Hub Group, Inc. Reports First Quarter 2024 Results

Highlights:

Diluted earnings per share (EPS) of $0.44 for the quarter
First quarter revenue of $1.0 billion
GAAP Quarterly operating income of $37 million (3.7% of revenue)
Executing on Capital Allocation Plan including completing our stock split, purchasing $26 million of shares during the quarter and paying the company’s first quarterly cash dividend of $0.125 per common share
Ended the quarter with cash and cash equivalents of $195 million
Integration of Final Mile acquisition is ahead of our expectations and contributed $64 million to revenue in the first quarter
Recognized by The Home Depot^®as the 2023 Intermodal Carrier of the Year, Online Big & Bulky Carrier of the Year, and the Dedicated Van Carrier of the Year. Named Outstanding Partnership of the Year by Target^®.

OAK BROOK, Ill., April 25, 2024 (GLOBE NEWSWIRE) -- Hub Group, Inc. (NASDAQ: HUBG) announced first quarter 2024 net income of $27 million and diluted earnings per share of $0.44. Net income for first quarter 2023 was $62 million, or $0.94 per diluted share.

“I am pleased with the team’s performance in the first quarter, resulting in $1.0 billion of revenue, in-line with fourth quarter performance despite normal seasonal declines and challenging market conditions. Our yield management, cost containment and operating efficiency initiatives resulted in operating income margin of 3.7% of revenue, an improvement over the fourth quarter. The team continues to execute on our key strategic priorities including diversification of our business and a focus on cost management that will lead to enhanced earnings stability and growth over the long term,” said Phil Yeager, Hub Group’s Vice Chairman of the Board of Directors, President and Chief Executive Officer.

First Quarter 2024 Results

Consolidated revenue for the first quarter of 2024 was $1.0 billion as compared to $1.2 billion in first quarter 2023. The revenue decline was driven by the impact of the January winter storm, lower volumes in ITS and brokerage, and lower fuel revenue, partially offset by contributions from the Final Mile acquisition. Purchased transportation and warehousing costs as a percent of revenue decreased 1.1% to prior year due to the impact of the Final Mile acquisition and Hub’s cost management efforts as drayage, equipment, rail and repositioning costs decreased in the quarter. As anticipated, salaries and benefits increased from the prior year due to merit and incentive compensation increases as well as headcount associated with the acquisition, excluding the acquisition, legacy headcount declined by 9%. Insurance and claims costs were in-line with prior year as we continue to make safety a top priority. Depreciation and amortization expense increased as compared to prior year driven by the Final Mile acquisition. General and administrative expenses increased $1.7 million as compared to prior year driven by costs associated with the integration of the Final Mile acquisition of $2.7 million, partially offset by cost management efforts. Gain on sale was minimal, whereas the prior year benefitted from strong used truck pricing resulting in a headwind of $3.5 million. Operating income for the first quarter was $37 million (3.7% of revenue) as compared to $78 million (6.8% of revenue) in the prior year. EBITDA (non-GAAP) for the quarter was $87 million.

First quarter Intermodal and Transportation Solutions (“ITS”) Segment revenue was $552 million, as compared to $709 million in the prior year due to soft market conditions, lower accessorial revenue, lower fuel revenue of $32 million, and lower volumes of 10%. ITS operating income decreased to $13 million (2.4% of revenue) due to January storms, as well as start-up costs and a larger than expected auto claim settlement in our Dedicated line of business.

First quarter Logistics Segment revenue was $480 million, an increase of 2.4% compared to $469 million in the prior year, as Final Mile revenue more than offset lower revenue per load in our brokerage business. First quarter operating income was $24 million, or 5.0% of revenue a decline of 1.1% from prior year as positive contribution from the acquisition only partially offset lower brokerage margin.

Capital expenditures for the first quarter of 2024 totaled $18 million as we continued to invest in our tractor fleet, technology, and expansion of our multipurpose warehouse footprint. As of March 31, 2024, we had cash and cash equivalents of $195 million following the acquisition of Final Mile for $261 million in the fourth quarter. In the first quarter, we completed our 2-for-1 stock split, purchased $26 million of HUBG shares and paid the company’s first quarterly cash dividend of $0.125 per common share.

2024 Outlook

We expect our 2024 diluted earnings per share will range from $1.80 to $2.25. We estimate revenue of approximately $4.3 to $4.7 billion for the full year and we continue to project an effective tax rate of approximately 24%. We expect capital expenditures for the full year in the range of $45 million to $65 million.

Non-GAAP Financial Measure

In this press release, we present a certain non-GAAP financial measure. As required by the rules of the Securities and Exchange Commission (“SEC”), we have provided herein a reconciliation of this non-GAAP financial measure to the most directly comparable measures under GAAP, along with an explanation why management believes this non-GAAP financial measure provide relevant and useful information. This non-GAAP financial measure should be viewed in addition to, and not as an alternative to or substitute for, measures determined in accordance with GAAP, and are not necessarily comparable to non-GAAP measures that may be presented by other companies.

