Hello, and welcome to Hub Group's Second Quarter 2020 Earnings Conference Call. Dave Yeager, Hub's CEO; Phil Yeager, Hub's President and Chief Operating Officer; and Geoff DeMartino, Hub's CFO, are joining me on the call [Operator Instructions]. Any forward-looking statements made during the course of the call are contained in the release represent the company's best good faith judgment as to what may happen in the future. Statements is forward-looking can be identified by the use of the 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 disclosures in the company's Form 10-K and other SEC filings regarding factors that could cause the 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.

Good afternoon, and thank you for participating in Hub Group's second quarter earnings call. I'm joined today by Phil Yeager, Hub's President and Chief Operating Officer; and Geoff DeMartino, Hub's Chief Financial Officer. I'd like to begin the call by recognizing Hub's employees who have performed masterfully for our clients during this pandemic. Our office staff continues to operate effectively, while our drivers continue to be on the front lines, delivering essential goods in support of our valued customers. We continue to support our drivers and staff with necessary PPE supplies as well as training to ensure that they remain safe during the pandemic. As anticipated, the second quarter proved to be very challenging as revenue decreased by 15% year-over-year. All of our business lines declined in revenue due to soft demand, coupled with pricing pressures. We did, however, see our intermodal volumes improved sequentially, with July exhibiting strong demand in certain regions as businesses replenished depleted inventories. With that, I will turn the call over to Phil, to review our business lines.

Thank you, Dave. I would like to start by echoing Dave's remarks and thank our entire Hub Group team for their unwavering commitment to our customers, communities and each other. We've seen an improving demand environment since April, and we are maintaining focus on our key priorities of the differentiated service and an improved cost structure, which will drive long-term growth. In April, we reviewed our top 100 customers, which accounted for 80% of 2019 revenue and determined that over 20% were either closed or significantly impacted by the pandemic. Today, over 90% of our customer base is reopened, with the remainder still somewhat impacted as their facilities continue to ramp back up to full production for serving end markets that are still impacted by closures. I will now discuss our business unit performance. Intermodal volume declined 8% and gross margin as a percentage of sales compressed 220 basis points in the quarter as our improved street performance could not offset a competitive pricing environment, lower volumes and rail cost increases. Local west volumes declined 3%, Transcon volumes were down 7% and local east declined 11% as we participated in a competitive truckload and intermodal environment, which was amplified by the pandemic. However, volume improved throughout the quarter and was up 5% in June. We have seen an improvement in demand to start the third quarter and have performed very well in bid season. Due to our execution during bid season, we plan to grow our fleet by 3,500 containers and over 200 tractors. The continued strength in rail service and our enhanced drayage operations are positioning us well to provide superior service to our customers as demand returns. Logistics revenue declined 15%, while gross margin as a percentage of sales improved 190 basis points year-over-year. We had strong margin…

Thank you, Phil, and hello, everyone. Our business performed very well in the quarter despite unprecedented macroeconomic conditions. We saw revenue improve throughout the quarter, and gross margin as a percent of revenue expanded for all four service lines compared to Q1. Q2 gross margin was 13.8% of revenue, up from 12.5% in Q1. Our results demonstrated the resilience of our operating model as we generated over $70 million of net cash from operating activities and over $52 million of EBITDA during the quarter. We continue to exhibit strong cost control. Our non-driver headcount is down 14% over the last 12 months, and we are on track to achieve the benefits of our profit improvement initiatives. We are improving our trucking operations, driving higher utilization and lower costs and reducing our operating expenses. Salaries and benefits expense for the quarter was down by over $11 million as compared to the prior year, driven by lower headcount and bonus expense. During the quarter, we incurred $5.7 million of expense for donations of refrigerated trailers to COVID-19 emergency responders. We also spent $2.6 million on consultants who worked with our team to drive improvement in our trucking operations. This engagement is now complete. G&A costs were up $4.9 million year-over-year. Excluding the donation and consulting expense, these costs were down by $3.4 million as we reduced our spending in several areas, including travel and IT implementation costs. Hub Group's diluted earnings per share for the quarter was $0.39. This includes $0.21 of costs related to donation, consulting and severance. This compares to $0.87 of diluted EPS in the second quarter of 2019. The decrease in earnings per share was driven by the soft freight market, including the impact of COVID-19 and competition within Intermodal and truckload, partially offset by the savings from our profit improvement initiatives. During the quarter, we repaid the $100 million we had borrowed on our revolving credit facility in March. And we ended the quarter with over $200 million of cash. We continue to have solid liquidity and low levels of net debt. For the remainder of the year, we expect to spend between $55 million and $75 million on capital expenditures, primarily to support growth in the business. We are purchasing 3,500 intermodal containers and over 200 tractors, to refresh and grow our fleet. Dave, back to you for closing remarks.

