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Hub Group Inc (NASDAQ:HUBG)
Q1 2021 Earnings Call
May 5, 2021, 5:00 p.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:

Operator

Hello and welcome to Hub Group First Quarter 2021 Earnings Conference Call. Dave Yeager Hub CEO and Phil Yeager Hubs President and Chief up Operating Officer and Dr Martina Hub CFO, are joining me on the call at this time, all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. An order for everyone to have an opportunity to participate, please let me your inquiries to one primary and one follow-up question. Any forward-looking statements made during the course of the call or contained in the release, represent the company's best good faith judgment as to what may happen in the future. Statements that are forward looking can be identified by the use of words such as believe, expect, anticipate and project and variations of these words. Please review the cautionary statements in the release. In addition, you should refer to the closures in the company's Form 10-K and other SEC filings regarding factors that could cause actual results to differ materially from those projected in these forward-looking statements. As a reminder, this conference is being recorded. It is now my pleasure to turn the call over to your host, Dave Yeager. You may now begin.

Dave Yeager -- Chief Executive Officer

Good afternoon,and thank you for participating in Hubbard's first quarter earnings call. I'm joined today by Phil Yeager, President and Chief Operating Officer and Geoff DeMartino Club's Chief Financial Officer. On April 18, Hubbard celebrated the 50th anniversary of my parents starting the company in a one room office over a flower shop in Hinsdale, Illinois. Over the decades 1000s of people that work to ensure that have grown and prosper. My thanks go to each and every one of them for their contribution to position hub for future success. The first quarter continue to exhibit strong demand as our customers are aggressively replenishing inventories. Going forward we expect positive economic conditions that will continue to benefit our customers. The macro outlook remains favorable with GDP growth of 6% strong retail sales and historically low inventory to sales and strengthen imports. on the supply side, the outlook for truckload capacity continues to be constrained due to a shortage of drivers issues with truck production, rising insurance expenses, and driver regulatory changes. We believe that the combination of strong demand and the tight supply and transportation capacity creates a positive pricing environment that will be partially offset by increased costs. With that, I'll turn the call over to Phil to review our business lines.

Phil Yeager -- President and Chief Operating Officer

Thank Dave. Congratulations to the entire hub group team on 50 years of success for our focus on service, innovation and integrity. I'd also like to congratulate our chairman and CEO Dave Yeager on his 25th years our CEO and his 100th earnings release. His drive determination and steady handed leadership has enabled us to be successful for 50 years and will set us up to continue to succeed for 50 more. For the quarter, we continue to prove the strength of our model through a dynamic market delivering strong results with significant improvement opportunities ahead. In particular in our intermodal segment as we move past weather disruptions and realize the benefits of enhanced pricing. For the quarter, intermodal revenue was up 6% and volume was up 2% year over year transcon volumes increased 9% local West increased 11% and local leads declined 11% year over year as the impact of weather and network disruption impacted volume. Gross Margin as a percentage of sales declined 190 basis points year over year as their intermodal segment was most impacted by the weather disruptions with a 6% volume and a $3 million gross margin impact in the quarter to dislocation of the network created inefficiencies leading to increased repositioning costs and outsourcing of drainage, which along with lower fleet turn could not be offset with our higher pricing surcharges, and enhanced productivity of our trucking fleet.

As we look ahead, we see robust demand through the end of the year along with a continually improving pricing environment. We continue to invest in our fleet by adding an additional 500 containers on top of our previously announced 2500 order, which along with our purchase of 3300 containers last year, and investments in our trucking fleet rollout to meet the strong demand for our service and reduce our costs. We just had a strong quarter with revenue increasing 8% and gross margin as a percentage of sales increasing 180 basis points year over year. We executed on gross margin improvements in our outsourced logistics segment, which along with new business onboarding, negated losses of business from last year. This improvement was offset by customer mix. Whether and cost increases in capex. We are addressing that through several internal improvement initiatives that we will see benefits from throughout the remainder of the year. NFC has been an extremely successful integration. We are executing on our cost synergies and our onboarding new wins from hub customers, while continuing organic growth from existing clients by leveraging our great service. We have a very strong pipeline and across logistics and with our value proposition to help reduce costs and improve service.

We anticipate strong demand going forward. brokerage performed well with 30% revenue growth on a 6% decline in volume as well as a 110 basis point decline in gross margin as a percentage of sales. We continue to support our clients in the spot market as our next move to 51% contractual 49%. Five during the quarter, we grow our LTL volumes and our team strong winds through our enhanced value proposition. Lastly, we have made great strides in our dedicated business. We have enhanced our operational discipline and go to market strategy which resulted in 11% revenue growth and a 90 basis point compression in gross margin as a percentage of sales. The enhancements we continue to make to our processes cost structure systems and management team will allow us to further improve our service products and ensure we continue to enhance our returns in the service line, which are now at much improved level. with that I will turn it over to Jeff to discuss our financial performance.

