Hub Group - Q3 2015
October 28, 2015
Transcript
Operator (participant)
Hello, and welcome to Hub Group, Inc.'s Third Quarter 2015 Earnings Conference Call. I am joined on the call by Dave Yeager, Hub's CEO, Don Maltby, our President and Chief Operating Officer, and Terri Pizzuto, our CFO. At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. In order for everyone to have an opportunity to participate, please limit your inquiries to one primary and one follow-up question. Any forward-looking statements made during the course of the call represent our best good-faith judgments as 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. Actual results could 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 begin.
David Yeager (CEO)
Great. Good afternoon, and thank you for participating in Hub Group's Third Quarter Earnings Call. As Vivian stated, I'm joined today by Don Maltby, Hub's President and COO, and our CFO, Terri Pizzuto. In the 45 days since Don returned to the organization, we've made numerous positive changes. We're focused on flattening the organization in order for Hub to become more responsive to our clients. One of the major changes made is that Intermodal now reports directly to me. Don has the added responsibility of having our information technology group reporting to him, as well as sales, customer service, truck brokerage, Unyson Logistics, and our specialized equipment group. In addition to changes being made to the existing organization, we're currently performing a search to fill the newly created role of Vice President of Corporate Development.
We plan to execute our acquisition strategy through this new position, as well as the use of other internal resources. We will integrate each acquisition fully into the Hub organization prior to adding additional targets, and we are prepared to use our balance sheet and a moderate amount of leverage in order to expand and enhance our service offerings. Turning to our results, the business levels in the third quarter continued the positive momentum we experienced in the second quarter. Revenue for both highway and intermodal did decline somewhat due to the reduction in fuel costs, but volumes and pricing continue to be strong. Unyson Logistics had a slight decline due to the loss of a major customer, but we feel as though the pipeline is strong and that the business levels will continue to recover for the remainder of the year. Now I'll talk about our intermodal results.
For the third quarter, our consolidated Big Box intermodal volume increased 4%. The Hub segment grew 3.5%, while Mode increased its intermodal volume by 6%. On a consolidated basis, volume was up uniformly across all regions, with Local East volume up 4%, Local West volume up 6%, and Transcon up 2%. We continue to see positive growth in Mexico, with a 52% increase in volume for the third quarter. Despite the industry slowdown and surplus of truck capacity, we remain confident that the Hub intermodal segment volume will grow between 3% and 5% this year. We're currently in the middle of what appears to be a normalized peak. Therefore, we're currently experiencing very high volumes out of Southern California, with increases of between 20% and 30% versus normalized unit volumes.
We anticipate that the surge in volumes will dissipate sometime around the Thanksgiving holiday. Overall, rail service improved incrementally throughout the quarter. On-time service improved in the low double digits on a year-over-year basis and high single digits on a sequential basis. For the quarter, transit improved 0.2 of a day year-over-year, although transits are still a half day longer than they were in 2013. Fleet utilization was flat with last year at 15 days, or 0.1 of a day better than the second quarter. In September, utilization improved to 14.5 days, or about a half day better than last year. We onboarded 1,000 new containers in September and October, which increases our fleet size to 29,300 containers.
Our satellite tracking system has been installed on over 11,000 containers, and installations will continue with the goal of adding tracking systems to 4,000 more containers this year and the remainder of the fleet by the end of 2016. Pricing improved slightly throughout the quarter. New pricing tools utilized in the bid season have helped us to expand margin, grow our business, and improve our network efficiency by assisting us to make better pricing decisions. On another positive note, our load acceptance process that was implemented in the last few months has improved our business mix through greater selectivity of acceptable business, thereby enhancing our service as well as our margins. We're continuing to focus on outsourcing more of Hub's drayage versus performing the work in-house. This is helping us to achieve the most cost-effective mix of in-house and outside power.
As a result of this sourcing initiative, Hub Group Trucking handled 11% fewer loads in the third quarter of 2015. Hub Group Trucking moved 60% of Hub's drayage during the quarter, compared to 70% last year. With that, I'll pass the call on to Don to guide you through the specifics on our other business segments.
Donald Maltby (President and COO)
Thank you, Dave. I'm excited to be back at Hub. Before I dig into the operational results, I would like to say a few words about my new role as the Chief Operating Officer at The Hub Group.
As you most likely know, I've been part of the Hub Group history for more than 25 years. I've held a variety of leadership roles across all lines of business, all a very good pre-rehearsal for my current position. As a result, I'm quickly immersing myself in all aspects of daily operations, and am determined to provide strong, focused leadership as we're building a more robust logistics company with a broad spectrum of offerings that will work seamlessly with one another. To that extent, as Dave mentioned, we have developed several key initiatives focused on enhancing our customer experience while driving bottom line growth and company-wide productivity across all of our business lines. One of the initiatives is our multimodal account management team that is focused on providing our customers a single point of contact with all modes of transportation.
During 2015, we rolled out our first account-specific management pilot program with much success. Building on that success, we'll be adding many more multimodal accounts in the months ahead, while continuing to enhance our talent and technology solution, solutions to support our customers' experience. We believe our account managed customer-centric initiative is a key component to our growth strategy. Our other company-wide initiatives are focused on driving productivity efficiencies by streamlining processes throughout all of our business lines. We will continue to make investments in technology, which will allow us to gain numerous internal efficiencies, expand margin, and provide our customers with a better experience.
On November first, we will launch our first customer into a new technology solution, and we will continue to transition many of our accounts over the next 2 years-3 years into this new environment, with the end goal of housing all of our key operational work streams in a single technology program. Now, let's talk about the business lines performance. Truck brokerage, once again, produced strong results with a 14% volume growth, reaffirming our strategy. As we move forward, the entire Hub Highway team remains focused on targeting core business growth, as well as expanding our value-added services and spot opportunities with both new and existing customers. No small feat during this time of soft demand.
We continue to implement this strategy through directed carrier development programs in key markets and are pleased that the group's collective expertise and newly improved execution are producing positive results and customer approval. Last quarter, we were named the 2015 Toyota Motor Sales Truckload Service Provider of the Year. The award was given in recognition of Hub Highway's outstanding creative solutions and for providing exceptional value-added services, both of which stand as further proof of our commitment to our customers and to growing our highway brokerage division. We are also focused on developing strategic carrier relations that will provide longer term stability that will benefit our carrier partners and customers. Turning to logistics, we recently promoted Brian Alexander to Executive Vice President in charge of Unyson Logistics team.