Thank you, Geoff. The second quarter was quite challenging as the pandemic locked down nonessential businesses and disrupted the lives of all Americans. But we are encouraged that we are beginning to see the economy come back with the demand for logistics services growing as businesses restock their inventories, and we expect the second half of the year will reflect improved volumes. With that, we'll open up the line to questions.

[Operator Instructions] And our first question comes from Justin Long from Stephens. Your line is open.

Thanks. Good afternoon and congrats on the quarter.

Thank you.

So you mentioned that volumes in June on the intermodal side were up 5%. I was wondering if you could give us monthly volumes throughout 2Q, maybe what you're seeing in July. And then after you do that, would love to get your thoughts on bids that you've won or market share you've won during bid season. And how much of that is reflected in this pickup we've seen in June and July?

Sure. This is Geoff, Justin. By month, April was down 15%, May was down 13%, June was up 5%. And then to date, in July, we're up 8%, and we expect high single digits for the rest of the year in intermodal volume.

Great. And Justin, this is Phil. Just from a bid perspective. It was somewhat aggressive during the peak of the pandemic from a pricing perspective. We did perform very well, though, with some of our larger customers in their intermodal renewals. And those customers are performing extremely well through the pandemic actually seeing surges in demand, and that's what gives us that confidence in continuing to invest in and grow the fleet. It is still somewhat competitive out there, but we are seeing signs of tightness and hope that that will continue, and that will set us up for a very strong 2021 bid season. But we are 71% completed on our bids at this point. Still have some larger ones to complete, but feeling very good with the results that we've been able to generate.

Okay. Great. And as you think about that volume forecast for the back half, are there any thoughts around intermodal gross margins and the progression sequentially that we could see in third and fourth quarter?

Sure. I mean, for the whole -- for the business as a whole, we do expect margins will come down sequentially, closer to that kind of that Q1 number. We are going to see the impact of our repricing start to hit the numbers more fully as more of that business is online. We do have some rail cost increase in the second half of the year. We are going to work to offset that with our profit improvement initiatives, both in the gross margin line and also in the cost and expenses line. But we do expect the gross margins will be lower in the second half.

And just to add on to that, Justin, we are continuing to see improvement in our cost for load and productivity on the drayage side and feeling very good with those results as well. So we're going to continue to push that forward to help offset those costs.

Okay. Great, I’ll leave at those two. I appreciate the time.

Thanks.

And our next question comes from Benjamin Hartford from Baird. Your line is open.

Good evening, guys. Maybe just to kind of close the loop on some of these cost elements. Do you have any sense or direction where salary and benefits in G&A, some of the operating type expenses will trend in the back half of the year as well?

Sure. Yes. If you use the Q2 number as a starting point and back out the specific items we called out, which is the donation, the severance and the consulting expense, kind of all of which we don't expect going forward. Think that's a pretty good number to use.

Okay. That’s helpful. Thanks. Dave, just interested in your perspective, on what's going on right now in the West Coast, in particular, I've asked this a couple of different times elsewhere, but it seems unusual, unusual how tight it is, where we're are starting to see some transactional surcharges put into place. A variety of reasons for that, but as you experience that today, in your mind, what is that set up for peak? And how concerned are you as it relates to service, rail service in particular as we move into the back half of the year?

