UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM
For the quarterly period ended
For the transition period from to
Commission file number:
(Exact name of registrant as specified in its charter)
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(State or other jurisdiction of incorporation or organization) |
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(I.R.S. Employer Identification No.) |
(Address, including zip code, of principal executive offices)
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(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Exchange Act: |
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Title of each class |
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Trading Symbol(s) |
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Name of each exchange on which registered |
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Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark if the Registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☒ No ☐
Indicate by check mark if Registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ☐ No ☒
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See definition of “large accelerated filer”, “accelerated filer”, “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes
On May 2, 2025, the registrant had
HUB GROUP, INC.
TABLE OF CONTENTS
2
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
HUB GROUP, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except share amounts)
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March 31, |
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December 31, |
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2025 |
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2024 |
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ASSETS |
(unaudited) |
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CURRENT ASSETS: |
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Cash and cash equivalents |
$ |
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$ |
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Restricted cash |
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Accounts receivable trade, net |
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Accounts receivable other |
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Prepaid taxes |
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Prepaid expenses and other current assets |
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TOTAL CURRENT ASSETS |
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Restricted investments |
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Property and equipment, net |
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Right-of-use assets - operating leases |
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Right-of-use assets - financing leases |
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Other intangibles, net |
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Goodwill |
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Other non-current assets |
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TOTAL ASSETS |
$ |
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$ |
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LIABILITIES AND STOCKHOLDERS' EQUITY |
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CURRENT LIABILITIES: |
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Accounts payable trade |
$ |
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$ |
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Accounts payable other |
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Accrued payroll |
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Accrued other |
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Lease liability - operating leases |
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Lease liability - financing leases |
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Current portion of long-term debt |
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TOTAL CURRENT LIABILITIES |
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Deferred consideration |
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Long-term debt |
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Other non-current liabilities |
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Lease liability - operating leases |
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Lease liability - financing leases |
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Deferred taxes |
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STOCKHOLDERS' EQUITY: |
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Preferred stock, $ |
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Common stock |
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Class A: $ |
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Class B: $ |
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Additional paid-in capital |
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Retained earnings |
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Accumulated other comprehensive loss |
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( |
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( |
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Treasury stock; at cost, |
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( |
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( |
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Total Hub Group, Inc. equity |
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Non-controlling interests |
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TOTAL STOCKHOLDERS' EQUITY |
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TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY |
$ |
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$ |
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See notes to unaudited condensed consolidated financial statements.
3
HUB GROUP, INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS
OF INCOME
(in thousands, except per share amounts)
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Three Months Ended |
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March 31, |
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2025 |
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2024 |
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Operating revenue |
$ |
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$ |
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Operating expenses: |
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Purchased transportation and warehousing |
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Salaries and benefits |
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Depreciation and amortization |
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Insurance and claims |
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General and administrative |
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Gain on sale of assets, net |
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( |
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( |
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Total operating expenses |
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Operating income |
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Other income (expense): |
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Interest expense |
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( |
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( |
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Interest income |
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Other, net |
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( |
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Total other expense, net |
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( |
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( |
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Income before provision for income taxes |
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Provision for income taxes |
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Net income |
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Less: net income attributable to non-controlling interests |
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Net income attributable to Hub Group, Inc. |
$ |
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$ |
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Basic earnings per common share |
$ |
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$ |
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Diluted earnings per common share |
$ |
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$ |
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Basic weighted average number of shares outstanding |
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Diluted weighted average number of shares outstanding |
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See notes to unaudited condensed consolidated financial statements.
4
HUB GROUP, INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS
OF COMPREHENSIVE INCOME
(in thousands)
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Three Months Ended |
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March 31, |
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2025 |
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2024 |
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Net income |
$ |
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$ |
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Other comprehensive (loss) income, net of tax: |
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Foreign currency translation adjustments |
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( |
) |
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Total comprehensive income |
$ |
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$ |
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Less: comprehensive income attributable to non-controlling interests |
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Comprehensive income attributable to Hub Group, Inc. |
$ |
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$ |
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See notes to unaudited condensed consolidated financial statements.
5
HUB GROUP, INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(in thousands, except share amounts)
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Class A & B |
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Accumulated |
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Common Stock |
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Additional |
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Other |
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Treasury |
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Non- |
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Shares |
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Paid-in |
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Retained |
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Comprehensive |
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Stock |
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Controlling |
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Issued |
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Amount |
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Capital |
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Earnings |
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Income |
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Shares |
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Amount |
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Interests |
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Total |
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Balance December 31, 2023 |
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$ |
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$ |
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$ |
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$ |
( |
) |
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( |
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$ |
( |
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$ |
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Adjustment related to stock split |
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( |
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( |
) |
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- |
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- |
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- |
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- |
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- |
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Net income attributable to Hub Group, Inc. |
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- |
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- |
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- |
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- |
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- |
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- |
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- |
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Stock tendered for payments of withholding taxes related to awards vested |
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- |
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- |
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- |
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- |
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- |
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( |
) |
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( |
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- |
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( |
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Purchase of treasury stock |
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- |
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- |
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- |
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- |
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- |
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( |
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( |
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- |
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( |
) |
Federal excise tax on purchased treasury stock |
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- |
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- |
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- |
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- |
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- |
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- |
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( |
) |
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- |
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( |
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Issuance of restricted stock awards, net of forfeitures |
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- |
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- |
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( |
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- |
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- |
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- |
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- |
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Share-based compensation expense |
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- |
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- |
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- |
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- |
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- |
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- |
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Dividends paid |
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( |
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- |
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- |
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- |
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- |
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( |
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Dividends accrued |
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( |
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- |
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- |
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- |
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- |
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( |
) |
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Foreign currency translation adjustment |
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- |
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- |
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- |
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- |
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( |
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- |
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- |
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- |
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( |
) |
Balance March 31, 2024 |
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$ |
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$ |
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$ |
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$ |
( |
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( |
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$ |
( |
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$ |
- |
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$ |
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Balance December 31, 2024 |
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$ |
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$ |
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$ |
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$ |
( |
) |
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( |
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$ |
( |
) |
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$ |
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$ |
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Net income attributable to Hub Group, Inc. |
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- |
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- |
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- |
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- |
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- |
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- |
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- |
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Net income attributable to non-controlling interests |
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- |
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- |
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- |
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- |
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- |
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- |
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- |
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Stock tendered for payments of withholding taxes related to awards vested |
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- |
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- |
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- |
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- |
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- |
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( |
) |
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( |
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- |
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( |
) |
Purchase of treasury stock |
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- |
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- |
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- |
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- |
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- |
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( |
) |
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( |
) |
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- |
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( |
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Issuance of restricted stock awards, net of forfeitures |
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- |
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- |
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( |
) |
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- |
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- |
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- |
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- |
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Share-based compensation expense |
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- |
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- |
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- |
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- |
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- |
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- |
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- |
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Dividends paid |
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- |
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- |
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- |
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( |
) |
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- |
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- |
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- |
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- |
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( |
) |
Change in unvested dividends |
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- |
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- |
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- |
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- |
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- |
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- |
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- |
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Foreign currency translation adjustment |
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- |
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- |
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- |
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- |
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( |
) |
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- |
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- |
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Balance March 31, 2025 |
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$ |
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$ |
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$ |
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$ |
( |
) |
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( |
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$ |
( |
) |
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$ |
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$ |
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See notes to unaudited condensed consolidated financial statements.
