PART I. Financial Information [Financial Statements](index=3&type=section&id=Item%201.%20Financial%20Statements) This section presents the unaudited condensed consolidated financial statements for Hub Group, Inc. as of June 30, 2025, and for the three and six-month periods then ended It includes the Balance Sheets, Statements of Income, Comprehensive Income, Stockholders' Equity, and Cash Flows, along with accompanying notes detailing key accounting policies, acquisitions, segment performance, and other financial matters [Condensed Consolidated Balance Sheets](index=3&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) As of June 30, 2025, Total Assets were **$2.80 billion**, a slight decrease from **$2.87 billion** at year-end 2024 Total Liabilities decreased to **$1.07 billion** from **$1.18 billion**, while Total Stockholders' Equity increased to **$1.73 billion** from **$1.69 billion** over the same period Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | **Total Current Assets** | $745,439 | $768,329 | | **Total Assets** | **$2,800,051** | **$2,868,343** | | **Total Current Liabilities** | $525,928 | $579,481 | | **Total Liabilities** | $1,073,843 | $1,176,392 | | **Total Stockholders' Equity** | **$1,726,208** | **$1,691,951** | [Unaudited Condensed Consolidated Statements of Income](index=4&type=section&id=Unaudited%20Condensed%20Consolidated%20Statements%20of%20Income) For the second quarter of 2025, the company reported operating revenue of **$905.6 million** and net income of **$25.0 million**, compared to **$986.5 million** and **$29.0 million** in the prior year period, respectively Diluted EPS for the quarter was **$0.42**, down from **$0.47** year-over-year For the six-month period, revenue was **$1.82 billion** with a net income of **$52.2 million**, compared to **$1.99 billion** and **$56.1 million** in the first half of 2024 Q2 Financial Performance (in thousands, except per share amounts) | Metric | Q2 2025 | Q2 2024 | Change | | :--- | :--- | :--- | :--- | | Operating Revenue | $905,648 | $986,495 | -8.2% | | Operating Income | $34,348 | $39,528 | -13.1% | | Net Income | $25,031 | $29,015 | -13.7% | | Diluted EPS | $0.42 | $0.47 | -10.6% | H1 Financial Performance (in thousands, except per share amounts) | Metric | H1 2025 | H1 2024 | Change | | :--- | :--- | :--- | :--- | | Operating Revenue | $1,820,864 | $1,985,988 | -8.3% | | Operating Income | $71,687 | $76,667 | -6.5% | | Net Income | $52,226 | $56,068 | -6.8% | | Diluted EPS | $0.86 | $0.91 | -5.5% | [Unaudited Condensed Consolidated Statements of Cash Flows](index=7&type=section&id=Unaudited%20Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) For the six months ended June 30, 2025, net cash provided by operating activities was **$131.5 million**, a decrease from **$150.5 million** in the prior year period Net cash used in investing activities was **$26.4 million**, primarily for property and equipment purchases Net cash used in financing activities was **$68.4 million**, driven by debt repayments, treasury stock purchases, and dividend payments Cash Flow Summary - Six Months Ended June 30 (in thousands) | Cash Flow Activity | 2025 | 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $131,536 | $150,465 | | Net cash used in investing activities | ($26,424) | ($21,804) | | Net cash used in financing activities | ($68,441) | ($95,664) | | **Net increase in cash** | **$36,653** | **$32,977** | [Notes to Unaudited Condensed Consolidated Financial Statements](index=8&type=section&id=Notes%20to%20Unaudited%20Condensed%20Consolidated%20Financial%20Statements) The notes provide details on shareholder activities, acquisitions, segment performance, and financing The company declared and paid quarterly dividends of **$0.125 per share** The acquisition of a **51%** stake in EASO for approximately **$55 million** is detailed, with purchase accounting still preliminary The company operates two segments: Intermodal and Transportation Solutions (ITS) and Logistics A new five-year, **$450 million** credit agreement was entered into in June 2025 A subsequent event notes an agreement to acquire assets from Marten Transport for **$51.8 million** - The Board declared and paid two quarterly cash dividends of **$0.125 per share** during the first half of 2025[27](index=27&type=chunk)[28](index=28&type=chunk) - In H1 2025, the company repurchased **330,441 shares** for approximately **$13.8 million** under its share repurchase program[29](index=29&type=chunk) - On October 23, 2024, the company acquired a **51%** controlling interest in EASO, a Mexican logistics provider, for total consideration of approximately **$55 million** The initial purchase price accounting is still incomplete[31](index=31&type=chunk)[32](index=32&type=chunk)[34](index=34&type=chunk) - On July 22, 2025, the