Well, thus far, rail service continues to be very good. And so our rail partners have been I think an awful lot of the work they did with the PSR, I think, really did help quite a bit. And so the service, we're very confident in right now. There's no question we're seeing surges off the West Coast, very strong, some of the quickest acceleration I've seen. From the customers that we've spoken with, they do believe that this is going to go through peak that we're going to have these elevated levels of business going through the West Coast. A lot of the shifts, inventory replenishment. And again, I think that a lot of it's been sitting in warehouses, apparently on the West Coast is now being shipped in mass. And so we'll see this through August through. I would hope maybe through November, maybe beyond. But it seems as though the restocking is definitely going to take some time as inventory levels are quite depleted.

And Ben, I would just add to that. I think one of the things that we've been most pleased with from a rail perspective is the reaction times and how much more nimble our rail partners are than when we have seen these kind of spikes in the past. So even though there can be challenges, the response times and the fixes that we're putting into place with our rail partners to support our customers are very fast and very fluid. And so we think that sets us up well to serve our clients during peak.

Okay. That's good. That's helpful. Thanks. And then Phil, maybe just to complete your thought on dedicated. Can you provide us an update where that stands operationally? It looks like a little bit of momentum there that you talked about in the press release. When do you think you can get back to positive growth from a revenue standpoint given what the pipeline looks like and just a status of where that unit sit operationally?

Sure. Yes, we are making progress. We are certainly not where we want to be long-term, but you can see it in the numbers that we are making progress. We still have some work to do operationally and on the technology front, but once again, making stride. We are through the majority of the loss of unprofitable business, and that will start to show up in the second half of the third quarter and feel very good about that. The wins that we're bringing on, obviously, there will be some start-up costs. But long-term, we think will be very strong business for us. And so my hope is, in 2021, we're getting to a positive growth trajectory in that business with strong margins and returns.

Okay. Thank you. I’ll turn it over to somebody else.

And the next question comes from Scott Group from Wolfe Research.

Hey thanks. Good afternoon, guys. I apologize if I missed it, but did you give the gross margin trends by business in the quarter?

We didn't, but I can give those to you now. So let me just pull up here. So on a year-over-year basis, intermodal was down by about 220 basis points; brokerage was up 100; logistics, up 190; and dedicated, up 200.

Okay. And then when you talk about mid -- or sorry, high single-digit volume growth in intermodal, do you think that's a function of market share gains through bid season? Or do you think that's -- is that your view of the market?

I would say a combination. So we certainly did have some strong showings in bid with some of our larger customers who have the ability to drive share shifts. So we think we did perform well there, and we're focused on really hitting the mark for them and meeting the commitments that we've set. I also think with some of the tightness that we're seeing in the market right now, there will be some additional share shift from truckload. And we're seeing a lot of customers come to us now focusing on peak plans and peak support. We are focusing on supporting the clients, who have stuck with us, and we're going to continue to support them. And that's really a big part of why we're expanding the fleet.

Okay. And then just, Phil, I mean, it sounds like the volumes are accelerating, but the gross margins get worse because maybe the pricing is getting a little bit worse. So is this sort of a shift of sort of refocusing a little bit more on growth and less on yield? And how quickly can you turn that yield lever back on in a tightening market?

Sure. We do want to focus on growth. We are going to continue to focus on growth. We need to get back to a strong growth trajectory in intermodal. So that is a focus of ours. We do believe that if the tightness continues in the market that we're seeing right now, that sets us up extremely well for 2021 bid season and an ability to grow and get profitability back up.

Okay. And just last question real quick. The increase in CapEx, is this pull forward from what next year was going to be? Or is this sort of a new run rate to think about continuing into next year as well?

No, it's not a pull forward, it's just responsive and supportive of growth that we see out there, particularly in intermodal. On the -- that's for the containers. The tractors we're purchasing, really a strong -- opportunity to generate a strong return by refreshing some older higher cost models.

And I would just add that within the drayage business or the drayage side of our intermodal business, we need to make sure that we're maintaining our share of our intermodal drayage, so that our Hub Group trucking fleet is managing a significant portion of that even as we grow. So we will need to continue to invest in that to maintain that share.

Okay. Thank you, guys.

Thanks, Scott.

And the next question comes from David Ross from Stifel. Your line is open.