Geoff DeMartino -- Chief Financial Officer

We are pleased with our Q1 performance despite the challenging weather impact during the quarter. revenue grew in all of our service lines with total company revenue up 10% gross margin was $109 million, or 11.8% of revenue, which is an improvement over our q4 2020 rate of 11.1%. We continue to exhibit strong cost control with quarterly costs and expenses equal to 9.2% of revenue as compared to 10.1%. Last year. Cost expenses were flat year over year, despite the acquisition of NSD in December of 2020. salaries and benefits expense for the quarter increased primarily due to incentive compensation expense, partially offset by lower salaries and lower headcount. Our non driver headcount is down by 9%, excluding the impact of the NFC acquisition, due to our efficiency and technology initiatives. q1 general and administrative expenses declined by over $7 million as compared to the prior year, due primarily to lower professional fees lower travel expense, and higher gains on sale. of goods diluted earnings per share for the quarter was 51 cents. This compares to 40 cents of diluted ups in the first quarter of 2020. Our tax rate for the quarter was 21.9%. we generated $56 million of EBIT die in the quarter and ended with $226 million of cash on hand. We continue to have solid liquidity and low levels of net debt. We view our capital structure as an asset and our priority is to reinvest in the business through capital expenditures and strategic acquisitions.

We are raising our 2021 epcs expectations to $3.20 to $3.40, up from 310 to 330 that we announced that February. For 2021. We expect revenue will grow in the mid teens percentage range with intermodal volumes of high single digits and revenue growth across all of our business lines. We forecast gross margin as a percent of revenue of 12.5 to 13% for the year, increasing throughout the year as we progress through the bid season and realize rate increases. Our outlook is based on the assumption that positive economic conditions will continue to benefit consumer demand and that low customer inventory levels will drive the need for restock. For the year, we expect costs and expenses of 365 to $380 million. For q2 we anticipate costs expenses will range from 92 to $94 million and will continue to increase throughout the year as we look more variable compensation expense. In line with growth in overall profitability. We expect our tax rate to be 24 to 25% for the full year. Our 2021 capital expenditure forecast is 165 to $175 million. We increase our container order for 2021. It will be adding 3000 containers which will result in net growth of 2750 after retirements. We will also be adding 150 refrigerated containers. We were at approximately seven attractors, the majority of which are for replacements of older units, and the remainder will support growth in our drainage and dedicated we date back to you for closing remarks.

Dave Yeager -- Chief Executive Officer

Thanks The gap, our outlook for the remainder of 2021 remains very optimistic. Demand is strong in all of our business lines, as our customers continue to need cost efficient solutions that offer high levels of service. With that, we'll open up the call for any questions.

Questions and Answers:

Operator

Thank you, we will now begin the question and answer session. If you have a question, please press star then one on your touch tone phone. If you wish to be removed from the queue, please press the pound sign or the hash key. Every time you speakerphone you may need to pick up the handset first before pressing the numbers. Once again, if you have a question, please press star then one on your touch tone phone. And our first question comes from Justin Long from Stephens.

Justin Long -- Stephens. -- Analyst

Thanks, and good afternoon. So I wanted I wanted to start with that question on whether you mentioned the volume headwind and intermodal. And so you pointed out the 3 million of costs as well. But all in Do you have an estimate for the ETS headwind from whether in one queue. And then Jeff would love to get any thoughts around second quarter? And what's baked into the guide from either a margin or VPS perspective?

Dave Yeager -- Chief Executive Officer

Sure, yeah. That's a great question. You know, I think I highlighted in intermodal, first, because that was the most impacted business unit that we had, obviously, we had three days is an integral network shutdown in our in our Western network. And, obviously, you know, some challenges in the eastern portion as well. So that was really the the largest impact, we didn't see some benefits, you know, in the in the truck brokerage side where we were able to maintain some of the the phrase that was delayed or needed, needed support with in the spot market. So that certainly was an offsetting benefit case stack had some headwinds as well, but I think, you know, really wanted to highlight it in intermodal, because that's where the biggest challenge was, if you look at volume, you know, we were up 6% in intermodal in January. And that's not adjusting for business days, down 8% in February, and then update in March. We've seen that trend improve in April with sequential improvement there, which came in around the 19%. Volume growth. So, you know, I just wanted to make sure I highlighted that. And, Jeff, did you want to hit on the numbers from the weather event?

Geoff DeMartino -- Chief Financial Officer

Sure. No, I think you've kind of got it. Most of the pieces there. Justin, it's, you know, how low to mid two is probably that after you after you capture that the pieces that they'll talk about.