company entered into an agreement to acquire certain intermodal equipment and contracts from Marten Transport, Ltd for **$51.8 million** in cash, with the transaction expected to close in Q3[64](index=64&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=16&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses the company's performance, highlighting an **8%** decrease in consolidated revenue for both Q2 and H1 2025 compared to the prior year, driven by price declines, mix changes, and lower volumes in certain business lines The Intermodal and Transportation Solutions (ITS) segment saw a revenue decrease but an operating income increase due to cost controls The Logistics segment experienced declines in both revenue and operating income, impacted by lower brokerage margins and volumes The company maintains a strong liquidity position with **$137 million** in cash and **$449 million** available under its new credit facility [Executive Summary](index=22&type=section&id=Executive%20Summary) Hub Group is a North American supply chain solutions provider with two reportable segments: Intermodal and Transportation Solutions (ITS) and Logistics The ITS segment combines rail with local trucking, utilizing approximately **50,000 containers** and **2,400 tractors** The Logistics segment offers non-asset-based services like transportation management, brokerage, and final mile delivery The company serves a diversified customer base, with its top 50 customers representing **68%** of revenue in H1 2025 - The company operates through two primary segments: Intermodal and Transportation Solutions (ITS) and Logistics[68](index=68&type=chunk) - The company's top 50 customers account for approximately **68%** of revenue for the first six months of 2025 One customer represented **16%** of total operating revenue during this period[71](index=71&type=chunk)[72](index=72&type=chunk) [Results of Operations](index=24&type=section&id=Results%20of%20Operations) For Q2 2025, consolidated revenue fell **8%** to **$906 million**, and operating income decreased **13%** to **$34.3 million** ITS revenue declined **6%** but operating income grew **6%** due to cost controls Logistics revenue fell **12%** and operating income decreased **23%** due to lower brokerage margins For H1 2025, consolidated revenue was down **8%** to **$1.82 billion**, while operating income decreased **7%** to **$71.7 million** Key expense drivers included lower purchased transportation costs, offset by slightly higher salaries and benefits, while depreciation decreased due to changes in container useful life estimates Q2 2025 vs Q2 2024 Segment Performance (in thousands) | Segment | Revenue Q2 2025 | Revenue Q2 2024 | % Change | Operating Income Q2 2025 | Operating Income Q2 2024 | % Change | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | ITS | $528,184 | $561,033 | -5.8% | $14,407 | $13,639 | +5.6% | | Logistics | $404,310 | $459,088 | -11.9% | $19,941 | $25,889 | -23.0% | H1 2025 vs H1 2024 Segment Performance (in thousands) | Segment | Revenue H1 2025 | Revenue H1 2024 | % Change | Operating Income H1 2025 | Operating Income H1 2024 | % Change | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | ITS | $1,058,206 | $1,113,066 | -4.9% | $28,457 | $26,670 | +6.7% | | Logistics | $815,311 | $939,312 | -13.2% | $43,230 | $49,997 | -13.5% | - Purchased transportation and warehousing costs decreased **10%** in H1 2025, falling to **72.2%** of revenue from **73.9%** in H1 2024, due to lower rail, drayage, and fuel costs[97](index=97&type=chunk)[98](index=98&type=chunk) - Depreciation and amortization expense decreased to **$65 million** in H1 2025 from **$76 million** in H1 2024, primarily due to changes in the estimated useful lives of containers made in Q3 2024[100](index=100&type=chunk) [Liquidity and Capital Resources](index=29&type=section&id=Liquidity%20and%20Capital%20Resources) The company maintains a strong liquidity position, with **$137 million** in cash and cash equivalents as of June 30, 2025 Cash from operations for the first six months was **$132 million** Capital expenditures are projected to be between **$40 million** and **$50 million** for the full year 2025, focused on tractor replacements and technology The company has **$449 million** available under its new credit facility and remains in compliance with all debt covenants - As of June 30, 2025, the company had **$137 million** in cash and **$449 million** in unused and available borrowings under its credit agreement[107](index=107&type=chunk)[116](index=116&type=chunk) - Cash provided by operating activities was **$132 million** for the first six months of 2025, compared to **$150 million** in 2024[108](index=108&type=chunk)[109](index=109&type=chunk) - Estimated capital expenditures for 2025 are expected to range from **$40 million** to **$50 million**, primarily for tractor replacements and technology investments[112](index=112&type=chunk) [Quantitative and Qualitative Disclosures about Market Risk](index=23&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) This section states that there have been no material changes in the company's market risk profile as of June 30, 2025, compared to what was disclosed in its 2024 Annual Report on Form 10-K - There have been no material changes in market risk as of June 30, 2025, from the information presented in the 2024 10-K[119](index=119&type=chunk) [Controls and Procedures](index=23&type=section&id=Item%204.