Echo Global Logistics Inc (ECHO) Q1 2021 Earnings Call Transcript

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Echo Global Logistics Inc (ECHO)
Q1 2021 Earnings Call
Apr 28, 2021, 5:00 p.m. ET

Contents:

• Prepared Remarks
• Questions and Answers
• Call Participants

Prepared Remarks:

Operator

Good day, and thank you for standing by. Welcome to the Echo Global Logistics First Quarter 2021 Earnings Call. [Operator Instructions]

I would now like to hand the conference over to your speaker today. Pete Rogers, Chief Financial Officer. Please go ahead.

Peter M. Rogers -- Chief Financial Officer

Thank you, and thank you for joining us today to discuss our first quarter 2021 earnings. Hosting the call are Doug Waggoner, Chairman of the Board and Chief Executive Officer; Dave Menzel, President and Chief Operating Officer; and Pete Rogers, Chief Financial Officer. We have posted presentation slides to our website that accompany management's prepared remarks, and these slides can be accessed in the Investor Relations section of our website at echo.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 will 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.

Douglas R. Waggoner -- Chairman and Chief Executive Officer

Thanks, and good afternoon, everyone. I appreciate all of you joining today, and I'll start on Slide three of our presentation and hit some of the highlights for the quarter. The first quarter represented a continuation of the positive trends from recent quarters in terms of demonstrating Echo's 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 a quarter that saw freight markets turned on their head by winter storms. These storms hobbled parts of the country and sent rates again to all-time highs. Throughout the disruption in shipper supply chains and 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 in the quarter. We had record revenue in Q1 as total revenue was $801 million, representing a 45% increase from last year. We had record brokerage revenue of $617 million, record managed transportation revenue of $184 million, record truckload revenue of $576 million and record LTL revenue of $190 million. Record adjusted gross profit of $120 million, representing a 34% increase from last year. Record adjusted EBITDA was $28.3 million, a 90% increase over the prior year. And non-GAAP fully diluted EPS was also a new record of $0.61 compared to $0.19 in the year ago period, reflecting a 217% increase. Again, a record-breaking quarter across the board, and 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 has helped to improve efficiency and productivity for our employees, given continued growth in truckload, accelerated growth in managed transportation offering and strengthened our digital play marketplace. When you look at the results in the first quarter, it's clear that our approach is driving value for both us and our clients. For example, in Q1, we continue to demonstrate increased productivity per client representatives. 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 month of the quarter. Our managed transportation revenue grew by 50% on a year-over-year basis, and we continue to renew clients at a high rate and bring on new business on board for the quarter. We continue to focus on enhancing our digital marketplace and continue to see increases in freight booked directly through automated channels and carriers booked from EchoDrive.

Bottom line, we had a great quarter in Q1, but more importantly, we executed our business strategy. Our focus remains on building an organization that demonstrates this ability over the long-term throughout full freight cycles. In a quarter with significant disruption, our shippers again try to less for competitively priced freight with very reliable service, and our carriers going 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 to Dave to cover additional details by mode.

David B. Menzel -- President and Chief Operating Officer

Thanks, Doug. As we discussed last quarter, Q4 2020 was characterized by strong freight demand and tight capacity, which resulted in truckload rates sitting all-time highs. That environment persisted into Q1, and that was further exasperated by the winter storm that impacted much of the country in February. The net result was a further tightening of capacity and new records in terms of truckload rates. Frequent discussion topic we've had with investors over the years has been centered around what point in the freight cycle is most favorable operating environment for Echo. Fundamentally, one the advantages of our business model is its flexibility. We can and must adapt to changing freight cycles. Our business requires content adjustment, and our people are prepared to deal with constant change. The current environment is obviously quite favorable for carriers. There's more freight than trucks, and maybe I should say than drivers. The ports are backlog, demand is strong and 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 a 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 do to deliver quality service and solutions during this unprecedented time.