6
HUB GROUP, INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
|
Three Months Ended |
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March 31, |
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2025 |
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2024 |
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Cash flows from operating activities: |
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Net income |
$ |
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$ |
|
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Adjustments to reconcile net income to net cash provided by operating activities: |
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Depreciation and amortization of intangibles and right-of-use assets |
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Deferred taxes |
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( |
) |
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( |
) |
Non-cash share-based compensation expense |
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Gain on sale of assets, net |
|
( |
) |
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( |
) |
Changes in operating assets and liabilities, net of acquisition: |
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Restricted investments |
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Accounts receivable, net |
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Prepaid taxes |
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Prepaid expenses and other current assets |
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Other non-current assets |
|
( |
) |
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( |
) |
Accounts payable |
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( |
) |
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( |
) |
Accrued expenses |
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( |
) |
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Non-current liabilities |
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( |
) |
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( |
) |
Net cash provided by operating activities |
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Cash flows from investing activities: |
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Proceeds from sale of equipment |
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Purchases of property and equipment |
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( |
) |
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( |
) |
Net cash used in investing activities |
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( |
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( |
) |
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Cash flows from financing activities: |
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Repayments of long-term debt |
|
( |
) |
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( |
) |
Purchase of treasury stock |
|
( |
) |
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( |
) |
Dividends paid |
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( |
) |
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( |
) |
Stock withheld for payments of withholding taxes |
|
( |
) |
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( |
) |
Finance lease payments |
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( |
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( |
) |
Proceeds from issuance of debt |
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Net cash used in financing activities |
|
( |
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( |
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Effect of exchange rate changes on cash and cash equivalents and restricted cash |
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Net increase in cash and cash equivalents and restricted cash |
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|
|
||
Cash and cash equivalents and restricted cash at beginning of the period |
|
|
|
|
|
||
Cash and cash equivalents and restricted cash at end of the period |
$ |
|
|
$ |
|
||
|
|
|
|
|
|
||
Supplemental disclosures of cash flow: |
|
|
|
|
|
||
Interest paid |
$ |
|
|
$ |
|
||
Income taxes (received) paid |
$ |
( |
) |
|
$ |
( |
) |
See notes to unaudited condensed consolidated financial statements.
7
HUB GROUP, INC.
NOTES TO UNAUDITED CONDENSED
CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1. Interim Financial Statements
Our accompanying unaudited condensed consolidated financial statements of Hub Group, Inc. (the “Company,” “Hub,” “we,” “us” or “our”) have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in annual financial statements have been omitted pursuant to those rules and regulations. However, we believe that the disclosures contained herein are adequate to make the information presented not misleading.
The financial statements reflect, in our opinion, all material adjustments (which include only normal recurring adjustments) necessary to fairly present our financial position as of March 31, 2025 and results of operations for the three months ended March 31, 2025 and 2024.
These unaudited condensed consolidated financial statements and notes thereto should be read in conjunction with the condensed consolidated financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2024 (the “2024 10-K”). Results of operations in interim periods are not necessarily indicative of results to be expected for a full year due partially to seasonality.
On March 5, 2025, the Board declared a quarterly cash dividend of $
In October 2023, the Board authorized the purchase of up to $
NOTE 2. Earnings Per Share
The following is a reconciliation of our earnings per share (in thousands, except for per share data):
|
Three Months Ended, March 31, |
|
|||||
|
2025 |
|
|
2024 |
|
||
|
|
|
|
|
|
||
Net income for basic and diluted earnings per share |
$ |
|
|
$ |
|
||
|
|
|
|
|
|
||
Less: net income attributable to non-controlling interests |
$ |
|
|
$ |
|
||
|
|
|
|
|
|
||
Net income attributable to Hub Group, Inc. |
$ |
|
|
$ |
|
||
|
|
|
|
|
|
||
|
|
|
|
|
|
||
|
|
|
|
|
|
||
Weighted average shares outstanding - basic |
|
|
|
|
|
||
|
|
|
|
|
|
||
Dilutive effect of restricted stock |
|
|
|
|
|
||
|
|
|
|
|
|
||
Weighted average shares outstanding - diluted |
|
|
|
|
|
||
|
|
|
|
|
|
||
Earnings per share net income |
|
|
|
|
|
||
Basic |
$ |
|
|
$ |
|
||
Diluted |
$ |
|
|
$ |
|
||
8
NOTE 3. Acquisitions
EASO Transaction
On
The estimated fair value of total consideration transferred was approximately $
The EASO investment transaction expanded our intermodal and transportation solutions business. With a substantial increase in cross-border trade activity from nearshoring, this transaction improves our ability to provide a cross-border service offering and provides increased intermodal conversion opportunities.