Yes. Just to follow-up on the drayage comment there. What percentage is company dray at this point? And what's the target?

Sure. Right now, we're -- in Q2, we did 60% on our own assets. That was up from 54% last year. Over time, we'd like to get that closer to 80%.

I would add to that -- it's Geoff. That we do have, if you look at just where we have terminal locations that is actually 74% of our overall business.

Okay. That’s helpful. And are there any constraints right now in the driver market to getting that? Because it seems like you've got the balance sheet and the capital. So if you wanted to just buy the trucks, it's a matter of seeding the trucks with the drivers. So how are you thinking about the time line on getting that up?

Yes. We've invested a lot of time and effort in improving the productivity of our drivers. So that was really step one. We also have improved our retention. So at this point, we feel very good about being more aggressive in the market going after drivers. It is getting somewhat more competitive as we're seeing some of that tightness in the market. Some drivers tend to walk towards getting their own search or really moving to an independent model during that time. But we feel very good about the value proposition that we bring to drivers. They're home every night. We help them make a very strong living and support them. So I think we're going to be able to add drivers. We have to stay competitive with wages and make sure that the drivers we have are staying happy and supported as well.

Well, it sounds good. And then just last question on the consultants, you mentioned bringing them in to tell you what to do with trucking. What were the key takeaways from their time there? Or what were the points of focus?

Yes, it's healthy. It's been a great investment for us. I think we recognized a lot of opportunities for the organization, and we've executed on a lot of those. So I would highlight a few areas. First, driver productivity and retention. I mentioned those earlier, and I think we've made significant strides there, and that's what's really reducing our cost per load in the drayage network. Our maintenance program was also another huge focus area for that, and that's really a big part of the investments we're making in the tractor fleet and in our own maintenance network. And we think we have a huge runway to improve in our maintenance organization. And then the other big area was in our procurements and how we purchase everything in our assets fleet, whether it goes to fuel or our tractors or our containers, we had opportunities to drive down our purchase expenses, and we are taking really a big swing of that and continuing to make a lot of progress there. So a lot of really good stuff that they help support.

I would just add that the trucking improvements both at drayage and dedicated was a big component of the $40 million of profit improvement initiatives we've been talking about since late last year. So we are certainly executing on that part of it.

Thanks. Thank you very much.

And the next question comes from Todd Fowler from KeyBanc. Your line is open.

Great. Thanks and good evening everyone. Phil, can you share -- I'm assuming that you're almost all the way through the bid season at this point. So can you share where contract pricing for 2020 shook out? And then as you look to the second half of the year, I'm assuming there's going to be some initial bids maybe late in the fourth quarter. Is the market now to a point where contract pricing intermodal should flip to being positive just based on the tightness in what you're seeing in the truck market?

Sure. Yes, great question. So we are 71% done and awarded. So we still have some sizable ones that are out there, but still feeling very good about how we've executed through that. We -- if the tightness in the market continues at the rate that it is, I think it sets up for a very solid 2021 bid renewal season. We may see some customers try to move bids out, but we've made commitments on 12-month rates, and we plan to continue to support those. But if people start pushing them out, we will take actions to make sure that our pricing has been a competitive play. We need the tightness to continue, though, for a little bit of a longer period, I think, before I could say that intermodal pricing is moving on a contract basis, really in a really good inflection, but the signs are out there that we're moving in the right direction.

Yes. Okay. That makes sense. And then I mean, do you care to kind of put a range around where the 70% came in at? Is it fair to say kind of low single digits? Or do you want to share a number around that?

Yes, it would be low single digit.

Great. Okay. And then just on the cost side, I guess, Geoff, I'm curious of the $40 million that you targeted for this year, how much do you see that's already in the numbers right now? So what can we expect going forward? And then I think the next big bucket that you laid out was $20 million, and I think that, that was a 2022 number, is that still a number that's out there in the horizon? Is there anything that would move that forward or push it out a little bit further?