Justin Long -- Stephens. -- Analyst

Okay. And in terms of the second quarter, Jeff, any color you could give there? Sure. Yeah, we obviously faced a pretty easy top row relative to last year, but now we expect we'll have sequential growth over over q1. You know, Phil mentioned the APR intermodal volume growth of 90% year over year, just sequentially April from March of 4%. On a business day adjusted basis, so we expect will continue to grow based on the demand profile. And, you know, we're starting now to with about 40% of our volume, or more volume, repriced starting to get some of the benefit of those price increases and more to come. But another 25 or 27%, in the second quarter will be replaced as well. Okay, that's how the second question is kind of more bigger picture up just had their investor day, there was clearly more of an emphasis on growth, the commentary seemed to suggest that intermodal would be leading the charge on that front. What would it be fair to say that you've seen an inflection point in that relationship as it relates to both growing together and providing better cost visibility? And if that is the case? How does that change your longer term framework for pubbed intermodal volumes and margins

Dave Yeager -- Chief Executive Officer

Justin, this is Dave, and I'll leave the last part of it to guess until the relationship with Union Pacific I don't believe has ever been better or stronger. We're working very collaboratively. And so it's it's really a very, very strong collaborative environment whereby we are focused on growth and investing in our intermodal product, and they certainly are encouraging us and supporting us in doing that. So we've never been in a better position with both of our rail partners. And I think that this will really act as a major driver for us to be able to continue to grow the future. Yeah, and this is still I would just add, you know, I think we have a really constructive contractual framework at this point that helps you know, with that relationship that's been And then phenomenal for us in having better visibility to cost, but also, to work more strategically on other items where we can drive growth or improve our operations together. We're really excited about the investments in Colton. And in Minneapolis, we think both of those are great growth avenues for us. So we love seeing that and being able to bring new lanes to to our client. Colton in particular, is a great setup with our current infrastructure in Southern California as well as just where our customers are domiciled in their distribution centers. So really a great opportunity for growth there. As we look ahead in intermodal, I think, you know, you have a driver shortage, you have tight truck capacity, delays and delivery of trucks. I don't think that's going anywhere anytime soon. Don't have escalating fuel prices. And I think, you know, a great backdrop with larger corporations with their focus on carbon emissions and have lowering that carbon footprint and we think intermodal is a great way to do that. So all of the kind of qualitative and quantitative factors are pointing toward kind of prolonged growth for for intermodal. And so that that is a big part of why we're going to continue to invest in it and make sure we're generating a strong return as well.

Justin Long -- Stephens. -- Analyst

Okay, great. I'll leave it at that. Thanks for the time.

Operator

Following question comes from Scott Group from Wolfe Research.

Scott Group -- Wolfe Research -- Analyst

Hey, thanks, afternoon, guys. I want to start on, I want to start on gross margins. So I think you beat the first quarter your guidance by about 50 basis points, but less the full year guidance unchanged. What's the thought there, especially given the pricing environment just keeps getting better?

Dave Yeager -- Chief Executive Officer

Yeah, we didn't. We didn't guide specifically for q1, I think we said we'd be up from our q4 adjusted rate of 11. Four. So I think you know, we're on track, we think we can get to the upper Upper 12, up to up to 13. You know, as more of that equation takes hold, we are getting very strong pricing dynamics. And that has to work its way into our volume and revenue as businesses, repriced. So we expect to continue to stay on that path throughout the year.

If I look back at eight and 18, the last time we had that really good pricing, you started the year and then 11% ended the year nearly 14, if we're starting the year now at almost 12. Is it realistic to end the year perhaps over 14, maybe closer to 15? On gross margin?

I'm not sure we would go quite that far. I think you know, with a strong pricing environment this year. And if conditions kind of stay the way they are, we certainly think that would be possible into next year. But I'm not sure we're going to appoint that high for this this current year. I think a lot of it also depends on peak, we're getting Pete plan set up right now. Feeling very good about the the plans we're getting in place. So that certainly gives us some some upside, I think versus, you know, our forecasts that really comes to fruition. So I would just highlight that as a potential upside. And based on what we're hearing from clients and discussions that we're having, you know, we're anticipating a really strong West Coast peak season.

Scott Group -- Wolfe Research -- Analyst

Okay. And then, just lastly, Jeff thoughts on reemergence of a baby five and what the potential impact could be.

Dave Yeager -- Chief Executive Officer

Yeah, hi, stuff is a day, we were watching that very closely, as obviously, we do use a fair amount of independent contractors. So it's something that definitely we're making a lot of different plans. In case, certain actions are taken, particularly out in California. We do have a large company driver fleet in California, when it doesn't support 100% of our needs. So it's something that we're working through just in anticipation that the legislature, in fact, will continue down the path or go in any way to sort of ballpark what the cost impact could be. If any.