CONFERENCE CALL

Hub Group, Inc. will hold a conference call at 5:00 p.m. Eastern Time on April 25, 2024 to discuss our first quarter 2024 results.

Hosting the conference call will be Phil Yeager, Vice Chairman of the Board of Directors, President and CEO. Also participating on the call will be Brian Alexander, Executive Vice President, Chief Operating Officer, and Kevin Beth, Executive Vice President, Chief Financial Officer and Treasurer.

This call is being webcast and can be accessed through the Investors link on Hub Group’s web site at www.hubgroup.com. The webcast is listen-only. Those interested in participating in the question-and-answer session should follow the telephone dial-in instructions below.

To participate in the conference call by telephone, please pre-register at https://register.vevent.com/register/BIa963a2fc05ca4d6e8871ed6c9e9f700e to receive the dial-in number and unique PIN. On the day of the call, dial in approximately ten minutes prior to the scheduled call time and enter the unique participant PIN received during registration. The call will be limited to 60 minutes, including questions and answers. An audio replay will be available through the Investors link on the Company's web site at www.hubgroup.com. This replay will be available for 30 days.

CERTAIN FORWARD-LOOKING STATEMENTS: Statements in this press release 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 Hub Group 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 Hub Group’s business is included in filings it makes with the SEC from time to time, including those discussed under the “Risk Factors” section in Hub Group’s most recently filed periodic reports on Form 10-K and Form 10-Q and subsequent filings. Hub Group assumes no obligation to update any such forward-looking statements.

SOURCE: Hub Group, Inc.

CONTACT- Lorna Williams, Investor Relations, +1-630-481-3632, lornawilliams@hubgroup.com

HUB GROUP, INC.
CONSOLIDATED STATEMENTS OF EARNINGS
(in thousands, except per share amounts)
(unaudited)

		Three Months Ended March 31,
			2024					2023
					% of					% of
		Amount			Revenue		Amount			Revenue
Operating revenue		$	999,493		100.0	%	$	1,152,265		100.0	%

Operating expenses:
	Purchased transportation and warehousing		740,172		74.1	%		866,931		75.2	%
	Salaries and benefits		144,497		14.4	%		137,431		11.9	%
	Depreciation and amortization		38,331		3.8	%		35,449		3.1	%
	Insurance and claims		12,618		1.3	%		12,683		1.1	%
	General and administrative		27,234		2.7	%		25,541		2.2	%
	Gain on sale of assets, net		(498	)	-0.0	%		(3,975	)	-0.3	%
Total operating expenses			962,354		96.3	%		1,074,060		93.2	%

Operating income			37,139		3.7	%		78,205		6.8	%

Other income (expense):
	Interest expense, net		(2,506	)	-0.3	%		(1,593	)	-0.1	%
	Other, net		(170	)	-0.0	%		38		0.0	%
Total other expense, net			(2,676	)	-0.3	%		(1,555	)	-0.1	%

Income before provision for income taxes			34,463		3.4	%		76,650		6.7	%

Provision for income taxes			7,410		0.7	%		14,870		1.3	%

Net income		$	27,053				$	61,780

Earnings per share
	Basic	$	0.44				$	0.95
	Diluted	$	0.44				$	0.94

Basic weighted average number of shares outstanding			61,325					65,098
Diluted weighted average number of shares outstanding			61,666					65,676

HUB GROUP, INC.
CONSOLIDATED BALANCE SHEETS
(in thousands, except share data)

					March 31,			December 31,
						2024			2023
					(unaudited)
ASSETS
	CURRENT ASSETS:
		Cash and cash equivalents			$	195,362		$	187,270
		Accounts receivable trade, net				588,957			600,197
		Accounts receivable other				4,940			3,358
		Prepaid taxes				10,078			17,331
		Prepaid expenses and other current assets				28,621			41,089
				TOTAL CURRENT ASSETS		827,958			849,245

	Restricted investments					20,393			20,763
	Property and equipment, net					777,209			791,692
	Right-of-use assets - operating leases					209,171			210,742
	Right-of-use assets - financing leases					2,152			2,522
	Other intangibles, net					295,943			304,607
	Goodwill					735,460			733,695
	Other non-current assets					22,984			22,781
				TOTAL ASSETS	$	2,891,270		$	2,936,047


LIABILITIES AND STOCKHOLDERS' EQUITY
	CURRENT LIABILITIES:
		Accounts payable trade			$	320,919		$	349,378
		Accounts payable other				18,179			14,471
		Accrued payroll				31,964			21,731
		Accrued other				126,475			121,253
		Lease liability - operating leases				45,775			44,690
		Lease liability - financing leases				1,253			1,579
		Current portion of long term debt				104,035			105,108
				TOTAL CURRENT LIABILITIES		648,600			658,210