Sure. Yes, the $40 million, what we've kind of said on that is we expect to be at a run rate once we've got all the initiatives in place. We're very close, I think, to having those initiatives largely in place. So we're starting to recognize that now. For the full calendar year of 2020, we'll recognize about half of that in year, so about $20 million. And then of course, we're still recognizing the $50 million that we executed on in the latter part of last year. As for the $20 million going forward, that's really a function. A lot of that's driven by our continued implementation of our Elevate IT initiative. So the timing of that $20 million will be dependent on those IT projects coming into play, but that's something we're looking at for next year.

Okay. Got it. And then just the last one for me. With the -- I guess, maybe two parts. First, the 200 tractors that you're buying this year, are those -- where are those going to be split? Are those dedicated? Are those intermodal? And then do you have some kind of parameters for dedicated revenue growth in the back half of the year as you start to lap the lost business? And based on some of the awards that you saw in the first part of the year. Thanks.

Sure. Yes, the tractors, the vast majority of those are going to be in drayage. There's a few dedicated as well. And then dedicated revenue growth for the back half of the year, we are still cycling some of the site exits that happened late last year, early this year. We are winning new business, and that is starting to come on, but we do expect revenue will be down before that, those new sites can really start to contribute.

Great. Okay, thanks so much for the time tonight.

Thanks.

And our next question comes from Jason Seidl from Cowen. Your line is open.

Getting back to the intermodal pricing side, if we're getting sort of this low single-digit number now, as we look out to 2021, if we can anticipate that this tightness continues in the marketplace, should we be looking at something more towards the mid-single-digit range?

Sure. Yes. I would be hopeful of that. But obviously, the tightness does need to continue. We need to see demand continue. If there -- we're certainly hopeful that the economy gets back moving in a positive direction and that the pandemic does not drive any further disruptions. But all of that being equal, yes, I would think, given the dynamics that we're seeing in the market right now, we would anticipate at a strong pricing environment.

Okay. And follow-up, just you guys talked about some of your initiatives. I was wondering what type of technology initiatives you might have whether it'd be on the intermodal side, the drayage side or even the dedicated side that could drive some cost savings going forward? And if you could just give us some more details on those.

Sure. So we are in the process of moving to our single platform for the organization, really retiring legacy systems. And one of the biggest benefits of what we are implementing is our driver optimization tool. And we have seen significant improvements in the test sites that we've done in both loaded miles and productivity for our drivers as well as the productivity of our associates. So they are able to preplan a day and spend their time on really more value-added things for our clients. So it will be both a productivity headcount enhancement, but also the larger bucket of dollars is going to be making our drivers more productive, having to put in less capital, getting more out of the expense that we're putting in.

And when is that going to be 100% rolled out?

That will be a 2021 rollout.

Okay. Appreciate the time, as always.

Thank you.

And our next question comes from Bascome Majors from Susquehanna. Your line is open.

Yes, thanks for taking my questions. I wanted to follow-up on the CapEx adjustment. If I recall, the initial range that you guys gave in February before you reduced it, it was pretty similar to what you raised it to today, but there was -- you had delayed the expansion of your headquarters building, which I think was $30 million or $40 million. So could you unpack the nature of that spend today, even though it's similar in dollar terms, how it might be different in the uses and opine on whether or not you plan to renew that headquarters expansion in 2021 and beyond? Thanks.

Sure. This is Dave. We have put it on hold. There was some expense in this quarter as we did have to complete the HVAC and the fire protection but it's sitting idle at this point in time. We are waiting to see several things. Number one, we are a relatively densely populated headquarters building. We're not sure if, in fact, we may be able to -- if the government may put regulations in, which would allow us to have fewer people in the building. So that's one thing we're waiting for. We're also looking very closely at how many functions can work from home. And is it possibly that they are working from home four days a week or 1 or -- so we're going through that process now. And ultimately, when you have the combination of the two, we can determine if, in fact, we're going to finish the building, rent it, sell it or in fact, inhabit it because we need the space overall. So we're still -- there's a lot of unknowns, but it's sitting idle right now, but it is fully up to code and could be finished, I would say, probably within 6 months if we chose to do so.