During his 13 years with Hub Group, Brian has held positions of increasing responsibility in all of our business lines, including highway, intermodal, and Unyson. Most recently, Brian served as Unyson's Vice President of Operations, responsible for all of our customer deliverables. Brian brings an abundance of talent, energy, and supply chain expertise to his new role, and we're looking forward to continued success in growing our 3PL product and service. During the quarter, we saw logistics revenue decline 7%, largely due to a key customer divesting a portion of its business, combined with the loss of a sizable customer in May. On a positive note, we increased revenue in the retail segment by providing innovative solutions for our customers in that space. We are projecting Unyson sales will be down again in Q4, due primarily to these account losses and lack of new onboardings.
Unyson will continue to see headwinds through the first half of 2016 due to the losses I just mentioned, along with the uncertainty of renewing several legacy contracts that expire in early 2016. With that said, we expect Unyson to continue to make positive contributions to the bottom line and increase revenue in the second half of 2016. Organic growth with our existing customers has been strong in 2015, and we expect this trend to continue in 2016 through continuous improvement initiatives, enhanced service offerings, and addition of new business in the second half of the year. As previously mentioned, we are making additional investments in transportation management technology, which are needed to answer our customers' demand for innovative solutions as we retain our position as the top 3PL in the marketplace.
We are proud to have won a number of awards, including the Quest for Quality Award from Logistics Management, where we were ranked number one for the second consecutive year. While we are proud for the awards we have received, we continue to strive for even greater success. Mode Transportation operating margin was a solid 3%, and operating income grew 2%. In the quarter we ended, we added 218 customers, while simultaneously maintaining a strong pipeline. The intermodal, truckload, and international businesses experienced volume growth, while intermodal, international, and LTL lines also grew margin in the period. Our IBOs expanded their presence by adding eight new salespeople to their organizations, a notable feat, given the historical difficulty of adding new salespeople heading into peak season.
On a year-to-date basis, we are 30% ahead of 2014 recruitment levels, with a pipeline full of promising leads. Once again, I'm excited to be back at Hub Group, and I'll turn the call over to Terri for financial highlights.
Terri Pizzuto (CFO)
Thanks, Don, and hello, everyone. As usual, I'd like to highlight three points. First, we had a record third quarter with earnings per share of $0.55. Second, the Hub segment gross margin increased over $10 million, with margin increases across the board in all three service lines. Third, Mode continued its streak with 14 consecutive quarters of operating income growth. Here are the key numbers for the third quarter. Hub Group's revenue decreased 1.5% to $900 million. Hub Group's diluted earnings per share increased 12% to $0.55, compared to an adjusted earnings per share of $0.49 last year. 2014 earnings per share was adjusted to exclude $0.37 of unusual costs related to owner-operators in California and the write-off of software development costs. All the numbers that I'm reporting today have been adjusted to exclude these charges.
Now I'll discuss details for the quarter, starting with the financial performance of the Hub segment. The Hub segment generated revenue of $681 million, which is a 2% decline compared to last year. Taking a look at our business lines, intermodal revenue was flat. Intermodal volume was up 3.5%. Price and mix were also up. These increases were offset by a decline for fuel. The price increase this quarter was higher than the price increase in the second quarter. The volume growth was driven by a 16% increase in loads from durable goods customers, a 4% increase in loads from retail customers, and a 15% increase in loads from paper customers. Truck brokerage revenue was down 0.5%. Truck brokerage handled 14% more loads, but fuel mix and price combined were down. Logistics revenue decreased 7%.
This decline is due to losing one customer in May and another customer selling a portion of their business and then taking a portion of their business in-house. Hub's gross margin increased by $10.4 million. Gross margin as a percentage of sales was 10.9% or 160 basis points higher than the third quarter of 2014. Intermodal gross margin increased because of a 3.5% increase in loads, price increases, and more favorable mix. Intermodal gross margin as a percentage of sales increased 180 basis points because of price increases, improved accessorial cost recovery, and effectively using our new load acceptance optimization tool. Truck brokerage margin increased because of growth with targeted customer accounts, which included an increase in seasonal business.
Truck brokerage gross margin as a percentage of sales was up 240 basis points due to more value-added services, price increases, and better purchasing. Logistics gross margin increased due to providing additional services to existing accounts and growth with new customers. Logistics gross margin as a percentage of sales was up 80 basis points due to purchasing more cost effectively and price increases. Sequentially, the Hub segment gross margin as a percentage of sales increased 40 basis points. Intermodal gross margin improved 60 basis points, and Logistics improved 80 basis points. Hub's costs and expenses increased $7 million-$48.2 million in 2015, compared to $41.2 million in 2014.
The increase relates to a $5.5 million increase in salaries and benefits and a $1.5 million increase in general and administrative expense. Salaries and benefits are up due to a $3.5 million increase in bonus, higher headcount, annual employee raises, and an increase in commissions. General and administrative costs are higher because of an increase in legal fees and costs for our new transportation management system and satellite tracking. Finally, operating margin for the Hub segment was 3.9%, which was 60 basis points higher than last year's 3.3%. Now I'll discuss results for our Mode segment. Mode had a solid quarter, with revenue of $239 million, which is down 3% from last year due to lower fuel revenue.
The revenue breaks down as $124 million in intermodal, which is up slightly, $80 million in truck brokerage, which was down 8%, and $35 million in logistics, which was up slightly. Mode's gross margin increased $1.5 million year-over-year due to growth in all three service lines. Gross margin as a percentage of sales was 12.8% compared to 11.9% last year, due mostly to a 70 basis point improvement in intermodal yields and a 110 basis point improvement in truck brokerage yields. Mode's total costs and expenses increased $1.3 million compared to last year because of an increase in agent commissions. Operating margin for Mode was 3% compared to 2.9% last year. Turning now to headcount for Hub Group.
We had 1,582 employees, excluding drivers, at the end of September, which is up seven people from the end of June. Now I'll discuss what we expect for this year and the fourth quarter. We believe that our 2015 diluted earnings per share will range from $1.90-$2. This guidance has been adjusted to exclude the one-time costs in the first quarter. We think we'll have about 36 million weighted average diluted shares outstanding for the year. We anticipate rail service will improve gradually and that utilization will be a little bit better in the fourth quarter than it was in the third quarter. We expect gross margin as a percentage of sales for the fourth quarter to be between 11.5% and 11.8%.