The initial accounting for the EASO transaction is incomplete as we, with the support of our valuation specialist, are in the process of finalizing the fair market value calculations of the acquired net assets as well as non-controlling interests. In addition, we are in the preparation and review process of the valuation of certain acquired assets, liabilities, and non-controlling interest used in determining the purchase accounting. Finally, certain post-closing activities outlined in the investment agreement remain incomplete. As a result, the amounts recorded in the condensed consolidated financial statements related to the EASO transaction are preliminary and the measurement period remains open.
The following table summarizes the preliminary purchase price allocation to the assets acquired and liabilities assumed as of the date of the investment agreement (in thousands):
|
October 23, 2024 |
|
|
|
Cash and cash equivalents |
$ |
|
|
|
Accounts receivable trade, net |
|
|
|
|
Other receivables |
|
|
|
|
Prepaid taxes |
|
|
|
|
Prepaid expenses and other current assets |
|
|
|
|
Property and equipment, net |
|
|
|
|
Right-of-use assets - operating leases |
|
|
|
|
Other intangibles |
|
|
|
|
Goodwill |
|
|
|
|
Other non-current assets |
|
|
|
|
Total assets acquired |
$ |
|
|
|
|
|
|
|
|
Accounts payable trade |
$ |
|
|
|
Accounts payable other |
|
|
|
|
Accrued payroll |
|
|
|
|
Accrued other |
|
|
|
|
Lease liability - operating leases (current) |
|
|
|
|
Current portion of long-term debt |
|
|
|
|
Long-term debt |
|
|
|
|
Lease liability - operating leases (non-current) |
|
|
|
|
Deferred taxes |
|
|
|
|
Total liabilities assumed |
$ |
|
|
|
|
|
|
|
|
Total purchase price allocation |
$ |
|
|
|
Less: non-controlling interests |
|
|
|
|
Consideration transferred for |
|
|
|
|
Less: contingent consideration due to sellers |
|
|
|
|
Cash contributed for |
|
|
|
|
Less: cash and cash equivalents acquired |
|
|
|
|
Less: deferred cash consideration |
|
|
|
|
Cash paid, net |
$ |
|
|
|
|
|
|
|
|
9
The following table summarizes the preliminary estimated acquisition date fair value of consideration transferred and purchase price allocation.
|
October 23, 2024 |
|
|
|
Cash |
$ |
|
|
|
Deferred cash consideration |
|
|
|
|
Contingent consideration |
|
|
|
|
Total consideration transferred |
|
|
|
|
Non-controlling interests |
|
|
|
|
Total purchase price allocation |
$ |
|
|
|
The EASO transaction was accounted for as a purchase business combination in accordance with ASC 805 “Business Combinations.” In connection with the transaction, we performed a consolidation analysis concluding that we control all EASO entities through either a majority voting interest or as the primary beneficiary of a variable interest entity. As a result,
Total consideration transferred includes $
Total consideration transferred includes $
Our investment in one of the EASO entities, Corporación Interamericana de Logística, S.A. de C.V. (“CIL”), qualifies as a Variable Interest Entity (“VIE”). Based on the rights provided in the investment and shareholder agreements, as well as the design of the VIE, our majority exposure to the variability associated with economic performance of the VIE, and the relationship and significance of activities of the VIE to us, we determined that we are most closely associated with the VIE and are therefore considered the primary beneficiary.
During a period from 2030 to 2032, Hub will have the right, but not the obligation, to purchase an amount of issued and outstanding shares of EASO such that, upon exercising this call right, we would own
The components of “Other intangibles” listed in the above table as of the transaction date are preliminarily estimated based on prior acquisitions as follows (in thousands):
|
Closing Date |
|
|
Accumulated |
|
|
Balance at |
|
Estimated Useful |
|||
|
Amount |
|
|
Amortization |
|
|
March 31, 2025 |
|
Life |
|||
Customer relationships |
$ |
|
|
$ |
|
|
$ |
|
||||
Trade name |
|
|
|
|
|
|
|
|
||||
Subtotal |
$ |
|
|
$ |
|
|
|
|
|
|||
Effect of translation |
|
|
|
|
|
|
|
( |
) |
|
||
Ending Balance |
|
|
|
|
|
|
$ |
|
|
|||
The above intangible assets are amortized using the straight-line method. Amortization expense related to this transaction for the three months ended March 31, 2025 was $
10
Amortization expense related to EASO investment agreement for the next five years is estimated as follows (in thousands):
|
|
Total |
|
|
2025 (Remainder of year) |
|
$ |
|
|
2026 |
|
|
|
|
2027 |
|
|
|
|
2028 |
|
|
|
|
2029 |
|
|
|
|
NOTE 4. Segment Reporting
Our has been identified as our Chief Operating Decision Maker (“CODM”). We have
Intermodal and Transportation Solutions. Our ITS segment offers high service, nationwide door-to-door intermodal transportation, providing value, visibility and reliability in both transcontinental and local lanes by combining rail transportation with local trucking. This segment includes our trucking operations which provides our customers with local pickup and delivery (referred to as “drayage”) as well as high service local and regional trucking transportation using equipment dedicated to their needs. We arrange for the movement of our customers’ freight in one of our approximately
