about and then maybe just thinking through profitability in the segment.
You expect the acquisition and integration cost to kind of moderate this quarter or are we still working through some of those.
Speaker Change: Could you repeat the very first part of your question if you don't mind.
No not at all.
Speaker Change: Looking at that moved down in the contractual business percentage. So I think it was 59%.
Speaker Change: Is that seasonal spot opportunity was that the NSF mix or was that some of the calling that you've been doing.
Speaker Change: Great. Okay. Thank you well first let me correct what I ended the last question.
Speaker Change: Not with us with this.
Speaker Change: Sorry.
Speaker Change: I was getting ahead of myself there but.
Speaker Change: We saw that come in right around 59% contract a little bit lower than what we had been.
Speaker Change: Certainly the mix of business that we saw come through in the over the road assets of the VSS acquisition that did play a factor.
Speaker Change: I think that as we move forward as you look at our history.
Speaker Change: Largely we like to be in that 50 50.
Speaker Change: Thanks for that swings higher on contract or published.
Speaker Change: We got over weighted during the pandemic, if you recall on spot, where we were greater than 50% spot. So the.
Speaker Change: Our sweet spot would be for us to live in that 50 to 60.
Speaker Change: I'd like to think that that's going to maintain but we're also going to need to see the spot market overall demand in the spot market pick up its still is relatively soft in that category.
Speaker Change: Compliance is very high amongst.
Speaker Change: Shipper tenders in terms of carriers.
Speaker Change: Accepting tender acceptance and so yes, we're going to pay real close attention as we move deeper in the year.
Do you believe that youre likely to see when we do see the flip you will start to see spot opportunities grow and will be poised to take advantage of that.
Speaker Change: Yeah.
Speaker Change: Your next question comes from the line of David Vernon from Bernstein. Please go ahead. Your line is open.
David Scott Vernon: Hey, good afternoon, a quick clarification, and then and then.
Question on the insurance stuff, So Charlie I think you talked about.
David Scott Vernon: <unk> dedicated EBIT, maybe being challenging were you referring to like the GAAP EBIT number or the adjusted EBIT number and.
David Scott Vernon: And then the real question I have for you is John I. Appreciate your comments on insurance being a recurring thing, but John cooler.
David Scott Vernon: Look at what we did in terms of the 53 going into reserves. However, you changed the premiums and the limits on the policies. If 2023 happened exactly as it happened this year in terms of incidents and payouts.
Flash forward to 2024, if that just repeats in 2024 or are we taking another charge or are we not taking another charge.
David Scott Vernon: Thanks.
David Scott Vernon: Okay.
Speaker Change: So were you talking about the gap could you repeat that first question again for dedicated.
Dedicated: Dedicated was I think Joe you mentioned that it's going to be challenging to grow dedicated from an EBIT perspective.
Dedicated: In this market and what you're referring to the GAAP number and the non-GAAP number.
Yes, I think David I don't want to answer that with spreads out, but I don't answer that question because it sounds like the fleet answer that provides.
Dedicated: Too much in guidance I think nicks intended purpose Adrian Kelly dependent purpose. There was we have visibility and some fleet losses.
Dedicated: And as a result, it's going to be hard to grow revenue and operating income in the quarter.
Speaker Change: I don't necessarily want to try to distinguish between whether that's on a GAAP or non-GAAP basis, because we report and we speak to everything in our financials on a GAAP basis.
Speaker Change: And David just.
Speaker Change: A final point on insurance.
Speaker Change: If 23 or 24 plays out like 23.
Speaker Change: As I mentioned, we look at our reserves quarterly.
Speaker Change: We feel like the reserves are appropriately valued these values were placed on prior period claims. So it is not our expectation that we have these charges going forward.
Speaker Change: Thank you and we have no further questions in our queue. At this time I will now turn the conference over to John Robert Sorry, Jon Roberts, Chief Executive Officer for closing remarks.