The main levers to get to the high end are price increases, truck brokerage growth, and increased operational efficiencies in intermodal. We think that our costs and expenses will range between $73 million and $74 million in the fourth quarter. Turning now to our balance sheet and how we used our cash. We ended the quarter with $184 million in cash and $123 million in debt, including capitalized leases. We spent $17 million on capital expenditures this quarter. This includes $13 million for tractors, which was funded with debt. This brings total year-to-date capital expenditures to $41 million. We expect our 2015 capital expenditures to range between $85 million and $95 million.
We're purchasing 1,000 containers, 300 tractors, and we're investing in technology projects, including transportation management systems and satellite tracking. We intend to fund the 2015 tractor and container purchases with debt. To wrap it up on a positive note, during the quarter, we paid $15.4 million to buy 394,504 shares of stock. We have $23.7 million remaining on our share buyback authorization. Dave, over to you for closing remarks.
David Yeager (CEO)
Great. Thank you, Terri. To summarize the call, we're pleased that the third quarter continued to build on the positive momentum that we've experienced throughout 2015. The pricing environment maintained its upward direction, and we're seeing increased volume in both intermodal as well as highway. Our rail and partners have incrementally improved their on-time performance, which has allowed Hub to provide better and more consistent service to our clients. And with that, we'll open up the line to any questions.
Operator (participant)
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 hash key. If you are using a 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. Our first question comes from John Barnes from RBC Capital Markets. John, please go ahead.
John Barnes (Managing Director and Senior Research Analyst)
Hey, good afternoon. Thanks for taking my question. Hey, so two questions I've got. Number one, I think you're still making some pretty decent progress on asset utilization. Can you just talk a little bit about how you anticipate utilization going, you know, improving from here, and especially, you know, in the new role as COO, you know, where do you think you can begin to maybe change, you know, or influence that utilization that maybe wasn't being attacked before?
David Yeager (CEO)
Yeah, John, this is Dave. I think I can answer that. I think, you know, number one, we are seeing that, the rail service is incrementally getting better, and so I think that, that's very positive, as it should begin to eliminate the need to, make double appointments, 'cause that, during the worst periods, we were doing an awful lot of that. I think the other is that, Don and I, and actually the entire team, are really digging into, where our bottlenecks are. Whether those bottlenecks are that, our containers are waiting too long to make appointments, prior to actually, when we know the container is gonna be available, the following day.
We're looking at an awful lot of how we leave our equipment sit in some remote locations for extended periods. It's gonna require a lot of operational focus as much as anything else, and I think that there's a lot of opportunity there that we have not tapped.
John Barnes (Managing Director and Senior Research Analyst)
Mm-hmm.
Okay.
Donald Maltby (President and COO)
It's taking an order from cradle to grave and looking at it and how it impacts our efficiencies with our boxes. So we've got some projects underway that are looking at that and digging into it.
Terri Pizzuto (CFO)
And the other item that'll help is the satellite tracking devices. With those, we expect that next year, we'll get at least a half a day improvement in utilization from the trackers. We're seeing a little bit of benefit now, and it's only on the 11,000 containers. And we see benefit from utilization as well as driver productivity because they don't have to go hunting for a box. They have an app that they can touch, and it'll tell them where the box is.
David Yeager (CEO)
But we're not waiting for that. We, because there is a lot of things we can do without that technology, just from a process standpoint and a focus standpoint.
John Barnes (Managing Director and Senior Research Analyst)
Okay. All right, very good. All right, then, you know, just a couple of questions on, you know, maybe your thoughts around the outlook for, you know, the balance of this year and going into next year. The two things I want to highlight, number one, your commentary around the peak right now seems to be maybe a little bit more robust than what we've heard from others in the last couple of days. Then, you know, as you look out, maybe over the next few quarters, you know, both of the Eastern railroads, you know, especially Norfolk today, slid domestic intermodal over into the headwind column when they were looking at the outlook.
You know, and even Union Pacific, I think, is calling into question some, you know, maybe some of the road to rail conversion opportunity, just where diesel fuel prices are, and, you know, beginning to acknowledge that as a bit of a headwind. So, you know, given all of that, can you just talk a little bit about, you know, number one, the peak, you know, maybe why you think you're seeing maybe something that others aren't? And then number two, you know, just given those headwinds facing the road to rail conversion, you know, how do you, how do you think that plays out?
David Yeager (CEO)
Yeah, I think that's a really good question. You know, we have a lot of retail business, and our retailers this year, again, it's more of a traditional peak that we're used to seeing, John. Last year, we had a lot of retailers that pulled business forward because they were concerned, rightly concerned, about the potential labor disruptions. And this year, it's much more normalized, where we saw it begin to build in late August and September, and now we're really in the heart of it right now, and will be for the next three weeks or so. So I think that the reason we're seeing that is we have such a large retail component.
As we look at the overall market, and maybe Don can comment on the truck brokerage market and how we're viewing carriers right now, but it is certainly soft. I would agree. I haven't seen what Norfolk Southern said, but certainly we've seen some limited amount of conversion back from rail to truck. It's for two reasons: A, it can be service, or B, it can be just with the lower cost of fuel that truck is competitive once again. Did you have anything to add about capacity, Don?
Donald Maltby (President and COO)
No, it's capacity is plentiful right now in peak season, and the economy is soft. So our strategy has been to try to penetrate customers that we haven't in the past with a bimodal solution, but this is softer than normal peaks with regards to the truck capacity.
John Barnes (Managing Director and Senior Research Analyst)
Very good. Now, Dave, are you, are you saying then, this is a normal peak, not as robust as it was a year ago, but, you know, is, is that what I'm hearing you say?
David Yeager (CEO)
Well, actually, no, I think it's just as robust. It's just the timing is different.
John Barnes (Managing Director and Senior Research Analyst)
Mm-hmm. Yeah
David Yeager (CEO)
To where we get, you get big bunches in October. Unlike last year, so many people, I mean, they were, they were shipping for Christmas in June and July. And people just didn't do that this year because they didn't have the potential labor unrest issue.
John Barnes (Managing Director and Senior Research Analyst)
Okay.
David Yeager (CEO)
This is more of a traditional peak, where right around this time period, in late October, early November, is the biggest three weeks or four weeks..