%20Controls%20and%20Procedures) Management, including the CEO and CFO, evaluated the company's disclosure controls and procedures and concluded they were effective as of June 30, 2025 There were no material changes to internal control over financial reporting during the quarter The company noted the ongoing integration of the recently acquired EASO business - The CEO and CFO concluded that the company's disclosure controls and procedures were effective as of June 30, 2025[120](index=120&type=chunk) - No changes in internal control over financial reporting occurred during the quarter that have materially affected, or are reasonably likely to materially affect, internal controls[121](index=121&type=chunk) - The company is currently integrating the processes, employees, and operations of the acquired EASO business and will continue to evaluate internal controls as the integration progresses[122](index=122&type=chunk) PART II. Other Information [Legal Proceedings](index=24&type=section&id=Item%201.%20Legal%20Proceedings) The company is involved in various claims and litigation arising from the normal course of business Management does not believe these matters will have a material adverse effect on the company's financial position, results, or cash flows - The company is involved in routine legal claims and litigation, which are not expected to have a material adverse effect on its financial condition[63](index=63&type=chunk)[123](index=123&type=chunk) [Risk Factors](index=24&type=section&id=Item%201A.%20Risk%20Factors) There have been no material changes to the company's risk factors since the filing of its 2024 Annual Report on Form 10-K - No material changes have been made to the Company's risk factors since the 2024 Form 10-K was filed[123](index=123&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=24&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company did not repurchase any shares under its publicly announced 2023 share repurchase program during the three months ended June 30, 2025 However, **3,661 shares** were purchased for approximately **$0.1 million** to satisfy tax withholding obligations upon the vesting of restricted stock Approximately **$141.5 million** remains authorized for repurchase under the program - During Q2 2025, no shares were purchased under the 2023 share repurchase program For the six months ended June 30, 2025, **330,441 shares** were purchased for **$13.8 million**[125](index=125&type=chunk) Share Repurchase Activity - Q2 2025 | Month | Total Shares Purchased | Average Price Paid Per Share | Shares Purchased as Part of Publicly Announced Plan | Maximum Value of Shares that May Yet Be Purchased (in 000's) | | :--- | :--- | :--- | :--- | :--- | | April 2025 | 3,574 | $37.18 | - | $141,540 | | May 2025 | - | - | - | $141,540 | | June 2025 | 87 | $32.78 | - | $141,540 | | **Total** | **3,661** | **$37.07** | **-** | **$141,540** | - The shares purchased during the quarter were to satisfy mandatory tax withholding requirements upon vesting of restricted stock and do not reduce the repurchase authority under the 2023 Program[127](index=127&type=chunk) [Other Information](index=24&type=section&id=Item%205.%20Other%20Information) On June 11, 2025, Phillip D Yeager, the President and Chief Executive Officer, adopted a Rule 10b5-1 trading plan for the potential sale of up to **32,000 shares** of the company's common stock The plan is scheduled to expire on January 26, 2026 - President and CEO Phillip D Yeager adopted a Rule 10b5-1 trading plan on June 11, 2025, for the potential sale of up to **32,000 shares** of common stock[131](index=131&type=chunk) [Exhibits](index=25&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed with the quarterly report, which include CEO and CFO certifications as required by the Sarbanes-Oxley Act (Rules 13a-14(a) and Section 1350) and interactive data files in Inline XBRL format - Exhibits filed include: - CEO Certification (Rule 13a-14(a)) - CFO Certification (Rule 13a-14(a)) - CEO and CFO Section 1350 Certifications - Interactive Data Files (Inline XBRL)[132](index=132&type=chunk)