Given this backdrop, I'd like to now cover our results in more granular detail. 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 and a 39% increase in the revenue per shipment. The strong volume growth was driven by a very robust spot market as routing guidance have 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. Spot business represented 53% of our overall volume in Q1 2021 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, a 21% increase over the prior year. Our growth in LTL was, again, a combination of volume and rates as our LTL shipments grew by 10% and our revenue per shipment increased by 10%. The increase in LTL 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. The LTL carriers are operating at capacity levels well above historic norms, and this has an impact on both price and service. It's 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 continue to go live. The brokerage business was impacted by the February weather but resumed growth in March and has continued to show even stronger growth in April as we're now facing more favorable LTL 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, which is an increase of 44% over the prior year. Our growth was driven by the combination of increased volume in rates, as I just highlighted. On March 31, our sales organization totaled 1,675 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 on operational rep increased by 5% on a year-over-year basis in Q1. This marks the seventh consecutive quarter of increases in this productivity metric. We'll continue to invest and enhance the technology and tools that enable our sales personnel to be more efficient and ramp fast 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. Carrier bookings from EchoDrive increased by 270% over last year and continued to accelerate. We booked over 10,000 loads in Q1 from our digital channel. We continue to integrate with our shippers for stockholder, utilizing our APIs and data science to deliver electronic quotes, and net revenue continues to grow at an impressive rate. In fact, we booked over $5 million in revenue in Q1 from our API integrations. Finally, we launched EchoShip awards in 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 in Q1, an increase of 50% over the prior year. Additionally, we signed $19 million of new business in Q1 and renewed a significant portion of our business at a 93% renewal rate. Again, I appreciate the efforts of our managed transportation team, who are truly on the front line, helping our shippers deal with higher rates and capacity challenges.

Turning to Slide six. We generated a record $120 million in adjusted gross profit, a 34% increase over the prior year. The increase was driven by record revenue but offset by 133 basis points of margin compression, resulting in adjusted gross profit margin of 15%. The adjusted gross margin compression was driven throughout our business as we experienced 123 basis point decline in truckload and a 111 basis point decline in LTL. Both of these declines were due to the increases in the cost of capacity. Despite this 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 into mid-2018. I'd like to now turn it over to Pete.

Peter M. Rogers -- Chief Financial Officer

Thanks, Dave. On Page seven of the slides, you'll find a 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 30.2% of adjusted gross profit, essentially flat when compared to 30.3% for the first quarter 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 were headcount increases and incentive compensation. Depreciation expense was $6.1 million in the first quarter of 2021, down from $7 million a year ago. Cash interest expense was $0.7 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% for the first quarter of 2021. As Doug mentioned, non-GAAP fully diluted EPS was $0.61, increasing from $0.19 in the first quarter of 2020. As a reminder, the primary differences between our GAAP non-GAAP fully diluted EPS in the first quarter of 2021 are $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 and 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, it's 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. Net borrowing capacity is calculated as 85% of our eligible accounts receivable with a maximum loan facility of $350 million. We had 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 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. Per-day revenue in April was up 86% over last year. Truckload volumes are up 33%, and LTL volumes are up 49% compared to last April. It is important to remember that April 2020 did see the biggest impact from the pandemic last year. Adjusted gross profit margin in early April was around 14.5%. Now for the guidance around some of the main drivers of performance for Q2. We expect revenue to be between $830 million 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. This increase from Q1 is largely due to increased in conversation, increased headcount, and a full quarter impact of our annual merit process. In Q2, we'll 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 to 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 $3.15 billion and $3.335 billion, up 29% over fiscal year 2020. That is a 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 million and $238 million, up 4% at the midpoint. The increase is primarily driven by increases in headcount and technology operations and sales throughout the rest of 2021 and increased incentive compensation. We continue to believe that 2021 is a 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.