Logistics. Our Logistics segment offers a wide range of services including transportation management, freight brokerage services, shipment optimization, load consolidation, mode selection, carrier management, load planning and execution, warehousing, fulfillment, cross-docking, consolidation services and final mile delivery. These services include a full range of trucking transportation services, including dry van, expedited, less-than-truckload, refrigerated and flatbed, all of which is provided by third party carriers with whom we contract. We also leverage proprietary technology along with collaborative relationships with third party service providers to deliver cost savings and performance-enhancing supply chain services to our clients. Our transportation management offering also serves as a source of volume for our ITS segment. Many of the customers for these solutions are consumer goods companies who sell into the retail channel. Our final mile delivery offering provides residential final mile delivery and installation of appliances and big and bulky goods. Final mile operates through a network of independent service providers in company, customer and third-party facilities throughout the continental United States. Our business operates or has access to approximately
11
The following tables summarize our financial and operating data by segment (in thousands):
|
|
|
|
|
Inter-Segment |
|
|
|
||||
Three Months Ended March 31, 2024 |
ITS |
|
Logistics |
|
Eliminations |
|
Total |
|
||||
|
|
|
|
|
|
|
|
|
||||
Operating revenue |
$ |
|
$ |
|
$ |
( |
) |
$ |
|
|||
|
|
|
|
|
|
|
|
|
||||
Operating expenses |
|
|
|
|
|
|
|
|
||||
Purchased transportation and warehousing |
|
|
|
|
|
( |
) |
|
|
|||
Salaries and benefits |
|
|
|
|
|
|
|
|
||||
Depreciation and amortization |
|
|
|
|
|
|
|
|
||||
Insurance and claims |
|
|
|
|
|
( |
) |
|
|
|||
General and administrative |
|
|
|
|
|
|
|
|
||||
Corporate allocations |
|
|
|
|
|
|
|
|
||||
(Gain) / loss on sale of assets, net |
|
( |
) |
|
|
|
|
|
|
|||
Total operating expenses |
|
|
|
|
|
( |
) |
|
|
|||
|
|
|
|
|
|
|
|
|
||||
Operating income |
$ |
|
$ |
|
$ |
|
$ |
|
||||
|
|
|
|
|
Inter-Segment |
|
|
|
||||
Three Months Ended March 31, 2025 |
ITS |
|
Logistics |
|
Eliminations |
|
Total |
|
||||
|
|
|
|
|
|
|
|
|
||||
Operating revenue |
$ |
|
$ |
|
$ |
( |
) |
$ |
|
|||
|
|
|
|
|
|
|
|
|
||||
Operating expenses |
|
|
|
|
|
|
|
|
||||
Purchased transportation and warehousing |
|
|
|
|
|
( |
) |
|
|
|||
Salaries and benefits |
|
|
|
|
|
|
|
|
||||
Depreciation and amortization |
|
|
|
|
|
|
|
|
||||
Insurance and claims |
|
|
|
|
|
( |
) |
|
|
|||
General and administrative |
|
|
|
|
|
|
|
|
||||
Corporate allocations |
|
|
|
|
|
|
|
|
||||
(Gain) / loss on sale of assets, net |
|
( |
) |
|
|
|
|
|
|
|||
Total operating expenses |
|
|
|
|
|
( |
) |
|
|
|||
|
|
|
|
|
|
|
|
|
||||
Operating income |
$ |
|
$ |
|
$ |
|
$ |
|
||||
Revenue from external customers attributable to the United States was $
NOTE 5. Fair Value Measurement
The carrying value of cash and cash equivalents, accounts receivable and accounts payable approximated fair value as of March 31, 2025 and December 31, 2024. As of March 31, 2025, the fair value of the Company’s fixed-rate borrowings was $
We consider as cash equivalents all highly liquid instruments with an original maturity of three months or less. As of March 31, 2025 and December 31, 2024, our cash and temporary investments were with high quality financial institutions in demand deposit accounts, savings accounts, checking accounts, and money market accounts.
Restricted Cash of $
12
Restricted investments included $
NOTE 6. Long-Term Debt and Financing Arrangements
In February 2022, we entered into a
We have standby letters of credit that expire in
As March 31, 2025 and December 31, 2024, we had
We have entered into various Equipment Notes (“Notes”) for the purchase of tractors, trailers, containers and refrigeration units. The Notes are secured by the underlying equipment financed in the agreements.
13
Our outstanding Notes are as follows (in thousands):
|
March 31, |
|
|
December 31, |
|
||
|
2025 |
|
|
2024 |
|
||
|
|
|
|
|
|
||
Interim funding for equipment received and expected to be converted to an equipment note in a subsequent period; interest paid at a variable rate |
$ |
|
|
$ |
|
||
|
|
|
|
|
|
||
Secured Equipment Note maturing in |
|
|
|
|
|
||
|
|
|
|
|
|
||
Secured Equipment Notes maturing on various dates in |
|
|
|
|
|
||
|
|
|
|
|
|
||
Secured Equipment Notes maturing on various dates in |
|
|
|
|
|
||
|
|
|
|
|
|
||
Secured Equipment Notes maturing on various dates in |
|
|
|
|
|
||
|
|
|
|
|
|
||
Secured Equipment Notes maturing on various dates in |
|
|
|
|
|
||
|
|
|
|
|
|
||
Secured Equipment Notes maturing on various dates in |
|
|
|
|
|
||
|
|
|
|
|
|
||
Total debt |
|
|
|
|
|
||
|
|
|
|
|
|
||
Less current portion of long-term debt |
|
( |
) |
|
|
( |
) |
Total long-term debt |
$ |
|
|
$ |
|
||
(1) Includes an immaterial amount of notes held at EASO with interest rates up to
NOTE 7. Legal Matters
The Company is involved in certain claims and pending litigation arising from the normal conduct of business, including putative class-action lawsuits involving employment related claims. Based on management's present knowledge, management does not believe that any potential unrecorded loss contingencies arising from these pending matters are likely to have a material adverse effect on our overall financial position, operating results, or cash flows after taking into account any existing accruals for settlements or losses determined to be probable and estimable. However, actual outcomes could be material to the Company's financial position, operating results, or cash flows for any particular period.
Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Forward-Looking Information
Statements in this section and other parts of this Quarterly Report on Form 10-Q that are not historical facts are forward-looking statements, provided pursuant to the safe harbor established under the Private Securities Litigation Reform Act of 1995. These forward-looking statements are not guarantees of future performance and involve risks, uncertainties and other factors that might cause the actual performance of the Company to differ materially from those expressed or implied by this discussion and, therefore, should be viewed with caution. Further information on the risks that may affect the Company’s business is included in filings it makes with the SEC from time to time, including those discussed under the “Risk Factors” section in the 2024 10-K and subsequent filings. The Company assumes no obligation to update any such forward-looking statements.
14
EXECUTIVE SUMMARY
We are a leading supply chain solutions provider in North America that offers comprehensive transportation and logistics management services focused on reliability, visibility and value for our customers. Our service offerings include a full range of freight transportation and logistics services, some of which are provided by assets we own and operate, and some of which are provided by third parties with whom we contract. Our services include intermodal, truckload, less-than-truckload, flatbed, temperature-controlled, dedicated and regional trucking. Other services include full outsource logistics solutions, transportation management services, freight consolidation, warehousing and fulfillment, final mile delivery, parcel and international services.
We service a large and diversified customer base in a broad range of industries, including retail, consumer products and durable goods. We believe our strategy to offer multi-modal supply chain management solutions serves to strengthen and deepen our relationships with our customers and allows us to provide a more cost effective and higher service solution.
We concluded we have two reportable segments, Intermodal and Transportation Solutions (“ITS”) and Logistics, which are based primarily on the services each segment provides.
Intermodal and Transportation Solutions. Our ITS segment offers high service, nationwide door-to-door intermodal transportation, providing value, visibility and reliability in both transcontinental and local lanes by combining rail transportation with local trucking. This segment includes our trucking operations which provides our customers with local pickup and delivery as well as high service local and regional trucking transportation using equipment dedicated to their needs. In the first quarter of 2025, approximately 76% of our drayage services was provided by our own fleet. We arrange for the movement of our customers’ freight in one of our approximately 50,000 containers. We contract with railroads to provide transportation for the long-haul portion of the shipment between rail terminals. Drayage between origin or destination and rail terminals are provided by our own trucking operations and third parties with whom we contract. Our dedicated service operation offers fleets of equipment and drivers to each customer on a contract basis, as well as the management and infrastructure to operate according to the customer’s high service expectations. As of March 31, 2025, our trucking transportation operation consisted of approximately 2,300 tractors, 3,300 employee drivers and 4,600 trailers. We also contract for services with approximately 500 independent owner-operators. These assets and contractual services are used to support drayage for our intermodal service offering and to serve our customers who require high service local and regional trucking transportation using equipment dedicated to their needs. Our dedicated service operation offers fleets of equipment and drivers to each customer on a contract basis, as well as the management and infrastructure to operate according to the customer’s high service expectations.
Logistics. Our Logistics segment offers a wide range of non-asset-based services including transportation management, freight brokerage services, shipment optimization, load consolidation, mode selection, carrier management, load planning and execution, cross-docking, consolidation and fulfillment services and final mile delivery. Logistics includes our brokerage business which consists of a full range of trucking transportation services, including dry van, expedited, less-than-truckload (“LTL”), refrigerated and flatbed, all of which is provided by third-party carriers with whom we contract. We leverage proprietary technology along with collaborative relationships with third-party service providers to deliver cost savings and performance-enhancing supply chain services to our clients. Our transportation management offering also serves as a source of volume for our ITS segment. Many of the customers for these solutions are consumer goods companies who sell into the retail channel. Our final mile delivery offering provides residential final mile delivery and installation of appliances and big and bulky goods. Final mile operates through a network of independent service providers in company, customer and third-party facilities throughout the continental United States. Our business operates or has access to approximately 7 million square feet of warehousing and cross-dock space across North America, to which our customers ship their goods to be stored and distributed to destinations including residences, retail stores and other commercial locations. These services offer our customers shipment visibility, transportation cost savings, high service and compliance with retailers’ increasingly stringent supply chain requirements.
We are focused on several margin enhancement projects including network optimization, matching of inbound and outbound loads, reducing empty miles, improving our recovery of accessorial costs, increasing our driver and asset utilization, reducing repositioning costs, providing holistic solutions and improving low profit freight. Hub’s top 50 customers represent approximately 66% of revenue for the three months ended March 31, 2025, while one customer accounted for more than 10% of our quarterly revenue in both segments in both 2025 and 2024. We use various performance indicators to manage our business. We closely monitor profit levels for our customers. We also evaluate on-time performance, customer service, cost per load and daily sales outstanding by customer account. Vendor cost changes and vendor service levels are also monitored closely.
15
The following table includes the one customer that represented 10% or more of our quarterly revenue by segment for the three months ending March 31, 2025 and 2024, respectively:
|
Three Months Ended |
||
Customer A |
March 31, |
||
|
2025 |
|
2024 |
ITS |
15% |
|
19% |
Logistics |
17% |
|
15% |
Total operating revenue |
16% |
|
18% |
Uncertainties and risks to our outlook include inflation, increased healthcare costs, a slowdown in consumer spending (driven by, among other factors, tariffs, inflation, increases in interest rates, an economic recession and geopolitical concerns), a shift by consumers to spending on services at the expense of goods, an increase of retailers’ inventory levels, the ability of customers to pay our accounts receivable, a significant increase in transportation supply in the marketplace, aggressive pricing actions by our competitors and any inability to pass cost increases, such as transportation and warehouse costs, through to our customers, economic factors such as the impact of potentially increasing tariffs between trading partners, all of which could have a materially negative impact on our revenue, profitability and cash flow in 2025. Exiting of truckload capacity, retail inventory levels declining leading to restocking demand, a return of typical shipping peak season demands and a stronger used tractor market could have a materially positive impact on our revenue, profitability and cash flows in 2025.