Core Insights - Hub Group reported Q2 2025 Non-GAAP EPS of $0.45, exceeding analyst expectations by $0.01, while GAAP revenue of $905.6 million fell short of estimates by $13.2 million, marking an 8% decline year-over-year [1][2] - The company emphasized ongoing margin discipline amid lower customer demand, with cost initiatives helping to buffer profitability despite decreased GAAP operating income and net income [1][5] Financial Performance - Non-GAAP EPS decreased by 4.3% from $0.47 in Q2 2024 to $0.45 in Q2 2025 [2] - GAAP revenue fell from $986.5 million in Q2 2024 to $905.6 million in Q2 2025, an 8.2% decline [2] - Non-GAAP operating income decreased by 6.6% to $36.9 million, while Non-GAAP net income declined by 6.9% to $27.0 million [2] - Adjusted EBITDA for Q2 2025 was reported at $85.1 million [2] Business Overview - Hub Group provides logistics solutions primarily through its Intermodal and Transportation Solutions (ITS) and Logistics segments, focusing on sustainable and cost-effective transportation [3] - The ITS segment combines rail and trucking to efficiently move containerized freight, while the Logistics segment includes freight brokerage and managed transportation services [3] Strategic Focus - The company's strategy includes expanding intermodal capacity, enhancing logistics offerings, pursuing selective acquisitions, upgrading technology, and emphasizing sustainability [4] - Investments in technology and energy-efficient logistics are aimed at attracting and retaining major customers [4] Segment Performance - ITS segment revenue declined by 5.9% to $528 million, despite a 2% increase in intermodal freight volumes, due to weak pricing and lower fuel revenue [6] - The Logistics segment's GAAP revenue dropped to $404 million from $459 million, impacted by lower volume and revenue per load, particularly in the brokerage business [7] Capital Deployment and Investments - Hub Group announced an agreement to acquire assets from Marten Intermodal to expand its reach, while previous acquisitions continue to support geographic and customer diversification [8] - The company is focused on technology investments to enhance operational efficiency, with reduced capital expenditure guidance for the year set at $40 million to $50 million [8] Sustainability Efforts - Hub Group maintains its commitment to sustainability as an EPA SmartWay® Transport Partner, with intermodal shipping appealing to customers seeking lower carbon footprints [9] Future Guidance - For fiscal 2025, management expects revenue between $3.6 billion and $3.8 billion, with diluted EPS projected between $1.75 and $2.25 [10] - The effective tax rate is estimated at 24.5% for FY2025, with a conservative outlook on near-term demand and no detailed segment volume or pricing forecasts provided [11]

Core Viewpoint - Hub Group reported quarterly earnings of $0.45 per share, exceeding the Zacks Consensus Estimate of $0.44 per share, but down from $0.47 per share a year ago, indicating a slight decline in year-over-year performance [1][2] Financial Performance - The company posted revenues of $905.65 million for the quarter ended June 2025, missing the Zacks Consensus Estimate by 1.02% and down from $986.49 million in the same quarter last year [2] - Over the last four quarters, Hub Group has surpassed consensus EPS estimates three times but has not beaten consensus revenue estimates [2] Stock Performance - Hub Group shares have declined approximately 21.9% since the beginning of the year, contrasting with the S&P 500's gain of 8.2% [3] - The current Zacks Rank for Hub Group is 3 (Hold), indicating expected performance in line with the market in the near future [6] Earnings Outlook - The current consensus EPS estimate for the upcoming quarter is $0.52 on revenues of $972.83 million, and for the current fiscal year, it is $1.94 on revenues of $3.79 billion [7] - The trend of estimate revisions for Hub Group was mixed ahead of the earnings release, which may change following the recent report [6] Industry Context - The Transportation - Services industry, to which Hub Group belongs, is currently ranked in the bottom 9% of over 250 Zacks industries, suggesting a challenging environment for stock performance [8]