Douglas R. Waggoner -- Chairman and Chief Executive Officer

Thanks, Pete. I think for the first quarter, record breakeven results speak for themselves. And as Pete highlighted with our guidance, we anticipate these conditions to persist throughout 2021 and into 2022. As our recent results indicate, we are well-positioned to capitalize on these prolonged times of supply chain disruption but also view it as a unique opportunity to further differentiate ourselves through our growth and our scale. Last quarter, I highlighted some of our top organizational opportunities for the future: API connectivity, automated pricing, EchoDrive and EchoShip technologies, internally phasing technology, and managed transportation growth. We made some great progress in the first quarter against many of these initiatives, but this is only the beginning. Employed by strong financial performance, the goals and opportunities for continued investment remain even more promising. Our focus is resolute. Our unique combination of people, technology, and data science will continue to be the reason for our success with our shippers and our carrier partners. That concludes our prepared remarks. And at this time, I'd like to open up the call for questions.

Questions and Answers:

Operator

[Operator Instructions] And your first question comes from the line of Jack Atkins with Stephens. Your line is open.

Wade -- Stephens Inc. -- Analyst

Hey, everybody. You have got Wade on for Jack this afternoon. Congrats on the quarter.

David B. Menzel -- President and Chief Operating Officer

Thanks.

Wade -- Stephens Inc. -- Analyst

I wanted to -- if I could start, I wanted to ask about API integrations with the larger shipper and load boards. How is that process coming along? Obviously, you mentioned $5 million in revenue stemmed from that this quarter. I'm wondering how much of that -- or if how much of that initiative is contributing to the strong April and second-quarter guidance? And where do you want that $5 million to be down the line?

David B. Menzel -- President and Chief Operating Officer

So the -- this is Dave. The April numbers -- I mean, I think that there's a couple of key things. First off, it's -- we're -- the progress has been fantastic. We've got a handful of clients integrated, and we've got a pipeline of more coming. So we'd see that as a nice growth opportunity into 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 improvements as we move forward. In terms of the impact that 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. And I'd say it's a long-term opportunity, but it's not the hugest of needle movers in terms of April results.

Wade -- Stephens Inc. -- Analyst

Okay. Great. Thank you. I want to stick on that large shipper 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, what's the right mix of spot versus contract when you balance that initiative in a market like what we're seeing today?

David B. Menzel -- President and Chief Operating Officer

Yes. It's a great question and one that we've never been able to successfully answer. We've gotten it plenty of times over the years. For Echo, our spot to contract mix is kind of ebbs and flow, as you would expect, the freight cycles. And we've seen as high as about 60% of our business being contract business in a cycle that has a very static supply and demand or balance, let's call it, a supply and demand dynamic. And then we've seen it as low as 40% when the spot market has kind of gone crazy. 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. We've got many small and mid-market clients that we would love to grow that share of the market. A lot of that business is in transactional in nature, would be classified a spot business because those type of companies don't tend to run routing 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 both small and midsized companies as well as larger clients.

Wade -- Stephens Inc. -- Analyst

Sure. That makes sense. One more, and then I'll turn it over. I know you guys don't comment specifically on route guide depth, but I'd be curious to know or get your thoughts on potential for routing guides to start breaking down again as we move through May and June, even with how difficult the comparisons are or will be getting as the months go by, just given how tight capacity is out there right now. I'm just wondering if there's any potential for that to worsen.

David B. Menzel -- President and Chief Operating Officer

It's a good question. Hard to predict. I think that we obviously have a very robust spot market, which is indicative of the fact that many of the routing guys are not performing to shipper expectations. I expect that to continue as freight demand continues to increase through the summer months. This is a -- I would say that February, March, and April are pretty unique. February being impacted, of course, by the huge winter storm, which then threw a lot of disruption in the marketplace, which created a spike in rates in March. And then -- and it's persistent, I'd say, as we go into April. But now we're getting into what I would call is a traditional, heavier freight cycle season. So my expectation is we're going to -- routing guys are going to continue 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.