RESULTS OF OPERATIONS
Three Months Ended March 31, 2025 Compared to the Three Months Ended March 31, 2024
The following table summarizes our operating revenue and operating income by segment (in thousands):
|
Three Months Ended |
|
|||||
Operating Revenue |
March 31, |
|
|||||
|
2025 |
|
|
2024 |
|
||
Intermodal and Transportation Solutions |
$ |
530,022 |
|
|
$ |
552,033 |
|
Logistics |
|
411,001 |
|
|
|
480,224 |
|
Inter-segment eliminations |
|
(25,807 |
) |
|
|
(32,764 |
) |
Total operating revenue |
$ |
915,216 |
|
|
$ |
999,493 |
|
|
Three Months Ended |
|
|||||
Operating Income |
March 31, |
|
|||||
|
2025 |
|
|
2024 |
|
||
Intermodal and Transportation Solutions |
$ |
14,049 |
|
|
$ |
13,031 |
|
Logistics |
|
23,289 |
|
|
|
24,108 |
|
Total operating income |
$ |
37,338 |
|
|
$ |
37,139 |
|
Operating Revenue and Operating Income
Total consolidated operating revenue decreased 8% to $915 million in 2025 from $999 million in 2024.
Intermodal and Transportation Solutions (“ITS”) revenue decreased 4% to $530 million primarily due to mix, price and fuel partially offset by higher intermodal volumes of 8%. ITS operating income increased to $14 million, or 2.7% of revenue, as compared to $13 million, 2.4% of revenue in the prior year, due to cost control efforts, lower dedicated start-up costs, and improved insurance and claims expenses.
Logistics revenue decreased 14% to $411 million primarily due to lower volume and revenue per load in our brokerage business, exiting of unprofitable business in consolidation and fulfillment, and seasonal softness in managed transportation and final mile businesses. Logistics operating income decreased to $23 million, 5.7% of revenue, as compared to $24 million, 5.0% of revenue, due to positive contribution from consolidation and fulfillment, managed transportation, and final mile fully offset a lower brokerage margin.
16
The following is a summary of operating results and certain items in the condensed consolidated statements of income as a percentage of revenue:
|
Three Months Ended |
||||||||
|
March 31, |
||||||||
|
2025 |
|
|
|
2024 |
|
|
||
|
|
|
|
|
|
|
|
||
Operating revenue |
$ |
915,216 |
|
100.0% |
|
$ |
999,493 |
|
100.0% |
|
|
|
|
|
|
|
|
||
Operating expenses: |
|
|
|
|
|
|
|
||
Purchased transportation and warehousing |
|
657,924 |
|
71.9% |
|
|
740,172 |
|
74.1% |
Salaries and benefits |
|
149,413 |
|
16.3% |
|
|
144,497 |
|
14.4% |
Depreciation and amortization |
|
32,578 |
|
3.6% |
|
|
38,331 |
|
3.8% |
Insurance and claims |
|
10,882 |
|
1.2% |
|
|
12,618 |
|
1.3% |
General and administrative |
|
27,146 |
|
2.9% |
|
|
27,234 |
|
2.7% |
Gain on sale of assets, net |
|
(65 |
) |
0.0% |
|
|
(498 |
) |
0.0% |
Total operating expenses |
|
877,878 |
|
95.9% |
|
|
962,354 |
|
96.3% |
|
|
|
|
|
|
|
|
||
Operating income |
|
37,338 |
|
4.1% |
|
|
37,139 |
|
3.7% |
|
|
|
|
|
|
|
|
||
Other income (expense): |
|
|
|
|
|
|
|
||
Interest expense |
|
(3,246 |
) |
-0.3% |
|
|
(3,899 |
) |
-0.4% |
Interest income |
|
1,254 |
|
0.1% |
|
|
1,393 |
|
0.1% |
Other, net |
|
295 |
|
0.0% |
|
|
(170 |
) |
0.0% |
Total other expense, net |
|
(1,697 |
) |
-0.2% |
|
|
(2,676 |
) |
-0.3% |
|
|
|
|
|
|
|
|
||
Income before provision for income taxes |
|
35,641 |
|
3.9% |
|
|
34,463 |
|
3.4% |
|
|
|
|
|
|
|
|
||
Provision for income taxes |
|
8,447 |
|
0.9% |
|
|
7,410 |
|
0.7% |
|
|
|
|
|
|
|
|
||
Net income |
$ |
27,194 |
|
3.0% |
|
$ |
27,053 |
|
2.7% |
CONSOLIDATED OPERATING EXPENSES, OTHER EXPENSES AND INCOME TAXES
Purchased Transportation and Warehousing
Purchased transportation and warehousing costs decreased 11% to $658 million in 2025 from $740 million in 2024. As a percentage of revenue, purchased transportation and warehousing costs decreased to 71.9% in 2025 from 74.1% in 2024.
Purchased transportation and warehousing costs declined as compared to the prior year due to lower rail and third-party warehouse costs. The reduction in warehouse costs is primarily driven by the completion of our network optimization project in 2024.
Salaries and Benefits
Salaries and benefits increased to $149 million in 2025 from $144 million in 2024. As a percentage of revenue, salaries and benefits increased to 16.3% in 2025 from 14.4% in 2024.
The salaries and benefits increase of $5 million was primarily due to an increase in driver compensation and warehouse labor costs driven by additional warehouse and driver team members and the addition of EASO.