Financial Data and Key Metrics Changes - Hub Group reported revenue for Q2 2025 at $906 million, an 8% decrease year-over-year and a 1% sequential decline [12] - Adjusted operating income decreased by 7% year-over-year, with an adjusted operating income margin of 4.1%, which is a 10 basis point increase from the previous year [16] - Adjusted EPS for the quarter was $0.45, down from $0.47 in Q2 2024 [17] Business Line Data and Key Metrics Changes - Intermodal Transportation Services (ITS) revenue declined 6% to $528 million, with intermodal volume growth of 2% offset by lower revenue per load and dedicated revenue [12][17] - Logistics segment revenue decreased 12% to $404 million, primarily due to lower brokerage load counts and revenue per load [9][13] - Final Mile division showed significant growth, onboarding $150 million of net new annualized revenue in Q3 and Q4 [10][45] Market Data and Key Metrics Changes - Intermodal volume increased 2% year-over-year, with local East down 1%, local West down 2%, TransCon down 6%, and Mexico up over 300% [7] - The company anticipates strong near-term demand trends off the West Coast, indicating an early peak season [6][20] Company Strategy and Development Direction - Hub Group is focused on executing a strategy of delivering best-in-class services while continuously improving productivity and investing in high-return initiatives [5] - The acquisition of Martin Transport's refrigerated intermodal fleet is aimed at enhancing scale and capacity in a high-growth segment [5][26] - The company plans to continue deploying capital towards long-term growth opportunities and has raised its cost reduction target to $50 million [6][24] Management's Comments on Operating Environment and Future Outlook - Management noted that the second quarter faced challenges due to tariff-driven adjustments and slower import volumes, but contractual services performed well [4][5] - There is uncertainty regarding the duration of elevated import demand, but management believes they are well-positioned to support customers [7][20] - The company expects full-year EPS in the range of $1.80 to $2.05 and revenue between $3.6 billion to $3.8 billion [18][19] Other Important Information - The merger between Union Pacific and Norfolk Southern is seen as a potential growth catalyst for the intermodal industry, with opportunities for improved service and asset utilization [26][27] - Hub Group's strong balance sheet provides flexibility for value-add acquisitions and investments across business lines [24][25] Q&A Session Summary Question: How significant is the potential for intermodal share gains? - Management indicated that over 30% of their business currently moves in a transcontinental fashion, and they see significant opportunities to improve service and reduce transit times, which could unlock additional value [30][31] Question: How does the company view the guidance for the second half of the year? - Management expects the second half to show similar quarters, with intermodal volumes anticipated to return to a seasonal pattern, supported by new business wins in Final Mile [32][34] Question: What is the impact of the new business onboarding on profitability? - The Final Mile wins are expected to be accretive, with significant revenue contributions anticipated towards the end of Q3 and into Q4 [45][49] Question: How does the company plan to manage costs while preparing for market recovery? - Management emphasized the importance of maintaining a competitive cost structure while identifying additional cost-saving opportunities, ensuring flexibility to respond to market changes [66][67] Question: What is the outlook for the Dedicated segment? - The Dedicated segment faced challenges due to lost sites and equipment count reductions, but management is optimistic about upcoming onboardings and service quality improvements [68][70]

Hub Group Overview - Hub Group is a leading supply chain solutions provider, offering Intermodal transportation and Logistics services[7] - The company's FY 2024 total revenue was $4 billion, with Intermodal & Transportation Solutions contributing 45% and Logistics contributing 55%[14] - In FY 2024, adjusted operating income was $157 million, with Intermodal & Transportation Solutions contributing 62% and Logistics contributing 38%[14] Q2 2025 Performance - Hub Group's Q2 2025 revenue was $906 million[33] - Adjusted diluted earnings per share (EPS) for Q2 2025 was $0.45[33] - Adjusted operating income for Q2 2025 was $37 million, representing 4.1% of revenue[33] - Intermodal & Transportation Solutions revenue in Q2 2025 was $528 million, with operating income of $14 million (2.7% of revenue)[40, 41] - Logistics revenue in Q2 2025 was $404 million, with adjusted operating income of $23 million (5.6% of revenue)[46, 47] Financial Position - As of June 30, 2025, Hub Group had a cash balance of $164 million[33, 54] - Net Debt/Adjusted EBITDA was 0.3x, well below the leverage target of 0.75 to 1.25x[33] 2025 Guidance - Hub Group projects 2025 revenue to be between $3.6 to $3.8 billion[67] - The company anticipates 2025 EPS to be between $1.80 to $2.05 per share[67]