Geoff DeMartino -- Chief Financial Officer

You know, I think that would be pretty tough to quantify. You know, obviously, the independent contractor model and the integration network is is very important. But we also know that our partners who we keep very close contact with are migrating their model to be able to continue to operate and be successful, regardless of the overall regulatory environment, whether that's shifting into more of a broker model or to a company driver model. So we you know, we can I think we've done a great job of building out an infrastructure ourselves where we take in more share of our own drainage out there and have a infrastructure going forward to support more volume work. That's, I would say, you know, in a very competitive driver market, that is one of the markets where we've been very successful in adding drivers. So, you know, I don't see that there is a cost impact because I think our our, our vendor base will continue to navigate through the regulatory environment very successfully.

Scott Group -- Wolfe Research -- Analyst

Thanks for the time, guys appreciate it.

Operator

Our next question comes from Todd Fowler from keeping capital.

Todd Fowler -- KeyBanc. -- Analyst

A great, thanks, and good evening. I apologize if I missed this, but I think that last quarter, you talked about expectations to realize pricing in the mid to high single digit range and on the intermodal book, it sounds like you're about 40% implemented, do you have updated thoughts on pricing and to speak a little bit to where contract renewals are currently? Yeah, I would highlight that. So I would highlight that we had after the weather disruptions, we saw a even greater inflection point in pricing. You know, I think with the chip shortage and continued delays in new production of view of vehicles as well, and the continued driver shortage, that that the pricing environment has continued to improve we're renewing and double digits at this point and anticipate that's going to continue.

Dave Yeager -- Chief Executive Officer

Okay, that's great. Thanks, Phil. And then just a follow up on on your comments to Justin about, you

Know, the environment, the constraints and kind of looking at the the environments a little bit more longer term. You're taking up the container fleet additions here this year, modestly, expectations were high single digit intermodal volume growth. Is this an environment where I don't want to see you're turning down volume, but there's an opportunity to even get more volume. And so just given some of the constraints to on the ability to add capacity, that there could be more of a tail where we see comes to sustain growth on the intermodal volume side, you know, for a couple of years at this point, or how do you think about balancing the pricing that you're able to get and volume growth in this market? Yeah, so we with the renewals, the you know, I was just referencing we are seeing growth as well, so that I think the conversion, intermodal is continuing. Customers want to walk in capacities, they don't want to have another peak where they're buying in the market. And I think that also that will continue through the remainder of the year and into next year. I you know, I think that the weather, we certainly Miss volume opportunities, and the recovery from that took us a little longer than I would have liked.

You know, we had a 15% slower fleet turn in the quarter, a lot of that was rail transit, but also delays and unloading at destination and sourcing of enough drain capacity to dig out quickly. So I think all those factors in April and now in may have trended positive, we're seeing transits really tighten up, which is great. And that alone will generate incremental capacity. Even on top of the orders that we've done, we think that there will be we haven't modeled this. So we think there is upside in our turns in the back half. And that will create an incremental capacity to handle more demand than we are today. But certainly the demand is there. And as we can create capacity with our deliveries will be taking place really, from June going forward, which will really benefit us earlier, as well. So, you know, very, very bullish on our ability to take more.

Todd Fowler -- KeyBanc. -- Analyst

Yeah. Okay, that sounds good. And that makes sense on the velocity plus the container additions helping the ability to handle more volume. Thanks a lot for the time and congratulations on the milestone this year

Operator

Our next question comes from Elliot Albert's and Cohen.

Elliot Albert -- Cowen -- Analyst

Great, thanks for taking the question on I wanted to stay on and our model talked a lot about volume growth, I guess how should we think about intermodal in the second quarter, for the full year on a margin perspective and kind of what may be baked into guidance? And then any other color the rails are telling you about congestion right now?

Geoff DeMartino -- Chief Financial Officer

Sure, I guess this is Jeff. I can speak to the margin of improvement. You know, much like we thought kind of q4 to q1 we expect continued expansion of the of the margin. In particular, it'll increase throughout the year again, as more and more of our business gets repriced Yep, plus prices, very big lever to our gross margin percentage. So maybe slight improvement going from q1 to q2, but we'll continue to ramp up throughout the course of the year. That was one of the key drivers in our the increase in our guidance for the year with us. anticipate pretty strong intermodal pricing throughout the course of the year, you know, we do have some costs that come into play as well, particularly in the short term, but I think we'll see that margin expansion throughout the rest of the year.

Yeah, I would just add around from our rail connection, you know, we're certain, and we're seeing it in the numbers, we're seeing, you know, improvement in in fluidity, I think part of that is getting past some of the weather events, making sure that congestion is down. And that also from a chassis availability perspective, we're seeing improvement there. And that's, that's important working with our clients to help in unloading times and making sure that we have the the capacity available to pull the freight. So all those factors are heading in a positive direction. And we anticipate really heading into peak season to be in a much better position. And so we are saying the control group.