Yes. This is Geoff. I could give you the breakdown. You're correct. Our original guidance back in February was $115 million to $120 million of CapEx. Included in that was about $35 million for the building. So if you take the -- we said about $49 million in the first half and then the outlook for the second half is $65 million to $75 million. So we're back to that kind of $120 million range, approximately. So about $20 million of that full year is on the building, around a little over $40 million is on containers, kind of $30 million to $40 million on tractors and trailers, and then the rest is going to be IT.

Thank you for that. That’s all what I had. Thank you.

And our next question comes from Brian Ossenbeck from JPMorgan.

I wanted to ask one about -- you mentioned rail service, but you're also seeing some new additions. A couple that were announced earlier this week. Your partner at West had some market share gains that they were talking about. I just wanted to see how that was flowing down to your business? And if that had any implications for deciding to grow the container fleet, I guess, in the near term and then long term, maybe if you can just offer some thoughts on just the pace of growth. Did you expect these sort of things to continue? Or it's a little too early to expect that at this point?

Yes, great. Thank you, Brian. The -- we're always looking at pushing our rail partners down additional services. We're excited that they are during PSR, we lost some lanes that we're servicing large clients, and some of it is reopening those, which is great and allows us to get back business that went to truck. So we're very excited about that and the opportunity to go back after those as bid seasons reopen and truck capacity hopefully tighten. So certainly, we think that that stands from our rail partners is fantastic. We hope that it continues, and we're going to continue to work with them to find new opportunities to drive growth.

Okay. So it sounds like the container fleet was separate from all that because some of these are still pretty new. I guess the other question is, when do you expect to get those containers? And how much of that's replacement versus incremental growth?

It will be incremental, and we'll be getting those throughout really the peak shifting season from August until early November, start of November. So we can make sure we get some turns on those to -- for this year. And yes, I would say, we really made that decision independent of the new offerings. But if we are successful in continuing to grow in those new corridors, then we would obviously want to continue to invest in the fleet.

Okay. Just one more, if you can give us an update on CaseStack, it has I think outperformed your expectations since you bought it. Do you have anything new to share there in terms of growing the footprint? Or how that's performing? I would think it's probably doing pretty well now with the restocking to those in the volume to the type of customers that it serves. But what you're seeing from a growth perspective? And again, with, I guess, one of the bigger competitors going over to a larger logistics company, if you've seen anything change in the market from that perspective as well.

Right. Well, when we acquired -- this is Dave. When we acquired CaseStack, we did think that they were -- and still believe that they are the premier company in their space. And you are absolutely correct, it's been -- they've surpassed their forecasts very consistently. They, of course, are serving CPG customers going into essential retailers. And so that market has been very, very strong. The management team has done a really, really good job in the panel in the growth and candidly also the impacts of the COVID virus. So nothing but kudos to the team, and they've added a lot of value to Hub overall as an organization.

I would just add, the footprints that we have is the national footprint. We feel very good about the locations that we have, but we may -- or we will continue to expand in our existing markets as we continue to add business, and that has really been the playbook that we've been running. The other piece that I would highlight is that we are winning larger awards with really legacy Hub customers, which is driving a good amount of growth. That was one of the uses of the deal was that we would really be able to cross-sell. And then the other part that I would highlight is that we're also adding new retail programs, and we're really pleased that, that has also come to fruition. We plan to continue to grow that. So another great win that we've gone through that acquisition.

Great. Thank you for the time.

[Operator Instructions] And our next question comes from Tom Wadewitz from UBS.

Wanted to see -- I apologize if I missed this, but I don't think you've commented on brokerage as you look to second half. It seems like you had good gross margin performance in the quarter, but obviously, the market's tightened up. So I don't know if you have any thoughts on kind of how your brokerage business, how you would expect it to perform in third quarter? And if there is pressure, maybe how quickly you can get through some of the gross margin pressure if you do have a strong peak season?