Wade -- Stephens Inc. -- Analyst

Great. Thanks so much.

David B. Menzel -- President and Chief Operating Officer

Got it.

Operator

And your next question comes from the line of Bruce Chan with Stifel. Your line is open.

Bruce Chan -- Stifel, Nicolaus & Company, Incorporated -- Analyst

Good afternoon. Nice result 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 few years. But if I look kind of cycle over cycle where gross margins are now versus back in the kind of late 2017 to early 2018 time frame, you're clearly seeing more pressure now. So maybe just want to get your thoughts on what's driving the differences versus, again, 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 whether they might be in your model.

David B. Menzel -- President and Chief Operating Officer

Yes, Bruce, this is Dave. Thanks for the question. The biggest factor is the significant increase in rates, truckload rates. So it's kind of interesting when you look at adjusted gross profit per load, which I know we don't disclose that specific metric. But I think that's probably more of a interesting indicator as to whether competition or all these factors have 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 appreciate how automation, efficiencies in our business driven by both changes that we make as well as competitors make, it may, in fact, over time, reduce some of the gross margin in the business. But we haven't seen that, frankly, in the last five to 10 years. It's kind of just cycling through freight cycles. And again, I'm a little more focused on what the gross profit is per load that we move than the specific margin. And so I think that's because of the high rates we're seeing what looks to be margin compression, but in reality, it's more of a function of the higher rates, if that makes sense to you.

Bruce Chan -- Stifel, Nicolaus & Company, Incorporated -- Analyst

Okay. That's very helpful. And then I don't know if you give this color, but any maybe visibility on how those gross margins trended through the quarter by month?

David B. Menzel -- President and Chief Operating Officer

Let me take a look. The -- they kind of bounced around a little bit, I would say. The February margins kind of took a dip, I think, with the freight and the real spike in rates. And then the spot market activity in March did exactly what you probably expect it to do, which is those margins a little bit when spot activity kind of increased in March. So I'd say it took a little bit in the middle month is how I would frame it up.

Bruce Chan -- Stifel, Nicolaus & Company, Incorporated -- Analyst

Got it. And then just a last quick one here. Obviously, 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 subsegments of truckload trends in the quarter?

David B. Menzel -- President and Chief Operating Officer

Our spot business was up, I think around, let me double-check my metrics here, but I think about 45%. And our contract business was down just over 10%, I believe, in the quarter.

Bruce Chan -- Stifel, Nicolaus & Company, Incorporated -- Analyst

Perfect. Super helpful and I appreciate the time and the answers.

David B. Menzel -- President and Chief Operating Officer

You got it, Bruce.

Douglas R. Waggoner -- Chairman and Chief Executive Officer

Thanks, Bruce.

Operator

Our next question comes from the line of Jason Seidl with Cowen. Your line is open.

Jason Seidl -- Cowen and Company, LLC -- Analyst

Thank you, Operator. Hey, Doug. Hey, Pete. Good afternoon. I wanted to focus a little bit on the contract-type business. What percent 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?

David B. Menzel -- President and Chief Operating Officer

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 negative loads, negative business, primarily, of course, associated with our contract business. And to be honest, 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 -- we don't look at it that way, but I think that it infers to me that probably 80% of the business is price -- it's reasonably at market rates, and there's probably another 20% or so of the business that is -- I'm not going to use the word underwater, but may be either temporarily or currently below what we think the current rate is in the market, and it causes us to challenge to service. And it's just -- 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 it's a good question. I don't have a -- Like I said, it's not a specific, but it's probably something like the 80/20 rule pretty fair.

Jason Seidl -- Cowen and Company, LLC -- Analyst

Sure. As you guys also, go on with this next question, throw more money at sort of more digital operations, is there any way to look at sort of the margins on moving a digital load versus the more traditional way to do it? Or is that just too hard to split out?

