Hub (HUBG) - 2025 Q2 - Quarterly Results

Hub Group Second Quarter 2025 Financial and Operational Highlights 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 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] - 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][8] - Year-to-date, Hub Group returned $29 million to shareholders, consisting of $15 million in dividend payments and $14 million in stock repurchases[8][10] Segment Performance 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 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 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 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 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 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] - 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] Financial Statements This chapter presents Hub Group's consolidated statements of earnings, balance sheets, and cash flows for the reported periods Consolidated Statements of Earnings 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 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 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 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 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] Reconciliation of Net Income to EBITDA and Net Debt / EBITDA Leverage 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]