John Barnes (Managing Director and Senior Research Analyst)
Absolutely.
David Yeager (CEO)
That we'll see all year.
John Barnes (Managing Director and Senior Research Analyst)
Okay, very good. Thanks for your time, guys. Appreciate it.
David Yeager (CEO)
Thanks, John.
Operator (participant)
Thank you. Our next question comes from Ben Hartford, from Robert W. Baird. Please go ahead.
Ben Hartford (Senior Research Analyst)
Thanks, and welcome back, Don. Wanted to get your topic. Very good summary at the beginning. Want to get your take, though. You obviously know the organization very well, left, maybe gained some perspective in retirement, come back to the organization with a fresh start. How long do you think it's going to take for you to. You talked about broadening the logistics offerings, in addition to some of the operational focuses, but how long do you think it'll take, realistically, for you to make some of the changes to the point that you really feel like the organization is maximizing its potential? I'll ask that first and then ask a follow-up.
Donald Maltby (President and COO)
Mm-hmm. A good question. Yeah, I, I look at the potential at Hub Group as, as being able to, satisfy our customers first, right? That's number one. If we do that, we will be very successful on growth. So we're focusing right now on being able to deliver that value to our customers on all lines of business. Part of it is structural, and part of it is just, focus. Part of it is technology. So to answer your question, we've got a number of initiatives underway. I would say in the next, six months or so, you will start to see some, improvement overall in how we go to market.
David Yeager (CEO)
Right. I would add that Don did not come in and just rest at his desk very long. That, you know, if you just look at the structural changes that we've made with management, and the reason for those changes is to flatten the organization, have more people have access to Don, and also have more decision-making power than the hierarchical model that we had. And so, in 45 days, I mean, there has been a lot of changes, and as Don said, there's a tremendous amount of initiatives going on that will also be embracing change in how we conduct some of our business.
Ben Hartford (Senior Research Analyst)
Okay, good. And then a follow-up, maybe to Terri. When we think about 2016, there's a lot of moving parts as it relates to gross profit margin overall. Obviously, logistics growth is a little below trend here, but brokerages as well. Core rate growth could slow, but fuel prices have fallen. So, is there you know, to what extent do you have confidence that next year, gross profit margin, the percentage on an overall basis, can be higher? And, I mean, if the confidence is high, you know, maybe can you talk a little bit about what some of the drivers might be and help us understand some of the constraints or opportunities in 2016 as it stands today?
Terri Pizzuto (CFO)
Sure. Yeah, our confidence is high that gross margin as a percent of sales would go up. One, you know, Dave and Don mentioned all the efficiencies that we're working on in intermodal, which should improve. But the biggest driver of improvement would be pricing.
Ben Hartford (Senior Research Analyst)
Right.
Terri Pizzuto (CFO)
Both vendor and customer. That's the biggest lever. So we will cover our cost increases with a price increase, and we'll be able to use our pricing, new pricing tool that we used this year that was effective in helping us get business at the right price and the right mix of business. We're going to continue with our dray sourcing events so that we optimize the right rate for the right carrier, and driving that dray balance improves efficiencies, that lowers our cost and increases our capacity. Truck brokerage, I think we're probably ready to say we're at victory now. It's been a couple quarters where we've really excelled, and we expect that to continue to grow in 2016. That's our highest margin business.
Then Mode, with its fourteenth, you know, consecutive quarter of operating income growth and 12.8% margins, Mode's been successful bringing on new customers. We expect that to continue in 2016, and between Mode and truck brokerage, and then, you know, improving our intermodal margin, we should be successful. You're right, the one headwind would be logistics.
David Yeager (CEO)
Mm-hmm.
Terri Pizzuto (CFO)
But that's our lowest margin business anyway.
Ben Hartford (Senior Research Analyst)
All right, okay.
Terri Pizzuto (CFO)
That will think in the second half of the year.
David Yeager (CEO)
We think the second half of the year for logistics, because the pipeline is strong, and as you know, it takes time to bring those in and get them onboarded. So, I think we're going to have headwinds in the first six months on logistics. I think to Terri's point, I think the highway group has done a very good job. We're stable. We're now offering our customers spot opportunities, so we're confident in that.
Ben Hartford (Senior Research Analyst)
That's great. Thank you.
Operator (participant)
Thank you. Our next question comes from Todd Fowler from KeyBanc Capital Markets. Please go ahead.
Todd Fowler (Analyst)
Great, thanks. Good evening, and Don, as Ben said, welcome back. I guess I wanted to go back to John's question about the asset utilization, you know, the 15 days here in the quarter. It sounds like the GPS tracking is going to get you a half a day in 2016. Dave, what do you think that the rail service is still costing you at this point?
David Yeager (CEO)
Go ahead, Terri, what'd you say?
Terri Pizzuto (CFO)
It's half a day worse than 2013 still, so we hope that, you know, it gets back up to those levels.
David Yeager (CEO)
Mm-hmm. Right. I would just add, though, that there is some things that we can do more effectively with our process, our focus on equipment management, that's just not being done right now. So there's no question that satellite tracking is going to help. There's no question that the rails are, they did get better in September.
To 14.5 days, and they're getting better. But candidly, a lot of it is focus also, and so that fall, that rests on us.
Todd Fowler (Analyst)
Dave, do you think that you can eventually move the turns back below the 13.5-day level where you were, you know, in mid-2013? It sounds like with I mean, that's assuming normalized rail service, but it seems like with everything else that you're doing internally, that there should be additional opportunity above and beyond where you've been historically.
David Yeager (CEO)
We should be able to get to the 13.5 or better, particularly with the satellite tracking. When we had first tested it, when we were looking at the technology, we forecasted it was going to be about 18 hours of benefit, just because our customers aren't telling us that containers are empty and available for 18 hours. And that's actually in with the limited number we have, actually, as we've gotten a broader number of units, it's actually closer to two days. So it's or not two days, excuse me, but 24 hours.
So it's, there's a lot of opportunity there.
Todd Fowler (Analyst)
Okay. And Terri, just as a reminder, what is the earnings sensitivity to every day in container turns on an annual basis?
Terri Pizzuto (CFO)
$6 million a year for every one day improvement.