David B. Menzel -- President and Chief Operating Officer

Yes, I mean we're not going to get into the specifics today about how -- what the margins are on different micro-segments, call it, within our business. I think over the long term, as we get more and more automation, operating margins can be -- would be probably the thing that we'll start to look at more carefully, but that's probably a three to five year kind of view and not something that we're overly focused on today.

Jason Seidl -- Cowen and Company, LLC -- Analyst

Okay. And then last question, maybe this one could be for Doug if he's around. You guys are raising your guidance, you're going to generate good free cash flow. In the past, you've talked a lot about tuck-in-type 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.

Douglas R. Waggoner -- Chairman and Chief Executive Officer

Yes. No, we're continuing to be very interested in M&A. We think it's probably the best use of our cash. Certainly, we have financing capacity to do deals. 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 at times in this market with cheap debt and with a lot of private equity money if an opportunity is big enough to be a private equity platform. We're seeing 14 times multiples and six to seven times leverage to get the deal done, and that's just not that attractive to us at this time. So that tends to refocus our thoughts on the smaller tuck-in type of deals, and those are the kind of things where youve got to look at a lot of opportunities to find the ones that are a good fit. And by that, I'm talking about management team fitted with our culture and a company that can utilize our technology and make sure that we don't have too much overlap with customers or carriers. And they're out there, but youve got to look at a lot of opportunities to find those right deals. And we are active, but it's just hard to predict what we're going to get one across the finish line.

Jason Seidl -- Cowen and Company, LLC -- Analyst

That makes sense. And I think given those multiples that you just cited, Doug, I think the market would agree with you guys looking for the more tuck-in types. Well, listen, I appreciate the time as always. My best to everyone there at Echo, and stay safe.

David B. Menzel -- President and Chief Operating Officer

Thanks, Jason.

Operator

And your next question comes from the line of Allison Landry with Credit Suisse.

Allison Landry -- Credit Suisse AG -- Analyst

Thanks. Good afternoon. I wanted to sort of echo a longer-term question. And first, curious to get your thoughts on longer-term changes in supply chains and inventory management post-COVID and whether you guys have contemplated or started thinking about whether there could be a change in how you view thoughts versus contractual business to the extent that freight stays stronger for longer and as shippers broadly become more averse to running out of inventory. And maybe this is even a question as it pertains to how you think about the enterprise business as well. So just to get your high-level thoughts on all of this.

Douglas R. Waggoner -- Chairman and Chief Executive Officer

Well, I think, Allison, there is some dialogue going on in the industry right now about how the shippers get whip-side in these markets. And when the capacity tightens up and the rates spike and their routing guys break down and then they have to overly rely on the spot market and pay up quite a bit, and so there's kind of an ongoing industry discussion, I would call it, of is there a better way. And potentially, that could be more of a cost-plus arrangement. But in order for that to work, you've got to have a mechanism of trust where you're basing your cost-plus on an index or something that the shipper has confidence and faith in and believes that the broker is doing their best to get the best cost in the marketplace. So I think that has some work to do, but there's certainly some shippers are open to exploring things that can cause them to get better service performance and not miss their budget still about it. That's part of the biggest thing that I'm thinking about. I think for us, we've got a great business model that can ride the wave of the cycle. And as Dave mentioned earlier, sometimes that means more spot freight. Sometimes it means more contract rate, and we just adjust.

Allison Landry -- Credit Suisse AG -- Analyst

Okay. And then maybe this is sort of a longer timeline, but just maybe in the last year, have you had more interest from customers in wanting to adopt or sort of use the digital price platform? And do you see this accelerate in the next 12 to 24 months?