Elliot Albert -- Cowen -- Analyst

Okay, that's helpful. And then I can lay at the UMP investor day yesterday, they talked about some trade operations, investing in leveraging autonomy in the future. curious if that's something you'd consider in the future?

Dave Yeager -- Chief Executive Officer

Sure, yeah, I think, you know, we're going to continue to experiment with different technologies. So we actually just launched an electric vehicle pilot that I was really excited to take place. And I think that's a great step. For us in the short haul configurations that we have, there's some weight and infrastructure costs, challenges that need to be overcome, but really exciting stuff there. I think in a very closed or confined sort of area, the autonomous technology can be applied, you know, and that's something that we're looking at very much as well, I don't think you're going to see that in long haul trucking anytime soon. Nor nor in short haul, I think you'll continue to have a driver in the truck, but couldn't have a much safer vehicle, which I think would be a big win for everyone. So you know, but in those confines sort of terminals, I think there is an opportunity to to really utilize autonomous technology and that's something that we're you know, once with up you know, and and other partners continuing to research and look for opportunities to deploy.

Elliot Albert -- Cowen -- Analyst

Great appreciate the time.

Operator

Our next question comes from Bascome Majors from Susquehanna.

Bascome Majors -- Susquehanna. -- Analyst

Thanks for taking my questions here. You made a comment earlier about sequential increases in the cost and expenses relative to incentive comp is that just leaving some cushion in the cost guidance in case revenue, and potentially income guidance tends to move higher? Just trying to understand the cadence of those accruals? And how they were?

Dave Yeager -- Chief Executive Officer

Thanks? Sure, yeah. And we talked about this a little bit on last quarter is called because in 2020, we did that meet our criteria pay bonus. So we do, we are anticipating and budgeting to pay both in 2021. We are we pay for performance. And we accrue bonus, as we start to recognize more and more profit throughout the year. So we're starting off slow. And we anticipate continuing to build that up throughout the year as as our gross margin and other operating profit contribution is supportive of the level that would allow us to pay a bonus for the year.

Bascome Majors -- Susquehanna. -- Analyst

Thank you

For that. And, you know, back to four q on the exit rate. I mean, is there an opportunity for you to be above your kind of 5% long term target, you know, either seasonally in the fourth quarter, or exiting on a run rate, assuming things, you know, stay that way into early 2022?

Dave Yeager -- Chief Executive Officer

Yeah, we certainly think it's possible. You know, we've, we've done a really good job, I think, in the last 24 months or so to take out operating expenses, and really improve the cost structure with your efficiencies and technology. And we're, you know, I think you saw in the q1 numbers, we're able to leverage those expenses, and just pay to continue to do that. And, you know, we'll add back some headcount and incur some additional costs as we grow. But you know, with mid teens revenue growth, you know, we certainly don't expect to be growing our operating systems at that rate, we'll be leveraging those costs. And, you know, we could be exiting the year that 5% range, you know, could take place in the next year, a little bit of a swing based on how strong pricing is that at the end of the year. I think we met you know, I might have mentioned the renewals that are coming in.

Phil Yeager -- President and Chief Operating Officer

We've certainly seen an improvement in pricing environment, but we're also coming off of a lower base where a lot of the customers that bid at this time last year got a benefit from really concerns around what was going to happen with the pandemic, right. So the opportunity to bring those rates often back into line with market as it is a large percentage swing, obviously, we've maintained the commitment, I think the other swing factor that we have is once again P and the surcharges that will be out in the market to provide capacity, obviously, we have additional costs to to make sure that the capacity is available, but we think that that will be higher than last year, as well and, and give us some upside to potentially be on a run rate on that target. What I like about some of these renewals that are coming in now is that pricing will be effective through the first half of our first three quarters of next year, which will give us you know, a benefit through really the first half of 22. Last one on a similar topic, the rail inflation, can you talk a little bit about how much visibility you have in the 22 at this point and how you think that'll compare to what you're feeling this year? on the PC side?

Bascome Majors -- Susquehanna. -- Analyst

Thank you. Yeah, we have very good visibility and anticipate it will be similar to this year. More than last year.

Operator

Next question comes from Tom Wadewitz from UBS

Tom Wadewitz -- UBS -- Analyst

Yeah, good afternoon, I wanted to ask you a bit about the, I guess, the fluidity and constraints that you see in the system? You know, what are the most important things points? And how do you think that they could potentially alleviate as you look forward? You know, I guess maybe, you know, East West rails, and you know, how much courage is a constraint is present time?