[Hub Group Second Quarter 2025 Financial and Operational Highlights](index=1&type=section&id=Hub%20Group%20Second%20Quarter%202025%20Financial%20and%20Operational%20Highlights) Hub Group reported an 8% revenue decline to $906 million in Q2 2025, with GAAP net income of $25 million, amidst market challenges [Q2 2025 Performance Summary](index=1&type=section&id=Q2%202025%20Performance%20Summary) Hub Group reported a challenging second quarter in 2025, with consolidated revenue declining 8% year-over-year to $906 million due to lower revenue per unit and sub-seasonal demand Q2 2025 Financial Performance | Financial Metric | Q2 2025 | Q2 2024 | Change | | :--- | :--- | :--- | :--- | | **Revenue** | $905.6M | $986.5M | -8.2% | | **Operating Income (GAAP)** | $34.3M | $39.5M | -13.1% | | **Adjusted Operating Income (Non-GAAP)** | $36.9M | $39.5M | -6.6% | | **Net Income (GAAP)** | $25.0M | $29.0M | -13.8% | | **Adjusted Net Income (Non-GAAP)** | $27.0M | $29.0M | -6.2% | | **Diluted EPS (GAAP)** | $0.42 | $0.47 | -$0.05 | | **Adjusted EPS (Non-GAAP)** | $0.45 | $0.47 | -$0.02 | - CEO Phil Yeager highlighted the company's focus on customer service, productivity improvements, and cost-saving initiatives amidst a challenging market, noting progress in intermodal margin performance and new customer wins in the Final Mile business[3](index=3&type=chunk) - The company maintained a strong balance sheet with a **Net Debt/EBITDA LTM (non-GAAP) ratio of 0.3x** as of June 30, 2025, which is below the target range of 0.75 to 1.25x[6](index=6&type=chunk)[8](index=8&type=chunk) - Year-to-date, Hub Group returned **$29 million to shareholders**, consisting of **$15 million in dividend payments** and **$14 million in stock repurchases**[8](index=8&type=chunk)[10](index=10&type=chunk) [Segment Performance](index=1&type=section&id=Segment%20Performance) This chapter details the financial performance of Hub Group's Intermodal and Transportation Solutions and Logistics segments in Q2 2025 [Intermodal and Transportation Solutions (ITS) Segment](index=1&type=section&id=Intermodal%20and%20Transportation%20Solutions%20%28ITS%29%20Segment) The ITS segment's revenue declined to $528 million due to unfavorable intermodal mix, pricing, and fuel impacts, though operating income slightly increased to $14.4 million ITS Segment Performance | ITS Segment | Q2 2025 | Q2 2024 | Change | | :--- | :--- | :--- | :--- | | **Revenue** | $528M | $561M | -5.9% | | **Operating Income** | $14.4M | $13.6M | +5.9% | | **Operating Margin** | 2.7% | 2.4% | +30 bps | [Logistics Segment](index=2&type=section&id=Logistics%20Segment) The Logistics segment's revenue decreased to $404 million due to lower volume and unprofitable business exits, resulting in an 11.5% drop in adjusted operating income Logistics Segment Performance | Logistics Segment | Q2 2025 | Q2 2024 | Change | | :--- | :--- | :--- | :--- | | **Revenue** | $404M | $459M | -12.0% | | **Operating Income (GAAP)** | $20M | $26M | -23.1% | | **Adjusted Operating Income (Non-GAAP)** | $23M | $26M | -11.5% | | **Adjusted Operating Margin** | 5.6% | 5.7% | -10 bps | [Company Outlook & Strategic Developments](index=2&type=section&id=Company%20Outlook%20%26%20Strategic%20Developments) This chapter outlines Hub Group's full-year 2025 financial guidance and its strategic support for the proposed Union Pacific and Norfolk Southern merger [2025 Full Year Outlook](index=2&type=section&id=2025%20Full%20Year%20Outlook) Hub Group projects full-year 2025 diluted EPS between $1.80 and $2.05, with revenue expected to range from $3.6 billion to $3.8 billion 2025 Full Year Guidance | 2025 Full Year Guidance | Range | | :--- | :--- | | **Diluted EPS** | $1.80 - $2.05 | | **Revenue** | $3.6B - $3.8B | | **Capital Expenditures** | $40M - $50M | | **Effective Tax Rate** | ~24.5% | [Proposed Union Pacific and Norfolk Southern Combination](index=2&type=section&id=Proposed%20Union%20Pacific%20and%20Norfolk%20Southern%20Combination) Hub Group strongly supports the proposed merger of Union Pacific and Norfolk Southern, anticipating it will create the first transcontinental railroad and accelerate long-term growth - The company is supportive of the plan to form America's first transcontinental railroad, viewing the transaction as a catalyst that would accelerate its long-term growth opportunity[11](index=11&type=chunk) - Key expected benefits of the merger include: - Removal of friction in gateways - Reduced transit times - Access to new markets - Increased competition with truck volume through new single-line service[11](index=11&type=chunk) [Financial Statements](index=3&type=section&id=Financial%20Statements) This chapter presents Hub Group's consolidated statements of earnings, balance sheets, and cash flows for the reported periods [Consolidated Statements of Earnings](index=3&type=section&id=Consolidated%20Statements%20of%20Earnings) Q2 2025 operating revenue decreased to $905.6 million, with net income attributable to Hub Group falling to $25.2 million, or $0.42 per diluted share Three Months Ended June 30 (in thousands) | Three Months Ended June 30 (in