Douglas R. Waggoner -- Chairman and Chief Executive Officer

Yes. I think we've been talking a lot about our API integration, and that's really an exciting opportunity for us because with these very large shippers with the big road boards, especially when there's a lot of spot freight in the market, it's a lot of work to respond through their website or whatever mechanism they're using to give them quotes on all their loads. So what we found with our initial integrations is that we're, first of all, we're able to quote on the 100% of the roads, which is more than we were before manually. And our win rate is higher and our margins are better. So you add all that up, and we want to automate as much of that as we can through APIs. And as Dave mentioned, 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 that would be where we're integrating to a third-party TMS platform and the users of that platform have the option of flipping a switch in that software and being able to see Echo rates on all their truckload shipments.

Allison Landry -- Credit Suisse AG -- Analyst

Okay. Perfect. That was very helpful. Thank you, guys.

Douglas R. Waggoner -- Chairman and Chief Executive Officer

Thank you, Allison.

Operator

And your next question comes from the line of Stephanie Benjamin with Truist. Your line is open.

Stephanie Benjamin -- Truist Securities, Inc. -- Analyst

Hi. Good afternoon.

Douglas R. Waggoner -- Chairman and Chief Executive Officer

Good afternoon.

Stephanie Benjamin -- Truist Securities, Inc. -- Analyst

It would be great to hear just kind of your thoughts on the broader competitive environment, not only from some of the digital players, but also just competition from some of these traditional asset-based players who are building out brokerage businesses. Just kind of your thoughts as you move throughout the quarter.

Douglas R. Waggoner -- Chairman and Chief Executive Officer

Yes, I mean, 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 and our existing carriers. And so we run into our competition. We did against it in RFPs. We've been against them on spot freight, but we don't put that much of our energy on evaluating them just because we're trying to execute our own business.

Stephanie Benjamin -- Truist Securities, Inc. -- Analyst

Absolutely. No, that's helpful. And then switching gears to your LTL business, I think another record quarter here with really nice volumes and rates. Would love to hear a little bit more on just kind of what was the main drivers of such a strong volume. Were you seeing any particular verticals? Is this a due to the growth in e-commerce, industrial recovery, anything that you can kind of point to for just outperformance in the quarter?

David B. Menzel -- President and Chief Operating Officer

Sure. I think there's two kind of key things here. One is we're definitely -- and especially in the March and into April, for sure, have seen the impact of industrial recovery impact the LTL business. As you know, our client base on the LTL 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 hitting favorable comps in April. The second big driver has been the success we have in the managed transportation business. So that's driven a pretty significant amount of growth in LTL. The only kind of interesting setback, if you will, was the freeze event in Q1. So that created really some big service challenges on the LTL 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 always been a strong LTL, SMB market provider. We feel really great about EchoShip, our ability to handle customers online, pursue micro shippers, SMB shippers in a multimodal way. And I think that's a big reason that we're having continued success on the LTL side.

Stephanie Benjamin -- Truist Securities, Inc. -- Analyst

Great. Thank you so much.

Douglas R. Waggoner -- Chairman and Chief Executive Officer

Thank you.

Operator

And our next question comes from the line of Alex Johnson with UBS.

Alex Johnson -- UBS Investment Bank -- Analyst

Hey. Good afternoon. It's Alex on for Tom Wadewitz. Dave, you got so close to answering my question with that last answer. You have multiple parts of the business, and weather was an impact in the first quarter. 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?

David B. Menzel -- President and Chief Operating Officer

Yes. Really -- it's really tricky. I would say this kind of interesting dynamic. We had 12% -- and this is not the biggest part of our business, but I think this gets to your question. Our growth rate in LTL 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 truckload dynamic was pretty similar. We had close to 20% growth in 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 LTL piece. But again, I think part of that March comp on the LTL was the pandemic, which really kind of hit home, I'd say, mid-March of 2020. So some of that's the favorable comps on the LTL 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 there's a lot of moving parts there. It's a 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.

Alex Johnson -- UBS Investment Bank -- Analyst

Okay. Great. That's super helpful, and I appreciate you sharing those specific numbers by month. Second question would be, obviously, a lot of discussion on the call about transportation costs. But any inflation may be like in the SG&A line that we wouldn't be thinking about, that you're thinking about that you would point out to us? Inflation, obviously, being a topic that a lot of people are talking about these days.