Dave Yeager -- Chief Executive Officer

Sure, to still be the emcee, you know, obviously, during the storms, and at the beginning of the year, transits were, you know, elongated on the rail side, you know, the unloading times were up, which was constraining capacity. And, you know, great capacity was at a significant premium, given some of the surges that were out there, we've done a nice job, I think of making sure that we are sticking with our rail partners and understanding where they have congestion both at at the terminal level, as well as on on recon line. And, and making sure that we're proactively working through that with them, which I think is part of why we've seen an improvement in transit. On the street, we've done a good job in a very competitive driver market of maintain our driver force. We haven't added as many as I would like. But, you know, we have done, I think, a very good job there. And we've done a great job, in my opinion of continuing to align with our third party carriers, and ensuring that we have, you know, available capacity, there are some constraints on the trade side on, you know, night and weekend sort of work, right. I think that's where we've seen constraints because we moved to a more 24, seven supply chain. That has certainly been something that that has been a challenge, but once again, working with our drivers and our third party partners to really overcome that. And then lastly, you know, our last year, our customers and early this year, were really struggling with getting folks into to work for warehousing, you know, and that was certainly a constraint on capacity, a constraint on chassis availability, which downstream impacts terminal fluidity and online fluidity as well, as the vaccines have been rolled out.

Phil Yeager -- President and Chief Operating Officer

More broadly, we've seen a significant improvement in folks coming back to work, something that is still out there. And I think this is a challenge for all industries is the continued government subsidies where you know that that might not incentivize work long term, it's a good thing for the consumer, but not necessarily for for our unloading time. So you know that that is something that we're closely monitoring with our clients every day. And we once again, it's been, you know, significant improvements from where we were in the fourth quarter, and even the first quarter of this year. So all of those I would say, are heading in the right direction. I don't see a negative out there for us. Just want to make sure that we continue down that path. And I think we'll be in very good shape to have a strong peak.

Tom Wadewitz -- UBS -- Analyst

Great, thanks for the detail on that. What about, I think the numbers you offered, I didn't catch them all in terms of like, trans town, east and west, but I think the East number was down a lot for intermodal volume and West was up.

Geoff DeMartino -- Chief Financial Officer

Is that something you think would normalize or is that that big spread and volume performance likely to persist through the year That was, you know, really a, it's something to do it was to do with our bid wins, we did win a lot off the west coast and then saw significant demand even beyond that. So we given the commitments that we had made, it pushed more capacity to the west coast. But we are seen as the year progresses more and more of a normalization on those growth rates, and should continue to do that work. For us. A big focus is making sure we take out empty repositioning cars trying to create more balance in the network. And through growth in the local ease, we can have more of that. Now, I don't see the demand on the West Coast really stopping any anytime soon, or at least in 2021. But we have been successful through bid season and creating more loaded inbound into those markets, which which will benefit us in the available capacity and cost going forward. So would you think eath volumes are are up or that's just a function of repositioning containers out of the yeast? I would say these volumes will trend upward on a year over year basis going forward. That would be mine. But not maybe not as a percentage that we're continuing to grow off the west. But we did. You know, obviously our growth last year was mostly off the west coast. So we'll have somewhat easier comparable in the east. So I would insist that you know, I would anticipate as you look at the kind of remainder of the year you'll see Eastern growth per month.

Tom Wadewitz -- UBS -- Analyst

Great, thanks for all the perspective

Operator

Our next question comes from Janet Chapelle Evercore ISI

Janet Chapelle -- Evercore ISI -- Analyst

Thank you. Good afternoon, Phil, we're approaching about a year now anniversary in some of the customer losses that you noted in logistics, brokerage and dedicated. You've said in your prepared comments that logistics you're onboarding a lot of new customers that are offsetting customer losses. But where do you sit with all three of those business businesses in kind of resetting the customer base and getting it to the point where your competitor capacity can handle it efficiently?

Dave Yeager -- Chief Executive Officer

Yeah, so I would highlight from a productivity perspective, maybe I'll go there first. So in our brokerage, we had an 8%, productivity improvement year over year in the first quarter. And we've really improved productivity 30% since the implementation of our growth report patch, so really pleased with that, in logistics, in the first quarter, we had a 28% productivity improvement, which is which is great. And that is largely attributable to changes we've made to our workflow making sure we have the right customers, and that we're really pushing automation, you know, in business. So all of that has been very positive. On the dedicated side, I really pay attention to our revenue per truck per day, which was up 12% year over year, in the first quarter. So as we look at those items, the increases we're continuing to get in dedicated and the improvement in operational practices, we're very bullish on our ability to continue to improve margins there and bring on profitably new wins, there's a lot of demand out there for dedicated so we're actually being very selective in what we are bidding on and where to ensure that it's going to meet our return criteria in brokerage, given how efficient we've become, you know, I feel and the the investments we're making continually into technology and to working with our carriers more proactively, you know, I feel as though we're going to continue to be able to grow there, but we're also growing or inside Salesforce, which is which is going to allow us to sustain growth, even as the market starts to cool off a little bit.