Headcount, which includes drivers, warehouse personnel and office employees, was 6,386 as of March 31, 2025 and 5,897 as of March 31, 2024, respectively. The increase in headcount related primarily to additional warehouse and driver team members as well as office employees and drivers due to the EASO transaction.
Depreciation and Amortization
Depreciation and amortization expense decreased to $33 million in 2025 from $38 million in 2024. This expense decrease was related primarily to decreased container depreciation expense resulting from changes made in the third quarter of 2024 to the estimated useful lives of our containers. This expense, as a percentage of revenue, decreased to 3.6% in 2025 from 3.8% in 2024. Depreciation expense includes transportation equipment, technology investments, leasehold improvements, warehouse equipment, office equipment and building improvements.
17
Insurance and Claims
Insurance and claims expense decreased to $11 million in 2025 from $13 million in 2024. This decrease was primarily due to less claim expenses related to auto liability claims in 2025. These expenses, as a percentage of revenue, decreased to 1.2% in 2025 from 1.3% in 2024.
General and Administrative
General and administrative expenses remained consistent at $27 million in both 2025 and 2024. These expenses, as a percentage of revenue, increased to 2.9% in 2025 from 2.7% in 2024.
Gain on Sale of Assets, Net
Net gains on the sale of equipment decreased to $0.1 million in 2025 from $0.5 million in 2024. This decrease resulted from both less units sold and a lower average gain per unit sold in 2025 as compared to 2024.
Other Income (Expense), Net
Other Expense decreased to $2 million in 2025 from $3 million in 2024. Interest expense decreased to $3 million in 2025 from $4 million in 2024 due primarily to lower average debt balances. Interest income remained consistent at $1 million in both 2025 and 2024.
Provision for Income Taxes
The provision for income taxes increased to $8 million in 2025 from $7 million in 2024. We provided for income taxes using an effective rate of 23.7% in 2025 and an effective rate of 21.5% in 2024. The first quarter 2025 effective tax rate exceeded the rate from 2024 as we had a smaller rate benefit related to stock-based compensation in 2025 than in 2024.
LIQUIDITY AND CAPITAL RESOURCES
Our financing and liquidity strategy is to fund operating cash payments and future dividends through cash received from the provision of services, cash on hand, and to a lesser extent, from cash received from the sale of equipment. As of March 31, 2025, we had $113 million of cash. In addition, we had $18 million of restricted investments and $28 million of restricted cash, which are held for payments of long-term liabilities and the deferred cash consideration from the EASO transaction, respectively. We generally fund our purchases of transportation equipment through the issuance of secured, fixed rate Equipment Notes. In prior years, we have funded our business acquisitions from cash on hand. Payments for our other investing activities, such as our capitalized technology investments, have been funded by cash on hand or cash flows from operations. Cash used in financing activities, including the purchase of treasury stock and dividend payments have been funded by cash from operations or cash on hand. We have not historically used our Credit Facility to fund our operating, investing, or financing cash needs, though it is available to fund future cash requirements as needed. Based on past performance and current expectations, we believe cash on hand and cash received from the provision of services, along with other financing sources, will provide us the necessary capital to fund transactions and achieve our planned growth for the next twelve months and the foreseeable future.
Cash provided by operating activities for the three months ended March 31, 2025 was $70 million, which resulted primarily from net income of $27 million, non-cash charges of $50 million partially offset by changes in operating assets and liabilities of $7 million.
Cash provided by operating activities totaled $70 million in 2025 compared to $81 million in 2024. The $11 million decrease in cash flow was primarily due to decreases in non-cash charges of $1 million plus a decrease in the change of assets and liabilities of $10 million.
Net cash used in investing activities for the three months ended March 31, 2025 was $16 million which resulted from capital expenditures of $19 million, partially offset by proceeds from the sale of equipment of $3 million. Capital expenditures of $19 million related primarily to tractors of $13 million, technology investments of $4 million, and warehouse equipment of $2 million.
Capital expenditures increased by approximately $2 million in 2025 as compared to 2024. The 2025 increase was due primarily to increased spend on tractors of $3 million and warehouse equipment of $1 million, partially offset by less spend on containers of $2 million.
In 2025, we estimate capital expenditures will range from $40 million to $50 million. We expect to focus these expenditures on replacements for tractors that have reached the end of their useful life as well as technology investments. We do not plan to purchase containers in 2025.
18
Net cash used in financing activities for the three months ended March 31, 2025 was $40 million which includes repayments of long-term debt of $26 million, purchase of treasury stock of $14 million, dividends paid and cash for stock tendered for payments of withholding taxes of $7 million each, partially offset by the proceeds from the issuance of debt of $14 million. Debt incurred in 2025 was used to fund the purchase of transportation equipment.
The $18 million decrease in cash used in financing activities for 2025 versus 2024 was primarily due to a decrease in the purchase of treasury stock of $12 million, increased proceeds from the issuance of debt of $3 million, a decrease in stock tendered for payments of withholding taxes of $2 million, and a decrease in repayments of long-term debt of $1 million.
As a result of anticipated unfavorable timing differences, primarily related to depreciation and compensation, we expect our cash paid for income taxes in 2025 to exceed our income tax expense.
See Note 6 of the condensed consolidated financial statements for details related to interest rates and commitment fees.
We have standby letters of credit that expire in 2025. As of both March 31, 2025 and December 31, 2024, our letters of credit were $1 million.
At March 31, 2025, and December 31, 2024, we had no borrowings under our respective credit agreements. Our unused and available borrowings were $349 million. We were in compliance with the financial covenants in our credit agreements as of March 31, 2025 and December 31, 2024.
We are continually evaluating the possible effects of current economic conditions and reasonable and supportable economic forecasts in operational cash flows, including the risks of declines in the overall freight market and our customers’ liquidity and ability to pay. We are monitoring working capital on a daily basis and are in frequent communications with our customers.