Todd Fowler (Analyst)
Okay. And then just for my follow-up, if I could, you know, with everything that you have in place with the GPS and with the pricing tool, can you give us a sense of how, I don't know the right way to ask this, but how utilized do you think each of those are right now? And I hate to use the baseball analogy, but maybe like what inning you're at as far as, you know, using the pricing tool and the GPS on the fleet. I'm just trying to get a sense of where you are in the whole process.
David Yeager (CEO)
I would say with the pricing tool, we're probably in the beginning of the middle innings. I think that we've grown accustomed to it. We understand it better, how to utilize it better, how to run a sensitivity analysis as far as price ranges, where we have a high probability of retaining business. It's using big data in this fashion has really helped us become to operate more efficiently during the bids. The GPS, that's very early innings. We're probably still in the first inning on it. As it'll progress quickly, as we're able to get a larger and larger percentage of the fleet with the tracking devices on them.
And in addition, just some of the software is not even written yet that will help us better utilize the GPS and where the containers are. And so as that comes into being, and that'll be pretty quick, all that will help our dispatchers and our load planning managers to make better and smarter decisions.
Todd Fowler (Analyst)
Okay. I wasn't sure if it was too soon with the Cubs to do the baseball analogy, but I appreciate it. Thanks for your time.
David Yeager (CEO)
With the Cubs where they are, probably, but, you know, Mets seems pretty strong, too, so does Kansas City.
Todd Fowler (Analyst)
All right, guys. Thanks so much.
David Yeager (CEO)
Thank you.
Operator (participant)
Thank you. And our next question comes from Scott Group from Wolfe Research. Scott, please go ahead.
Scott Group (Managing Director and Senior Analyst)
Great, thanks. Afternoon, everyone. So want to ask about pricing, both, from customer perspective and then from the rail perspective. So we, we've started to see truckload pricing slow, hearing today about LTL pricing slowing. Can you talk about the momentum in intermodal pricing and what your outlook for next year would be there? And then from a rail perspective, can you just give us any insight on rail cost increases in the fourth quarter? And if you think that 2016 has similar, bigger, or smaller rail cost increases than 2015. So a few things in there.
David Yeager (CEO)
Yes, Scott, this is Dave. I would suggest to you that we don't have any more price increases for the remainder of this year with our rail carriers. For next year, I would say that increases will be similar to a little bit larger. We're talking to our Eastern and Western partners right now and working towards bringing that to closure. You know, as always, it's just like with clients, it's a bit of a knife fight, and but I think, you know, they're they've been very good partners, and there's no reason for us to believe that that's going to change dramatically. So we expect, we and what our focus will be is to make sure that we can pass on the increases that do occur in 2016.
So we'll have a much better idea, but of course, our business don't really start to kick in till the probably the mid-late first quarter, and then are actually awarded closer to the middle of the year. So we're hoping we can get our rail price increases to coordinate with in fact, when in fact, we are able to get price increases with our clients.
Scott Group (Managing Director and Senior Analyst)
Mm-hmm. That's great color. Do you think that you can get from your customers similar to bigger increases next year?
David Yeager (CEO)
It's a really good question, and we're kicking it around a lot internally. I think, you know, one of the biggest things that concerns us is the amount of truck capacity out there. So I think on the shorter haul lane, that getting a large price increase is going to be difficult.
Scott Group (Managing Director and Senior Analyst)
Mm-hmm.
David Yeager (CEO)
Or at least more, put it this way, more difficult than this year. For the longer haul, for the 1,200+ mile haul, I mean, that's really more of an issue with how our competitors behave, and if we're all, you know, if everybody's looking to increase prices on long-haul business, they'll increase. If they're not, well, that could become difficult as well.
Scott Group (Managing Director and Senior Analyst)
Okay, great. If I can just ask one last one. Dave, your prepared comments on the beginning about acquisitions, it sounded more like a when, not an if, which to me is a change. Maybe just talk about if I'm right, that there's something changing where you're seem more definitive about doing deals, and what kinds of deals, and how big, and things like that.
David Yeager (CEO)
Yeah. Our last several board meetings, and I'll put a lot of it with our board, we've been looking at our long-term strategy, and we concluded that, really, there's a certain amount of organic growth that can be performed. But if we're really going to branch out and offer some of the services that are being requested and required by our clients, then we need to have a much greater focus on acquisitions. So that's why, we're currently interviewing for a VP of corporate development.
We really think that, you know, we may be a little bit late to the acquisition party here, but we also might be avoiding some of the high multiple hangover that some of the aggressive acquirers might, might feel later on, because we do think multiples have come down somewhat. There's still a lot of really good companies that could add value as a part of Hub Group, and we're going to be very, very focused. As far as size, we definitely want something, you know. We've always had a certain criteria that basically we wanted companies that diversify our product offering, that are not fixed operators, good cultural fits, strong management teams, and immediately accretive, and we believe that they are out there.
Our efforts in the past, I think that myself and several others, we've looked, but we have day jobs as well, and we just weren't as effective, and we need somebody that can solely focus on that, someone with investment banking experience and deal experience, that can bring these home for us.
Scott Group (Managing Director and Senior Analyst)
All right. Good stuff. Thanks, guys.
David Yeager (CEO)
Thanks, Scott.
Operator (participant)
Thank you. Our next question comes from Matthew Frankel from Macquarie Capital. Please go ahead.
Matthew Frankel (Analyst)
Thanks, guys. Thank you for taking the question. You know, just to add on to what Scott asked you about, would you be willing to take on more assets in an acquisition, or do you want to remain asset light, and how do you think about that?
David Yeager (CEO)
Well, I think it depends upon the type of acquisition. If, in fact, let's say we would acquire a dedicated company, I think in that case, what we would look to do is where we would derive synergies is not necessarily from cost takeouts of that company. It would be through sales synergies that we can bring with our book of business and with our client relationships that could allow that company to grow at a quicker pace and maybe a more profitable pace as well. There could be certain times with other businesses that if it was aligned like an IMC, that would probably be more cost synergy driven.
But for the new services, for the dedicated, for the new logistics services, we need a really strong company with a very strong management team that we can work with to help drive their sales and revenue.
Matthew Frankel (Analyst)
How comfortable would you be in terms of taking on more debt? I mean, how much, what kind of leverage would.
David Yeager (CEO)
We're very.
Matthew Frankel (Analyst)
Just in your mind, are you?
David Yeager (CEO)
We're thinking, you know, we are conservative by nature, and we always have been. We're thinking two to three times EBITDA is not unrealistic. That's kind of where we're thinking right now.