And then lastly, in logistics, you know, our pipeline across our outputs, transportation management, our home delivery, and case stack is on the back, but I've seen it. And there are some large revenue, but much, much better operating margin winds coming on in our outward transportation management segments, case stack, we're bringing on new winds, some bigger customers, but we need to focus on the small ones as well that have a little bit of a higher profitability. And then lastly, just with NSD, you know, the cross selling to our hub clients has been great. It's opened up doors that the NFV team could not have gotten into before. And we've improved the pricing structure by removing layers of margin that were in there before to be more competitive. And so that's bringing on new wins, which is allowing us to beat the forecast and growth. So I feel like the non intermodal segments all have great upside. And we're in a very stable and strong position right now.

Janet Chapelle -- Evercore ISI -- Analyst

That's great, great input. Thanks, Phil. And I was gonna ask about the cross sell anything in NSD. But since you addressed it, let me let me ask another question. It's pretty noticeable how much your cash balance continues to increase. And obviously you guys have a track record of making some well timed acquisitions. I'm sure the pipeline's flowing I'm sure you're looking at a lot of things right now. But just curious with the tightness across the entire supply chain. I would think maybe the valuations are also getting a bit stretch. So is there any general comments maybe Dave can make about valuations as you look at inorganic growth? And if they're just not there, right now, you're not willing to chase anything? Is there any other uses of capital that you would think about, in addition to just your normal capital spend? I can answer the one part, I think Jeff would be more qualified on the overall valuations. But we do review with the board every quarter, whether or not we do any stock buybacks, dividends, etc. And, honestly, we do believe that the most efficient use of the cash is to continue to expand the business into a variety of other verticals, while investing in our more asset based or asset intensity businesses have intermodal and dedicated, just to be sure, yeah, like, like Dave said, you know, we've got some pretty stringent criteria. We don't, we don't feel like we should be chasing, you know, every last dollar when it comes to that position. But you know, we are pretty selective.

Dave Yeager -- Chief Executive Officer

You know, it has to meet the criteria. And then, you know, when we do find something we like, we do, you know, spent a pretty good amount of time on on diligence and making sure there's a cultural fit. You know, the acquisitions we've done, I think, have been pretty reasonable valuations, if given the growth profile, both what that business has been doing on its own, but also probably more importantly, as well, we can do with that business under our we've had really good success with both, actually all three of the recent acquisitions in terms of the crossbelt. Not that we're very, very pleased with, you know, that business is doing doing very well either with with its existing customer base, but also the opportunities that we're able to bring to bear with our, our customer base and our sales force as well. So we can we can kind of make that work if the potential is there. But you know, we're not going to certainly chase them and go after a highly competitive auction type situation.

Janet Chapelle -- Evercore ISI -- Analyst

Okay, that makes sense. Thanks, Jeff. Thanks, Dave. Thank you.

Operator

Just a reminder, if you have a question, please press star then one on your touch tone phone. And once again, that's star one. Our next question comes from Brian Ossenbeck from JPMorgan

Brian Ossenbeck -- JPMorgan -- Analyst

Good afternoon, thanks for taking the question. One of the one of the other themes from the investor day yesterday with Union Pacific was ESG. And you mentioned earlier, the focus on conversion, lowering the carbon footprint. Maybe you can just give a little bit more color into if that's actually happening on a regular basis, or is still part of the conversation, how that's been working, you know, coming to the bottom line and actually making those conversions. And then separately, can you talk about the spread in between truck and rail? As you see it now in the east and the west?

Geoff DeMartino -- Chief Financial Officer

Sure, yeah. No,. We have a great story much like our rail partners. Do. You know, last year, for example, we use of our intermodal product saved about 1.6 million metric tons for about 70% more efficient than over the road. And, you know, increasingly, we're hearing more and more customers request that and look for that type of support as they're trying to achieve their own their own environmental goals with respect to their carbon footprint.

On your question on the spread between rail and truckload, I have that here. So in the western transcon, you know, north of 60% per mile basis, intermodal contract versus truckload contract in the east, low double digit percentage gap. And I would just highlight on the intermodal versus truck price. And I think that gap will will close pretty dramatically as changes are put into place in renewal. But, you know, there's a premium on capacity and service right now. And so that's certainly something we're looking at. And then we have a good understanding, I think of where the market is, and we're where we are right, though. That'll be important going forward.