thousands) | 2025 | 2024 | | :--- | :--- | :--- | | **Operating revenue** | $905,648 | $986,495 | | **Operating income** | $34,348 | $39,528 | | **Net income attributable to Hub Group** | $25,247 | $29,015 | | **Diluted EPS** | $0.42 | $0.47 | Six Months Ended June 30 (in thousands) | Six Months Ended June 30 (in thousands) | 2025 | 2024 | | :--- | :--- | :--- | | **Operating revenue** | $1,820,864 | $1,985,988 | | **Operating income** | $71,687 | $76,667 | | **Net income attributable to Hub Group** | $52,095 | $56,068 | | **Diluted EPS** | $0.86 | $0.91 | [Consolidated Balance Sheets](index=5&type=section&id=Consolidated%20Balance%20Sheets) As of June 30, 2025, total assets were $2.80 billion, with cash increasing to $137.0 million, and total stockholders' equity growing to $1.73 billion Balance Sheet Items (in thousands) | Balance Sheet Items (in thousands) | June 30, 2025 | Dec 31, 2024 | | :--- | :--- | :--- | | **Total Current Assets** | $745,439 | $768,329 | | **Total Assets** | $2,800,051 | $2,868,343 | | **Total Current Liabilities** | $525,928 | $579,481 | | **Total Liabilities** | $1,073,843 | $1,176,392 | | **Total Stockholders' Equity** | $1,726,208 | $1,691,951 | [Consolidated Statements of Cash Flows](index=6&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) Cash from operating activities for the first six months of 2025 was $131.5 million, with $68.4 million used in financing activities, including $13.8 million in stock repurchases Six Months Ended June 30 (in thousands) | Six Months Ended June 30 (in thousands) | 2025 | 2024 | | :--- | :--- | :--- | | **Net cash provided by operating activities** | $131,536 | $150,465 | | **Net cash used in investing activities** | $(26,424) | $(21,804) | | **Net cash used in financing activities** | $(68,441) | $(95,664) | | **Cash and cash equivalents end of period** | $163,601 | $220,247 | [Non-GAAP Financial Measures & Reconciliations](index=8&type=section&id=Non-GAAP%20Financial%20Measures%20%26%20Reconciliations) This chapter provides reconciliations of GAAP to non-GAAP earnings and calculates the net debt to Adjusted EBITDA leverage ratio [Reconciliation of GAAP to Non-GAAP Earnings](index=9&type=section&id=Reconciliation%20of%20GAAP%20to%20Non-GAAP%20Earnings) For Q2 2025, a $2.6 million pre-tax adjustment for vendor settlements increased GAAP diluted EPS of $0.42 to a non-GAAP adjusted EPS of $0.45 Q2 2025 Reconciliation (in millions, except per share) | Q2 2025 Reconciliation (in millions, except per share) | Pre-Tax | After-Tax | Per Share | | :--- | :--- | :--- | :--- | | **GAAP Earnings** | $32.9 | $25.0 | $0.42 | | Vendor settlements | $2.6 | $2.0 | $0.03 | | **Non-GAAP Adjusted Earnings** | $35.5 | $27.0 | $0.45 | - The vendor settlements are related to disputes arising from the company's network alignment consolidation activities[39](index=39&type=chunk) [Reconciliation of Net Income to EBITDA and Net Debt / EBITDA Leverage](index=9&type=section&id=Reconciliation%20of%20Net%20Income%20to%20EBITDA%20and%20Net%20Debt%20%2F%20EBITDA%20Leverage) Adjusted EBITDA for the last twelve months ending Q2 2025 was $343.4 million, resulting in a low Net Debt / Adjusted EBITDA LTM ratio of 0.3x LTM Ended Q2 2025 (in thousands) | LTM Ended Q2 2025 (in thousands) | Amount | | :--- | :--- | | **Net Income** | $100,200 | | Interest Expense, net | $7,312 | | Depreciation and Amortization | $187,910 | | Provision for Income Taxes | $28,890 | | **EBITDA** | $324,312 | | Adjustments (Network, Transaction, etc.) | $19,039 | | **Adjusted EBITDA** | $343,351 | - The **Net Debt / Adjusted EBITDA LTM ratio** for Q2 2025 was **0.3x**, indicating low financial leverage[44](index=44&type=chunk)

Core Insights - Hub Group, Inc. reported a net income of $25 million for Q2 2025, with diluted earnings per share (EPS) of $0.42, reflecting a decrease in adjusted net income of 6.2% from the previous year [2][4][8] - The company is focused on improving productivity and customer service while navigating challenging market conditions, with a positive outlook on long-term growth opportunities [3][11] Financial Performance - Consolidated revenue for Q2 2025 was $906 million, an 8% decrease from $986 million in Q2 2024, driven by lower revenue per unit in intermodal and brokerage, decreased fuel revenue, and sub-seasonal demand [4][8] - Adjusted operating income for Q2 2025 was $37 million, or 4.1% of revenue, compared to $39.5 million, or 4.0% of revenue, in the prior year [6][9] - The company returned $29 million to shareholders year-to-date through dividends and stock repurchases [10][12] Segment Performance - The Intermodal and Transportation Solutions (ITS) segment generated revenue of $528 million in Q2 2025, down from $561 million in the prior year, with operating income of $14.4 million [7][9] - The Logistics segment