Hub (HUBG) - 2025 Q2 - Quarterly Report

PART I. Financial Information Financial Statements 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 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 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 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 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][28] - In H1 2025, the company repurchased 330,441 shares for approximately $13.8 million under its share repurchase program[29] - 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][32][34] - 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] Management's Discussion and Analysis of Financial Condition and Results of Operations 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 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] - 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][72] Results of Operations 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][98] - 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] Liquidity and Capital Resources 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][116] - Cash provided by operating activities was $132 million for the first six months of 2025, compared to $150 million in 2024[108][109] - Estimated capital expenditures for 2025 are expected to range from $40 million to $50 million, primarily for tractor replacements and technology investments[112] Quantitative and Qualitative Disclosures about Market Risk 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] Controls and Procedures 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] - 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] - 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] PART II. Other Information Legal Proceedings 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][123] Risk Factors 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] Unregistered Sales of Equity Securities and Use of Proceeds 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] 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] Other Information 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] Exhibits 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]