Brian Ossenbeck -- JPMorgan -- Analyst

Okay, got it. And just on the follow up on the ESG, is it something that shippers are getting is just nice to have, and you can get the support for get the biggest credit in their net reporting? Where do you feel like it's starting to be, you know, monetized or, or quantified in some way that you're seeing it actually be the, the trigger for new business is probably pretty hard right now consuming capacity is so tight, but I guess how is it coming up in the conversations, you know, maybe now versus the last 12 months and where you see it going?

Geoff DeMartino -- Chief Financial Officer

I would say that certainly that moved to be a much higher priority. I don't know that. It's the deciding factor, although I think that varies by customers there, there are some customers that are taking it extremely seriously. And really making a conscious decision based on that, obviously, cost is always going to be a factor as well. Right. So I think given the capacity environment, it's tough to say whether it is cost or if it's actually the the carbon emissions decision, but it is certainly a much larger factor. And once again, that's great, especially with a lot of the companies that we work with who are out making commitment on carbon emissions, this is a, this is a really easy way to make a lot of a lot of headway toward those goals that are the week, we are out selling it, you know, very aggressively, we are establishing, you know, automated reporting for our customers so that they can factor it into their scorecard, which has been, I think, a great win and ensuring that they understand every week, they're they're getting value out of that and doing their part in the transportation and logistics group to help the company achieve their goal.

Brian Ossenbeck -- JPMorgan -- Analyst

Okay, thank you for the first step.

Operator

Our next question comes from David zullo, from Barclays.

David Zullo -- Barclays. -- Analyst

Hey, thanks for taking the question. Maybe for a filler Dave's question on big picture. Grade strategy, just, you know, as you've seen kind of a cycle of increased intermodal demand kind of coming up and the ability of your great systems to handle any thought on how you want to try to reposition your great systems be like a split from company versus outsourced are other ways to look at drayage to better position yourself for the next cycle.

Geoff DeMartino -- Chief Financial Officer

Sure, yeah, I think it's a great question. So, you know, we traditionally in the past had been about 30%, owner operators, 70% company, and it really shifted to be about 60%, company 40%. owner operators, this point in our own drainage network, we're being much more successful in adding company drivers. And if we have a great value proposition, with new equipment, great benefits, great pay to be out in the marketplace with we are continuing to add independent contractors in the right market. You know, where where we think there's a sustainable model there, though. So for us, you know, we do believe that continuing to invest in the fleet putting capital toward that it's going to be through a cost effective and highest service solution for it. But we also maintain extremely strong partnerships with with the outside capacity and third party that we've been working with for many years and will continue to work with that I don't have a set percentage in my head, it would probably I think we want to get to 80% company driver over the next several years. But as we grow, we need to be nimble in our ability to take on more good Murray or contract that as the market changes, which is going to allow us to maintain margins more effectively, throughout cycles. So that would be my view, we don't really have a target in mind, but do want to continue to, to invest to allow us to grow our

Footprint.

David Zullo -- Barclays. -- Analyst

Great. Thanks. And then just as a quick follow up with kind of the brokerage market being as hot as it is, you mentioned the 5149 split, are you looking to be a little more aggressive into the spot market or try to take the contract percentage up to try to capture the current market?

Yeah, so we traditionally remind, you know, somewhere between 70 and 80%, contract, sometimes even north of that. So this is a little abnormal foreign part of it is some of the changes we've seen, we have some lower projects, long term project break, as well as some lower logistics volumes, which fall into our contractual bucket. So long term, you know, we have a lot of our customers do annual RFPs. And the spine opportunities are are going to be outside of that the long term. I don't see that the split, I think it'll move back closer to that sort of 60 to 70% contractual on a longer term nature. But you know that I think that this this year, has been an aberration in our stock market exposure. But, you know, we're certainly going to continue to step in and support our clients.

Operator

We have no further questions. I'd like to turn the call over to Mehta tavia for closing remarks.

Dave Yeager -- Chief Executive Officer

Okay. Well, again, thank you for joining us on the earnings call today. As always, Phil, Jeff and I would be available for any questions if you have some additional Call us. Thank you again.

Operator

[Operator Closing Remarks]

Duration: 50 minutes

Call participants:

Dave Yeager -- Chief Executive Officer

Phil Yeager -- President and Chief Operating Officer

Geoff DeMartino -- Chief Financial Officer

Justin Long -- Stephens. -- Analyst

Scott Group -- Wolfe Research -- Analyst

Todd Fowler -- KeyBanc. -- Analyst

Elliot Albert -- Cowen -- Analyst

Bascome Majors -- Susquehanna. -- Analyst

Tom Wadewitz -- UBS -- Analyst

Janet Chapelle -- Evercore ISI -- Analyst

Brian Ossenbeck -- JPMorgan -- Analyst

David Zullo -- Barclays. -- Analyst

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