reported revenue of $404 million, down from $459 million in the prior year, attributed to lower volume and revenue per load in the brokerage business [8][9] Cost Management - Purchased transportation and warehousing costs were $656 million, a 10% decrease from the prior year, while salaries and benefits increased by 1% to $143 million [5][6] - General and administrative expenses rose due to vendor settlements, while depreciation and amortization costs decreased by 14% to $32 million [5][6] Strategic Initiatives - Hub Group announced an agreement to acquire certain assets from Marten Intermodal, reflecting its opportunistic capital deployment strategy [3][8] - The proposed combination of Union Pacific and Norfolk Southern is viewed as a catalyst for growth, enhancing intermodal transportation capabilities [11] 2025 Outlook - The company expects diluted EPS for 2025 to range from $1.80 to $2.05, with estimated revenue between $3.6 billion and $3.8 billion [12]

Company Overview - Hub Group (HUBG) is expected to report a year-over-year decline in earnings, with a projected EPS of $0.44, reflecting a decrease of 6.4% compared to the previous year [3] - Revenues are anticipated to be $914.96 million, down 7.3% from the same quarter last year [3] Earnings Expectations - The consensus EPS estimate has been revised 2.71% lower in the last 30 days, indicating a reassessment by analysts [4] - A positive Earnings ESP of +0.39% suggests that analysts have recently become more optimistic about Hub Group's earnings prospects, despite the company holding a Zacks Rank of 4, which complicates predictions of an earnings beat [12] Historical Performance - In the last reported quarter, Hub Group exceeded the expected EPS of $0.42 by delivering $0.44, resulting in a surprise of +4.76% [13] - Over the past four quarters, the company has beaten consensus EPS estimates two times [14] Industry Context - C.H. Robinson Worldwide (CHRW), another player in the transportation services industry, is expected to post earnings of $1.17 per share, indicating a year-over-year change of +1.7% [18] - C.H. Robinson's revenues are projected to be $4.22 billion, down 5.9% from the previous year [19]

Core Viewpoint - Marten Transport, Ltd. has entered into an agreement to sell its intermodal business assets to Hub Group, Inc. for $51.8 million in cash, reflecting a strategic focus on core operations and growth opportunities [1][2][3]. Company Overview - Marten Transport is a leading temperature-sensitive truckload carrier in the United States, specializing in transporting food, beverages, and consumer packaged goods that require temperature control [5]. - The company operates across the United States, Mexico, and Canada, focusing on expedited movements for high-volume customers [5]. Transaction Details - The transaction involves the sale of over 1,200 refrigerated containers and related contracts, expected to close by the end of the third quarter, subject to customary closing conditions [2]. - Legal counsel for the transaction is provided by Fox Rothschild LLP [4]. Strategic Focus - Executive Chairman Randolph L. Marten emphasized that the transaction aligns with the company's integrated business strategy, allowing for investment in core operations and capitalizing on profitable organic growth opportunities [3].

Core Viewpoint - Hub Group, Inc. has announced the acquisition of Marten Transport's intermodal assets, significantly enhancing its temperature-controlled intermodal service capabilities and scale [3][5]. Transaction Highlights - The acquisition involves an asset purchase of intermodal equipment and contracts for $51.8 million in cash, expected to close by the end of Q3 2025, subject to customary closing conditions [5]. - The deal includes approximately 1,200 refrigerated containers, positioning Hub Group as the second largest provider of temperature-controlled intermodal solutions in North America [9]. - Marten Intermodal generated $51.5 million in revenue over the trailing twelve months ending June 30, 2025 [9]. Strategic Implications - The acquisition is expected to double Hub Group's temperature-controlled container fleet and leverage its existing intermodal network to serve Marten Intermodal's customers [5]. - The transaction aligns with Hub Group's long-term investment strategy, aiming to expand margins and maintain capital flexibility [5]. - The deal is anticipated to be immediately accretive to Hub Group's fourth quarter 2025 EPS and also accretive to 2026 EPS, contributing positively to long-term returns on invested capital [9]. Operational Synergies - The acquisition is expected to create operational synergies through increased scale and network density [9]. - There are cross-sell opportunities with additional refrigerated customers across various business lines [9].