We do not have any off-balance sheet transactions, arrangements, obligations (including contingent obligations) or liabilities.
CRITICAL ACCOUNTING POLICIES AND ESTIMATES
Refer to the company's 2024 Annual Report on Form 10-K for a complete discussion regarding our critical accounting policies and estimates. As of March 31, 2025, there were no material changes to our critical accounting policies and estimates.
Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
There have been no material changes in our market risk as of March 31, 2025 from that presented in our 2024 10-K.
Item 4. CONTROLS AND PROCEDURES
(a) Disclosure Controls and Procedures. As of March 31, 2025, an evaluation was carried out under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of our disclosure controls and procedures (as such term is defined in Exchange Act Rule 13a-15(e)). Based upon this evaluation, the Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective as of March 31, 2025.
(b) Changes in Internal Control over Financial Reporting. There have been no changes in our internal control over financial reporting (as such term is defined in Exchange Act Rule 13a-15(f)) during the fiscal quarter ended March 31, 2025 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
On October 23, 2024, we entered into an investment agreement with Corporación Interamericana de Logística, S.A. de C.V. and certain associated entities (commonly known as “EASO”), to acquire a controlling interest in EASO. We are currently integrating processes, employees, technologies and operations. Management will continue to evaluate our internal controls over financial reporting as we complete our integration.
PART II. Other Information
Item 1. Legal Proceedings
For information regarding legal proceedings, see Note 7 “Legal Matters” to the Condensed Consolidated Financial Statements included in Item 1. “Financial Statements.”
19
Item 1A. Risk Factors
Investing in shares of our stock involves certain risks, including those identified and described in Part I, Item 1A of our 2024 10-K under the heading “Risk Factors.” When any one or more of these risks materialize from time to time, the Company’s business and stock price can be materially and adversely affected. There have been no material changes to the Company’s risk factors since the 2024 Form 10-K.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
In October 2023, the Board authorized the purchase of up to $250 million of our Class A Common Stock pursuant to a share repurchase program (the “2023 Program”). Under the 2023 Program, the shares may be repurchased in the open market or in privately negotiated transactions, from time to time subject to market and other conditions. The approved share repurchase program does not obligate us to repurchase any dollar amount or number of shares and the program may be modified, suspended or discontinued at any time.
During the three months ended March 31, 2025, we purchased 330,441 shares for approximately $13.8 million under the 2023 Program.
During the three months ended March 31, 2025, we purchased 148,024 shares for approximately $6.5 million related to withholding upon vesting of restricted stock.
The table below includes information on a monthly basis regarding shares purchased under the 2023 Program and the number of shares delivered to us to satisfy the mandatory tax withholding requirement upon vesting of restricted stock during the first quarter of 2025. Shares delivered to us to satisfy the mandatory tax withholding requirement upon vesting of restricted stock do not reduce the repurchase authority under the 2023 Program.
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
|
|
|
|
|
|
|
|
|
Maximum Value of |
|
||||
|
Total |
|
|
|
|
|
Total Number of |
|
|
Shares that May Yet |
|
||||
|
Number of |
|
|
Average |
|
|
Shares Purchased as |
|
|
Be Purchased Under |
|
||||
|
Shares |
|
|
Price Paid |
|
|
Part of Publicly |
|
|
the Program |
|
||||
|
Purchased |
|
|
Per Share |
|
|
Announced Plan |
|
|
(in 000’s) |
|
||||
January 2025 |
|
147,939 |
|
|
$ |
44.17 |
|
|
|
- |
|
|
$ |
155,348 |
|
February 2025 |
|
281,586 |
|
|
$ |
41.95 |
|
|
|
281,586 |
|
|
$ |
143,540 |
|
March 2025 |
|
48,940 |
|
|
$ |
40.95 |
|
|
|
48,855 |
|
|
$ |
141,540 |
|
Total |
|
478,465 |
|
|
$ |
42.54 |
|
|
|
330,441 |
|
|
$ |
141,540 |
|
Item 3. Defaults Upon Senior Securities
Not applicable.
Item 4. Mine Safety Disclosures
Not applicable.
Item 5. Other Information
None of the Company’s directors or officers
20
Item 6. Exhibits INDEX TO EXHIBITS
Number |
Exhibit |
|
|
31.1 |
Rule 13a-14(a) Certification of Phillip D. Yeager, Chief Executive Officer |
|
|
31.2 |
Rule 13a-14(a) Certification of Kevin W. Beth, Chief Financial Officer |
|
|
32.1 |
|
101 |
Interactive data files for Hub Group, Inc.’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2025, formatted in Inline XBRL: (i) the Condensed Consolidated Balance Sheets (unaudited); (ii) the Unaudited Condensed Consolidated Statements of Income; (iii) the Unaudited Condensed Consolidated Statements of Comprehensive Income; (iv) the Unaudited Condensed Consolidated Statements of Stockholders’ Equity; (v) the Unaudited Condensed Consolidated Statements of Cash Flows (unaudited); and (vi) the Notes to Unaudited Condensed Consolidated Financial Statements. XBRL Instance Document-the XBRL Instance Document does not appear in the Interactive Data file because its XBRL tags are embedded within the Inline XBRL document. |
104 |
The cover page from Hub Group, Inc.’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2025 (formatted in Inline XBRL and included in Exhibit 101).
|
21
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
|
HUB GROUP, INC. |
|
|
|
|
DATE: |
May 9, 2025 |
/s/ Kevin W. Beth |
|
Kevin W. Beth |
|
|
Executive Vice President, Chief |
|
|
Financial Officer and Treasurer |
|
|
(Principal Financial Officer) |
|
|
|
|
|
/s/ Brent M. Rhodes |
|
|
Brent M. Rhodes |
|
|
Executive Vice President, Chief |
|
|
Accounting Officer |
|
|
(Principal Accounting Officer) |
|
22