John N. Roberts III: Great. Thank you and appreciate the interest in the call today, I would reiterate goodbye and good riddance to 2023 with a couple of exceptions, we think about the performance in our dedicated and final mile business.
Again, revealing what we believe is a very complementary portfolio of services built in very intentionally looked at our performance in safety.
John N. Roberts III: We feel like there is.
John N. Roberts III: A disconnect between our actual work in performance in investment and the results we're getting in.
John N. Roberts III: The claims markets in the insurance markets I think I look at like JV I intermodal has kind of been in the gym all year.
John N. Roberts III: Carrying some extra.
John N. Roberts III: Positioning, but we got a glimpse of that Darrin in the fourth quarter of what that can latest Susan I don't remember, who said it but I don't know 80 rock fan and I heard back in black.
John N. Roberts III: I really like that because.
John N. Roberts III: That will be something that could use around here through.
John N. Roberts III: Through the rest of our work.
John N. Roberts III: I would say that.
While 2023 was a tough year and in fact, we talked about our tenure a lot, but we've discussed here none of us have really seen much in the like 2023 in many years, we're looking at decades of leadership here and so I think.
John N. Roberts III: It was one of the toughest I see it is also a very strengthening year, we had to lean in harder to get ready for 'twenty. Four we had to ask ourselves a different type of question than we normally do and through that worked in prepping for 'twenty four and dealing with 23 I do believe we are.
John N. Roberts III: Prepare as we come out of.
John N. Roberts III: And I guess I'll say when not if but when we come out of this.
Great recession.
Totally and completely believe we are ready to respond to the needs of our customers we are.
John N. Roberts III: We have extraordinarily strong alignment and commitment to our top priorities our people our technology and our capacity and I would just say, let's watch for improvement.
John N. Roberts III: While we continue to take care of our people, who take care of our customers.
And when that presents I think will be very be very ready.
John N. Roberts III: To serve it and take it take advantage of that change of climate. So good riddance. Thanks for the memories and I'll turn it over to Shelly to reference up. Thank you John and there is a saying that John Roberts has said for many years around here and it is growth is oxygen and I think that you saw some of that come into play in the fourth quarter and.
Shelley Simpson: Intermodal and that's exactly why we are built for scale, we do look at our investments for the long term and we noted that our customers want more of our services and want us to be more comprehensive and saw it in your supply chain challenges over the long term and so we have spent 2023 getting prepared and ready for our customers.
Shelley Simpson: Now in 2020 for it we need to grow into our investments in our people and our technology and our capacity one of the ways that we will do that and why it is our priority number one is making sure that we continue our operational excellence to further separate ourselves as the best in class in all five of our business units that.
Shelley Simpson: Will allow us to create more value for our customers. They will recognize that value and then we believe we can earn the right to have a conversation with our customers around cost that is a key focus for us and that started on January one finally that will allow us to continue focusing on driving long term compounding returns for our shareholders. So those three key.
Shelley Simpson: Priorities as we March into 2024.
Shelley Simpson: So let us have a happy dance that 'twenty three is over and we're moving into 'twenty forward. Because we are built for scale and we are ready for growth.
Shelley Simpson: It would be remiss if I did not say we are remaining committed to.
Shelley Simpson: Two people being our top priority our team of 35000 people have worked so hard this year. They have been resilient. They have labored harder this year than likely any other year at least in my 29 year career and sometimes the fruit of their labor does it necessarily show it on paper, but we do believe if its.
Shelley Simpson: Our long term debt free at their label will prove it for our customers for our people and for our shareholders for that I. Thank you for your time and your interest tiers to 'twenty four.
Speaker Change: This concludes today's conference call. Thank you for your participation and you may now disconnect.
Speaker Change: Yeah.
Speaker Change:
Speaker Change: Okay.
Yeah.
Speaker Change: Yeah.
Speaker Change: Yeah.
Speaker Change: Yeah.