Sure. This is Phil. So as you're probably aware, our brokerage is primarily contractual business. The majority of that business is with committed carriers where -- and those committed carriers are living up to the awards and commitments that we've set with our clients and continuing to support us in our customers. So we feel very good about that. Where we are seeing some compression is when it is a committed line from a customer that we were sourcing transactionally really prior to the tightness. And so that is where we're going to see some compression. We are working with our customers on ensuring that they understand the compression that we're seeing and also working to get higher-margin spot volumes into the business. The spot market tightened from a capacity perspective prior to the demand side from a rate perspective. So we do believe now that the spot market load board activity is increasing, spot opportunities are increasing. So we feel as though we're going to be able to really keep our gross margins at a good level, but we'll see some pressure in the back half. The only other piece I'd highlight is we do have some high profitability project business that we typically run that has slowed down given the pandemic. So that will be somewhat of an offset as well. But I think we're doing a very good job in our procurement methodology. We're supporting our carriers. We're continuing to work with our customers very well. And so we're focused on growth and really continuing to buy well in the market.

I would just add that the process changes and technology we've put in place have made our carrier reps much more efficient than they used to be, going back 1.5 years or 2 years ago. And so we're seeing that benefit on the bottom line as well.

Great. Okay. And then with respect to the new business you're bringing in, in intermodal, is it skewed to be the West, the East, transcontinental? I just wanted to see if there's some color on the type of business that it is that you've been winning.

Sure. A lot of our wins were local West and Transcon. We -- it's still very competitive in the East, both with truckload and with other intermodal competitors, but the majority of those wins were really kind of Western and Transcon based.

Great. Okay, great. Thank you for the time.

And our next question comes from Benjamin Hartford from Baird. Your line is open.

Thanks. The quick follow-up. Geoff, did you -- if you said this, I missed it. Did you tell us which line items specifically, the various called out expenses from the donations, consulting, severance, et cetera, we're looking?

Sure. Yes, sure. Severances in salaries and benefits and then the donation and consulting expense were both in G&A.

Okay. And then an update on where you guys said as it relates to evaluating acquisitions in this environment. Can you provide us an update there?

Absolutely. Yes, we want to continue to do M&A. We want to get larger and expand our suite of services, look to have more of those opportunities to cross-sell new lines of service to our intermodal customers where we've had pretty good success in the acquisitions we've done. We are targeting really kind of the value-added 3PL type businesses, non-asset-based businesses where we can add new lines of service, expand our freight under management and/or get into new customer verticals. So we've been looking all year. We -- at one point, I thought we would get a deal done this year. I think we're still hopeful we can. Obviously, things had to kind of go on hold in the March through June timeframe, but we are back at it, evaluating opportunities and hopeful to get one done here.

And in the meantime, your mindset as it relates to potential share repurchases or does that sit in the hierarchy?

Sure. I mean we've been pretty conservative, obviously, taking down $100 million on the revolver earlier this year. We always -- we do always evaluate share repurchases at our quarterly board meetings, got one of those coming up, and I'm sure it will be a topic of discussion.

And then lastly, you provided some parameters to how to think about modeling some of the beneath the gross margin line, operating expenses, but incentive comp in the back half of the year. And as you can even think about 2021, can you talk a little bit about what may or may not have been included in 2Q and how that might feather in as we move through the year?

Sure. Yes, very little incentive comp in Q2. Obviously, I think our earnings are going to be down year-over-year, and our incentive compensation program is not designed to pay when that happens.

Okay, that’s helpful. Thank you, appreciated.

And our next question comes Bascome Majors from Susquehanna. Your line is open.

Thanks for the follow-up there. I just wanted to follow-up on Ben's follow-up. Is a special dividend a possibility? Is that something you guys could even do if you wanted to, assuming that M&A doesn't come through as quickly as you hope to? Because certainly, the cash balance is rising. It looks like you -- if all goes well, you should be in a net cash position again next year. Thank you.

Yes. I mean, it's not something that's off the table. But again, our priority is for excess cash continue to be reinvested in the business, both through CapEx and through acquisitions. And I think those are 2 areas that we are either actively or looking to invest in as a priority.

Thank you.

Thanks, Bascome.

And that concludes today's question-answer session. I'll turn the call over to Dave Yeager for final remarks.

Great. Well, again, thank you for joining us this afternoon. As always, if you have any further questions. Phil, Geoff and I are available to talk at any time. So thank you again. Have a good day.

Thank you.

Thank you, ladies and gentlemen. This concludes today's conference call. Thank you for participating. You may now disconnect.