Matthew Frankel (Analyst)
Okay. All right. Well, thank you very much. Appreciate it.
David Yeager (CEO)
Thanks, Matthew.
Operator (participant)
Thank you. And our next question comes from Thomas Wadewitz from UBS. Please go ahead.
Thomas Wadewitz (Analyst)
Yeah, good afternoon. And I apologize if I'm asking you something you've talked about. I had to flip over from another call, so I missed a little bit of the beginning. But, did you comment at all on your outlook for volumes for fourth quarter, if that looks kind of similar in intermodal to what you saw in third, or if you'd expect it to be a little lighter given some of the weakness we've seen in trucking data points?
David Yeager (CEO)
Yes, we did talk about that a bit, in as much as we are seeing a very strong peak right now. The rationale for that, for the most part, is that we have a strong retail concentration, and as a result of that, it's been very, very strong. October and into early November will be the strongest periods for our business coming off of the West Coast. So Southern California right now is 20%-30% more volume than we would regularly see. Non-peak, I'm talking about, just normalized volumes. We've had a lot more shipping out of the PNW, Seattle, specifically.
So we think that it's going to continue to be strong up through Thanksgiving, and then we think that the large surge in business will begin to dissipate as this appears to be a more normalized peak.
Thomas Wadewitz (Analyst)
Mm-hmm.
Terri Pizzuto (CFO)
We're thinking for the fourth quarter, between 3% and 5% volume growth.
David Yeager (CEO)
Right.
Thomas Wadewitz (Analyst)
3%-5% volume growth. Okay, and what about the progress on the outsourcing of your drayage activity and just kind of, you know, I know you face some easy comparisons, but improvement in the drayage operation in general, where are you at on that topic?
David Yeager (CEO)
As far as the outsourcing, I think that, we've made some, very positive momentum. Hub Group Trucking actually handled 1,000 basis points less of Hub business than they had the prior year. And so HGT is now 60% of Hub's business versus 77%-70% before. From an operating efficiencies perspective, I can honestly say we're, we're still not there. We can get a lot better. We can focus better on equipment turns, we can focus better on, our, our own, trucking optimization as far as reducing empty miles. So that, that, that needs. That's really getting down in the mud for us, and that's what we intend to do, and that's really the only way to fix it.
Donald Maltby (President and COO)
Right. And that's what we plan on working on because of the allocation of third-party draymen. So they're partners. We've done a good job at developing that, and now we want to continue to work on the workflows.
Thomas Wadewitz (Analyst)
So when you're in fourth quarter, would you expect it to be stable in terms of the, you know, at the run rate you want, in terms of how much is in, in-house and how much is outsourced dray? Like, at that 60% in-insourced.
David Yeager (CEO)
You know, that's a really good question. I don't have a goal. I think that what we're looking at is to be able to optimize from a price and a service perspective, the insourcing and outsourcing. And so if we're finding that outside draymen in fact are more cost effective and better service-oriented than 50% of it or 60%, we will shrink or grow HGT accordingly.
Thomas Wadewitz (Analyst)
Okay. But it sounds like a pretty constructive read from the progress and what you're doing with it, and probably a lot of runway left to go on improvement in drayage and how that flows through to the net revenue margin.
David Yeager (CEO)
Absolutely, Tom. There's a lot. Good news is, good news and bad news is there's still a lot of room for improvement.
Terri Pizzuto (CFO)
Mm-hmm.
Thomas Wadewitz (Analyst)
Right. Okay. Thanks for the time.
David Yeager (CEO)
Sure.
Operator (participant)
Thank you. And our next question comes from Justin Long, from Stephens. Please go ahead.
Justin Long (Analyst)
Thanks, and good afternoon. I wanted to ask another one on 2016, with the final rule on ELDs potentially coming out in the next few days or so. Is this something that you think could materially impact your intermodal volumes and/or pricing for next year? And if so, you know, any rough guess you would have on the order of magnitude would be helpful.
David Yeager (CEO)
You know, I've read a lot of different things. First of all, all of our tractors with HGT have ELDs, whether it's an owner-operator owned tractor or a Hub-owned tractor. It certainly would, it certainly would shrink the amount of available capacity. It's I've seen different numbers, 8%, 12%. But whatever it is, it certainly will enhance the attractiveness of intermodal, and certainly will change the pricing environment, and the relationship with, your customers.
Justin Long (Analyst)
Great.
David Yeager (CEO)
So, you know, from a transportation company perspective, it's very positive. I think from a safety perspective, it's very positive as well, as you'll eliminate a lot of people going over on hours.
Justin Long (Analyst)
Great. But just to maybe touch on the timing of when you think it could impact the market. You know, if we get a final rule, do you think this is something that could impact the market and the pricing dynamics in 2016? Or do you think it's something that we're looking at, you know, impacting the market more so in 2017 and beyond?
David Yeager (CEO)
You know, I think it would, if there's a ruling in 2016, I would suggest that it would impact 2017 more so because clients would look at it, look at their bids, and become very, very focused on trying to secure the capacity that they require.
Justin Long (Analyst)
Mm-hmm. Okay. And I know you don't break out margins by segment, but one of the things I wanted to ask about, could you give us a sense for where OR in your intermodal business stands today on a relative basis to where it was in the prior peak?
Terri Pizzuto (CFO)
You know, we still have room to go. You know, our margins at the Hub segment were 10.9%, and back in the day, they were closer to 12% or 13%. So, a couple of hundred basis points, at least, of improvement still to go to get back to those levels.
Justin Long (Analyst)
Would you say that's what the gap is if you just looked at intermodal specifically, or is the gap in intermodal bigger than 200 basis points or so? I know you've had some mix changes, especially with the growth in logistics.
Terri Pizzuto (CFO)
It's, it's mostly in intermodal. You're right, logistics gross margin as a percentage of sales has gone down from 2013 levels as well. That business has grown, too, so it has a little bigger impact, but that will always be a headwind, we think. So most of the improvement would have to come from intermodal.
Justin Long (Analyst)
Okay, and last quick one, if you don't mind. I was going to ask, the $1 million in other expense during the quarter, Terri, could you give some more color on what drove that?
Terri Pizzuto (CFO)
Sure. It was a Canadian exchange loss that's unrealized because we have cash sitting in Canada.