	Long term debt					230,775			245,574
	Other non-current liabilities					52,932			55,287
	Lease liability - operating leases					175,481			177,699
	Lease liability - financing leases					823			865
	Deferred taxes					160,443			163,767

	STOCKHOLDERS' EQUITY:
		Preferred stock, $.01 par value; 2,000,000 shares authorized;
			no shares issued or outstanding in 2024 and 2023.			-			-
		Common stock
			Class A: $.01 par value; 97,337,700 shares authorized; 72,303,228
				shares issued in 2024 and 75,524,189 shares issued in 2023;
				61,847,444 shares outstanding in 2024 and 62,200,921 shares outstanding in 2023.		755			755
			Class B: $.01 par value; 662,300 shares authorized;
				574,903 shares issued and outstanding in both 2024 and 2023.		6			6

		Additional paid-in capital				208,932			209,830
		Retained earnings				1,968,361			1,949,110
		Accumulated other comprehensive loss				(137	)		(129	)
		Treasury stock; at cost, 10,455,784 shares in 2024
			and 13,323,268 shares in 2023			(555,701	)		(524,927	)
			TOTAL STOCKHOLDERS' EQUITY			1,622,216			1,634,645
				TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$	2,891,270		$	2,936,047

HUB GROUP, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)

					Three Months Ended March 31,
						2024			2023


Cash flows from operating activities:
	Net income				$	27,053		$	61,780
	Adjustments to reconcile net income
		to net cash provided by operating activities:
			Depreciation and amortization of intangibles and right-of-use assets			49,605			45,810
			Deferred taxes			(3,025	)		4,901
			Non-cash share-based compensation expense			4,040			5,238
			Gain on sale of assets, net			(498	)		(3,975	)
	Changes in operating assets and liabilities, net of acquisitions:
			Restricted investments			370			(1,122	)
			Accounts receivable, net			9,652			18,951
			Prepaid taxes			7,253			7,605
			Prepaid expenses and other current assets			12,468			13,617
			Other non-current assets			(880	)		(653	)
			Accounts payable			(24,755	)		(17,705	)
			Accrued expenses			11,462			(40,065	)
			Non-current liabilities			(12,229	)		(5,007	)
				Net cash provided by operating activities		80,516			89,375

Cash flows from investing activities:
	Proceeds from sale of equipment					3,442			10,172
	Purchases of property and equipment					(17,524	)		(26,845	)
	Acquisitions, net of cash acquired					-			108
				Net cash used in investing activities		(14,082	)		(16,565	)

Cash flows from financing activities:
	Repayments of long term debt					(27,422	)		(29,237	)
	Purchase of treasury stock					(25,756	)		-
	Stock withheld for payments of withholding taxes					(8,486	)		(7,606	)
	Dividends paid					(7,626	)		-
	Finance lease payments					(606	)		(888	)
	Proceeds from issuance of debt					11,550			20,831
				Net cash used in financing activities		(58,346	)		(16,900	)


	Effect of exchange rate changes on cash and cash equivalents					4			18

Net increase in cash and cash equivalents						8,092			55,928
Cash and cash equivalents beginning of period						187,270			286,642
Cash and cash equivalents end of period					$	195,362		$	342,570

HUB GROUP, INC.
FINANCIAL INFORMATION BY SEGMENT
(in thousands)
(unaudited)

	Three Months
	Ended March 31,
Operating Revenue		2024			2023
Intermodal and Transportation Services	$	552,033		$	709,249
Logistics		480,224			469,141
Inter-segment eliminations		(32,764	)		(26,125	)
Total operating revenue	$	999,493		$	1,152,265


	Three Months
	Ended March 31,
Operating Income		2024			2023
Intermodal and Transportation Services	$	13,031		$	49,379
Logistics		24,108			28,826
Total operating income	$	37,139		$	78,205


	Three Months
	Ended March 31,
Depreciation and Amortization		2024			2023
Intermodal and Transportation Services	$	27,049		$	27,142
Logistics		11,282			8,307
Total depreciation and amortization	$	38,331		$	35,449

RECONCILIATION OF NET INCOME TO EBITDA (1)
(in thousands)
(unaudited)

	Three Months
	Ended March 31,

		2024		2023

Net Income	$	27,053	$	61,780

Interest Expense, net		2,506		1,593

Depreciation and Amortization (2)		49,605		45,810

Provision for Income Taxes		7,410		14,870

EBITDA	$	86,574	$	124,053

(1) By providing this non-GAAP measure of EBITDA, management intends to provide investors with a meaningful, consistent comparison of the Company’s profitability for the periods presented.

(2) Includes depreciation of property and equipment, amortization of intangible assets and amortization of right-of-use assets.