Peter M. Rogers -- Chief Financial Officer

Not that I'd point to specifically. I think that we provided a range there, and there's different scenarios where you get to those. But when I think of inflation, the different cost of things out the G&A line, I think adding headcount and then inside the two biggest drivers. I wouldn't point to anything beyond that.

David B. Menzel -- President and Chief Operating Officer

Or maybe a full three months of the cycle?

Peter M. Rogers -- Chief Financial Officer

Oh, yes. Sorry, yes.

David B. Menzel -- President and Chief Operating Officer

Just the overall

Peter M. Rogers -- Chief Financial Officer

Yes, but nothing -- just nothing beyond that.

Alex Johnson -- UBS Investment Bank -- Analyst

Okay. Thanks for the time this afternoon.

Peter M. Rogers -- Chief Financial Officer

Thank you.

Operator

And for your last question, we have David Campbell with Thompson, Davis. Your line is open.

David Campbell -- Thompson, Davis & Company, Inc. -- Analyst

Thank you. Thank you for answering the questions. So you're doing such a grand, great job in running in your business, and I really appreciate it. And I would say that one of the questions I had was the visibility of your growth. There's always a concern that these numbers are so strong and that you will not be able to sustain the growth into the end of the year. You don't seem to be concerned about that. What gives you the confidence that the growth rates will continue?

Douglas R. Waggoner -- Chairman and Chief Executive Officer

Well, David, a good question. I think we're seeing continued strong demand. We know inventories are at record lows. The stimulus money that's coming into the economy is a continuation of what we saw last year, and we saw what that did to demand. We're coming into a seasonal uptick that we would see with the produce season and a normal build in the summer building into the peak season. So all the indicators on the demand side are strong. We're coming out of the industrial recession that we were in over the past couple of years. And then on the supply side, I think the capacity is somewhat capped. There's not that many trucks coming in market. And if there were, they're not drivers to drive them. So the capacity seems to be capped. So 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 we add those together, we're going to see continued growth.

David Campbell -- Thompson, Davis & Company, Inc. -- Analyst

Right. That's a good possibility and all the reopenings that were now adherent experience. Would probably be helpful to your small and midsized shippers. Some of these reopenings must be helping your business. Is that true?

Douglas R. Waggoner -- Chairman and Chief Executive Officer

Yes, I think that's true. The whole service and hospitality, part of the economy is presumably coming back, and there's a multiplier effect of the stimulus money. So I just don't see any signs that are not bullish.

David Campbell -- Thompson, Davis & Company, Inc. -- Analyst

Right. Well, thank you very much. I appreciate it your answers and your comments. Look forward to another good quarter coming out.

Douglas R. Waggoner -- Chairman and Chief Executive Officer

Thank you, David.

Operator

Thank you, speakers. I am 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.

Douglas R. Waggoner -- Chairman and Chief Executive Officer

Yes. I just wanted to say thank you for everybody making time to listen to our first-quarter results today, and we look forward to talking to you again in three months.

Operator

[Operator Closing Remarks]

Duration: 48 minutes

Call participants:

Peter M. Rogers -- Chief Financial Officer

Douglas R. Waggoner -- Chairman and Chief Executive Officer

David B. Menzel -- President and Chief Operating Officer

Wade -- Stephens Inc. -- Analyst

Bruce Chan -- Stifel, Nicolaus & Company, Incorporated -- Analyst

Jason Seidl -- Cowen and Company, LLC -- Analyst

Allison Landry -- Credit Suisse AG -- Analyst

Stephanie Benjamin -- Truist Securities, Inc. -- Analyst

Alex Johnson -- UBS Investment Bank -- Analyst

David Campbell -- Thompson, Davis & Company, Inc. -- Analyst

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