Justin Long (Analyst)
Okay, great. I'll leave it at that. Thanks for the time.
David Yeager (CEO)
Thanks, Justin.
Operator (participant)
Thank you. And our next question comes from Brandon Oglenski from Barclays. Please go ahead.
Brandon Oglenski (Director and Senior Equity Analyst)
Hey, good afternoon, everyone. David, I wanted to circle back to the corporate development and the M&A discussion, just because we've seen some of these recent deals get a little bit more challenging with investors, at least. You know, with the concern that you go outside your core competency and pursue a different service, does it really drive synergy with your customers? So, I mean, what's been your experience as you've gone through some of your own acquisitions at Hub? You know, where do you find yourself deficient when you go to negotiate with customers? And is there actually some truthfulness in the fact that, hey, we need to be more things to our current customers to get more at the table?
David Yeager (CEO)
Well, I think, you know, first and foremost, I do think that if you're bringing a really well-run product to them, that yes, in fact, our existing clients do have a high degree of interest. And so specifically, again, I'll go back to dedicated trucking. It's an area all of our retail customers use it, many of our durable goods companies do. And are there current providers? Absolutely. But I think if, again, we would be looking at a really solid, well-run company that we can proudly present to our clients that are going to deliver a service that's going to be value added for them.
Brandon Oglenski (Director and Senior Equity Analyst)
Mm-hmm.
David Yeager (CEO)
It's, you know, I get what you're saying about if you've got a management team that leaves shortly after the acquisition, we'd be in trouble. And so that's why we would be very, very focused on the management team and their capabilities. And if you look at our history, we bought Comtrak, and this is eons ago, but two thousand and eight, which was a drayage company. We basically had them take over our drayage company and implement their processes and their systems because they were superior. And the president, who was the sole owner, he stayed with us for four years.
Brandon Oglenski (Director and Senior Equity Analyst)
Mm-hmm.
David Yeager (CEO)
If you look at Mode, which we acquired in 2011.
The entire management team remains with us. And again, because we incent them to, well, most of their bonus or a lot of their bonus is based upon those things that they can control. And we give them a lot of leash, and we also assist them wherever we can. So no, I think it's very doable, and but you always do have to be leery when you're going into types of businesses that you don't fully understand. So I get your point.
Brandon Oglenski (Director and Senior Equity Analyst)
Well, actually, I wanted to get your opinion on it because you guys are by far the experts compared to me, but I can just observe how the market reacts to these things. You know, on dedicated trucking, though, I would just add, and I'd love to hear what you think about it, but it doesn't seem that there's that many examples of actual differentiated dedicated trucking models that drive higher financial returns. You know, most of the businesses, at least from our perspective, seem to be very commoditized. So, you know, relative to your current business model that can spit off some pretty high returns, how do you think about getting into, I guess this question was already asked, but more asset-heavy business that could potentially be more commoditized?
David Yeager (CEO)
Well, like dedicated, and we, we've looked at some that, we haven't pursued that, but it, it can be not necessarily as asset intensive, particularly if the equipment is coterminous with the contract that you have with the client, which is a relatively common practice. If you're going to go to all of the major retailers and those types of people, I mean, there, you, it, it can be commoditized. There's no question, because, our, our what are you doing? You're bringing a truck and a driver. That's, that's only going to get you a certain margin. But there is a lot of other value-added services that, in fact, can be and are offered, whether it's, specific to a type of industry.
Brandon Oglenski (Director and Senior Equity Analyst)
Mm-hmm.
David Yeager (CEO)
Whether it's automotive, that requires high degrees of service, or other white glove type of treatment. I mean, there are areas that, in fact, you can get into that are a high margin, for high service, though. I mean, you've got and that's why the quality of the company and the leadership is so important when you make these acquisitions.
Brandon Oglenski (Director and Senior Equity Analyst)
All right, I appreciate it. Thank you.
Operator (participant)
Thank you. And our next question comes from Casey Deak from Wells Fargo. Please go ahead.
Casey Deak (Analyst)
Thank you. Just wanted to go back to the volume surge off the West Coast that you guys are seeing. So when you put out a number like 20%-30% volume surge, and you've made some helpful comments here, but is that within your expectations and what you would normally expect in a normal peak season environment, or is 20%-30% above typical trends?
David Yeager (CEO)
It is a typical peak. So what we the way we go about this is we do query with all of our large retail clients, and we ask them for their forecasts. And from that, because we need to repo empties from Texas, from the Pacific Northwest, and a lot of other areas in order to make sure we have enough equipment there for them. So it's a very collaborative approach with our retail customers so that we can supply them the equipment they need to get the goods into their warehouses and then ultimately their stores.
Casey Deak (Analyst)
Okay, great. And to stay on the West Coast, can you give an update on where you are with the driver sourcing and drayage in California after the change out there?
David Yeager (CEO)
Sure. That's one where we've been very successful with the sourcing. When we first changed the model from owner-operators to company drivers, that was we had 275 drivers. We now have about 125, and instead of handling 70% of our Los Angeles business, they're handling about 25%. And that feels about right.
Casey Deak (Analyst)
Okay, great. So that, that's where you'd expect it to stay going forward?
David Yeager (CEO)
Again, well, you know, we'll, we're. I think that that's something that we're going to allow to be fluid, depending upon the service levels we're giving our customers, and how the sourcing events work, and how we're able to continue to grow our relationship with our outside providers. Los Angeles, we've got some really good ones with really long, very long-term relationships that I think that we can continue to get, make that relationship stronger and stronger over time. Yeah, we're evaluating it by market.
Casey Deak (Analyst)
Okay.
David Yeager (CEO)
So we've had.
Casey Deak (Analyst)
How many third-party players are you working with? You had talked about going with a few strategic alliances out there. How many is that up to at this point?
David Yeager (CEO)
Well, as you can guess, with the amount of volume we have, it's not a handful. It's probably more like 20.
Casey Deak (Analyst)
Okay.
David Yeager (CEO)
And, you know, we do try to concentrate volume. We want to make sure we're a significant client to them, because we think that that's important, that, we, you know, our business means something. And so it's, it's in that range, and we're always looking for, others. I mean, it's a relatively low barrier to entry, type of a business, and if you get a, somebody that's really service-focused, the relationship can really build well.
Casey Deak (Analyst)
Okay. I appreciate the time. Thank you.
David Yeager (CEO)
Thanks, Casey.
Operator (participant)
Thank you. And we have a follow-up question from Scott Group from Wolfe Research. Please go ahead.
Scott Group (Managing Director and Senior Analyst)
Great. Thank you for the follow-up. So just a couple last things. With the Norfolk's change with Triple Crown, what are you hearing from customers, and what kind of opportunity is that for you next year on the volume side?
David Yeager (CEO)
You know, we've been looking at it. We had, of course, with our competitive intelligence, we have a pretty good idea of who their clients were and some of the lanes involved. An awful lot of the lanes that Triple Crown handles are not a natural transition to the Norfolk Southern's intermodal network. There's really some fit, but it's a little more difficult, Scott. So I don't look for huge surges as a result of this for Hub Group anyway. I do look for a lot of that business to convert to over-the-road. And so that'll suck up some of the capacity as well. So there's some positive things from that perspective.
But they've, I think, Norfolk Southern had really designed the Triple Crown network to not compete with their intermodal network.
Scott Group (Managing Director and Senior Analyst)
Does it overlap with the CSX? Is that an opportunity for them?
David Yeager (CEO)
You know, it probably has a little more overlap with them because just some of their terminal locations, but an awful lot of the traffic is just outside of Triple Crown naturally will move towards truck.
Scott Group (Managing Director and Senior Analyst)
Okay. We've heard from your competitor, I guess, that they're moving some business from NS to CSX, or it appears they're moving some business from NS to CSX. Do you think that's an opportunity for you?
David Yeager (CEO)
As far as just our relationship with Norfolk Southern?
Scott Group (Managing Director and Senior Analyst)
Or a similar potential transition?
David Yeager (CEO)
Oh, you know, we never rule.
Scott Group (Managing Director and Senior Analyst)
Either way.
David Yeager (CEO)
Yeah, we never rule anything out. I mean, we've had a very strong, good relationship with the Norfolk Southern. We certainly have a lot of respect for CSX and their network, which, you know, unlike the West, like the UP does, has get to probably the most points of the two western railroads. Norfolk Southern and CSX have very different networks, and so it's certainly something that could be interesting and attractive just from a perspective that there's markets that Norfolk Southern can't get to, that CSX can.
Scott Group (Managing Director and Senior Analyst)
Okay. And then just lastly, real quick, with the focus on acquisitions, do you think you'll still be buying back stock, or do you?
David Yeager (CEO)
Terri?
Scott Group (Managing Director and Senior Analyst)
Stay out of the market there?
David Yeager (CEO)
Yes.
Terri Pizzuto (CFO)
Yes. Yes, yes.
David Yeager (CEO)
Yes.
Terri Pizzuto (CFO)
Yes, we think we could do both, you know.
David Yeager (CEO)
We can do both, Scott.
Terri Pizzuto (CFO)
Yeah, we've got about $43 million remaining on our current share buyback authorization. Or $24 million, I'm sorry, $24 million on our share buyback authorization remaining, and so we can certainly do that and acquisitions.
David Yeager (CEO)
Yeah, and we'll talk to our board about, you know, whether we need another authorization from them, in the upcoming November meeting.
Scott Group (Managing Director and Senior Analyst)
Okay, great. Thank you.
David Yeager (CEO)
Thanks, Scott.
Operator (participant)
Thank you. Our next question comes from Matt Brooklier from Longbow Research. Please go ahead.
Matthew Brooklier (Senior Equity Research Analyst)
Hey, thanks. Good evening. I think the intermodal volume growth guidance range that the top end came down just a little bit. I'm just trying to get a sense for if that's just a function of maybe a softer macro here in 3Q versus when you gave guidance in 2Q, or if there's any other factors at play, if maybe rail services isn't improving at the rate you thought it would, or you know, some conversion from rail to truck. I'm just trying to get a feel for, you know, the components of the top end coming down a little bit.
Terri Pizzuto (CFO)
Yeah, you're right, Matt, we had originally said between 3%-7% volume growth for the year. So now we think between 3%-5%. And the reason for bringing it down is the overall domestic intermodal market growth isn't as strong as it was at this time last year. There are headwinds due to rail service and lower fuel. You know, for the first nine months of the year, we grew our volume 3.5%. And, you know, what range we get to, either 3% or 5%, will depend on how long peak lasts and how strong it is. As Dave mentioned, you know, in his prepared remarks, it's going well now. It could dissipate at Thanksgiving, could last longer with e-commerce. We're just not sure. And more tepid demand than last year.
Matthew Brooklier (Senior Equity Research Analyst)
Okay, it sounds like we're off to a good start. I guess it's the conversion part of it, more capacity in the truckload market and additional freight may be moving from rail over to truck. That sounds like it was. That's a much smaller component of it.
Terri Pizzuto (CFO)
Yeah, we certainly saw some of that, but not a lot, and it was more in the East that we saw it than in.
Matthew Brooklier (Senior Equity Research Analyst)
Right
Terri Pizzuto (CFO)
The Local West business.
Matthew Brooklier (Senior Equity Research Analyst)
Okay. And then, on the other end of things, your net revenue margin guide for fourth quarter, I mean, you hit towards the higher end of the guide in 3Q. You took off the bottom end of the range. Just trying to get a sense for, you know, the contributors to having more conviction in the higher end of the range, and if there's any headwinds that we should be thinking about in terms of the margin.
Terri Pizzuto (CFO)
Yeah, well, I mean, a couple of things that have to happen to get to the high end. Volume and price increases that customers awarded us have to materialize, rail service and utilization improvement. You know, we are assuming about a half day better than last year and slightly better than the third quarter, and then growth in truck brokerage and mode to get us to the high end.
Matthew Brooklier (Senior Equity Research Analyst)
Okay. Appreciate, appreciate the time. Thank you.
David Yeager (CEO)
Thanks, Matt.
Terri Pizzuto (CFO)
Sure.
Operator (participant)
Thank you. I'm not showing any further questions at this time. I'll turn the call back over to Dave Yeager for closing remarks.
David Yeager (CEO)
Great. Well, again, thank you for joining us this evening on the call. Obviously, as always, if there's any further questions, both Terri, Don, as well as myself, are available at any time. So thank you again. Have a nice evening.
Operator (participant)
Thank you, ladies and gentlemen. This concludes today's conference. Thank you for participating. You may now disconnect.
