Form 8-K
0000940942 False 0000940942 2023-07-27 2023-07-27 iso4217:USD xbrli:shares iso4217:USD xbrli:shares
 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

_________________

FORM 8-K

_________________

CURRENT REPORT

Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported):  July 27, 2023

_______________________________

Hub Group, Inc.

(Exact name of registrant as specified in its charter)

_______________________________

Delaware0-2775436-4007085
(State or Other Jurisdiction of Incorporation)(Commission File Number)(I.R.S. Employer Identification No.)

2001 Hub Group Way

Oak Brook, Illinois 60523

(Address of Principal Executive Offices) (Zip Code)

(630) 271-3600

(Registrant's telephone number, including area code)

NOT APPLICABLE

(Former name or former address, if changed since last report)

_______________________________

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:

Title of each classTrading Symbol(s)Name of each exchange on which registered
Class A Common StockHUBGNASDAQ

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company

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. ☐

 
 
Item 2.02. Results of Operations and Financial Condition.

On July 27, 2023, Hub Group, Inc. issued a press release announcing its second quarter 2023 results from operations. The press release is furnished as Exhibit 99.1 to this Form 8-K.

The information furnished in Item 2.02 of this Current Report on Form 8-K and Exhibit 99.1 attached hereto shall not be deemed to be filed for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to liabilities of that Section or Sections 11 and 12(a)(2) of the Securities Act of 1933, as amended, and shall not be deemed to be incorporated by reference into any registration statement or other document filed pursuant to the Securities Act of 1933, as amended.

Item 9.01. Financial Statements and Exhibits.

(d) Exhibits

Exhibit No. Description
   
99.1 Press release issued on July 27, 2023, announcing second quarter 2023 operating results for Hub Group, Inc.
104 The cover page from this Current Report on Form 8-K, formatted in Inline XBRL
 
 

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: July 27, 2023By: /s/ Geoffrey F. DeMartino        
  Geoffrey F. DeMartino
  Executive Vice President, Chief Financial Officer and Treasurer
  


 

EdgarFiling

EXHIBIT 99.1

Hub Group, Inc. Reports Second Quarter 2023 Results

Highlights:        

OAK BROOK, Ill., July 27, 2023 (GLOBE NEWSWIRE) -- Hub Group, Inc. (NASDAQ:HUBG) announced second quarter 2023 net income of $47 million, and diluted earnings per share of $1.44.   Net income for second quarter 2022 was $103 million, or $3.03 per diluted share.

“Challenging market conditions have persisted throughout 2023 that have impacted demand for our services. We are seeing the benefits of our strategy to diversify and expand into less cyclical and non-asset-based services, with our Logistics Segment contributing nearly half of our operating income in the quarter, which has helped offset softer profitability at our ITS Segment. We performed well during this year’s intermodal bid season and are providing excellent service which has positioned us to grow as inventory levels normalize and demand increases. We returned $100 million of capital to our shareholders through share repurchases in the second quarter. We remain focused on managing our costs and capital structure and supporting our customers with great service while investing in our core business and technology to drive success in a variety of market conditions,” said Phil Yeager, Hub Group’s President and Chief Executive Officer.   

Second Quarter 2023 Results

Consolidated revenue for the second quarter of 2023 was $1.0 billion as compared to $1.4 billion in second quarter 2022. The decline in revenue was driven by changes in customer rate and volumes in our ITS and Logistics Segments. Purchased transportation and warehousing costs declined as compared to prior year due to lower volumes, reductions in third-party carrier costs and a higher percentage of insourced drayage, partially offset by higher equipment and rail costs. Salaries and benefits costs increased $12 million relative to prior year due to $30 million of incremental expense related to growth of our driver and warehouse employee headcount, partially offset by an $18 million reduction in office employee compensation due to lower headcount and lower incentive compensation expense. General and administrative expense decreased as compared to prior year due to lower legal and acquisition-related outside services spending. Depreciation and amortization expense increased as compared to prior year due to investments in our container and tractor fleets, as well as amortization of intangible assets related to the acquisition of TAGG Logistics, LLC (“TAGG”). Operating income for the quarter was $62 million (6.0% of revenue) as compared to $138 million (9.8% of revenue) in the prior year. EBITDA (non-GAAP)1 for the quarter was $108 million.

Second quarter Intermodal and Transportation Solutions (“ITS”) Segment revenue was $615 million. Intermodal volume for the quarter decreased 17% as compared to prior year, driven by elevated retailer inventory levels and soft import activity that impacted demand for our services. Intermodal revenue per load was impacted by changes in customer rates, fuel and mix. ITS operating income decreased to $32 million (5.2% of revenue) as compared to $101 million (11.5% of revenue) in the prior year due to lower volume, lower customer rates, higher equipment costs and lower surcharges and accessorial income. These headwinds were partially offset by lower drayage costs as we increased the portion of drayage handled on our own fleet to 79% in second quarter 2023 as compared to 62% in the prior year, as well as an improvement in profitability at our Dedicated service line.

Second quarter Logistics Segment revenue was $454 million, as compared to $549 million in the prior year. The decline in revenue was driven by lower revenue per load in our brokerage service line and lower managed transportation service line revenue, partially offset by revenue from TAGG. Brokerage volumes were down slightly as compared to the prior year but increased relative to first quarter. Second quarter operating income was 6.7% of revenue as compared to 6.8% last year. Operating income was $30 million as compared to $37 million last year, as lower revenue was partially offset by lower purchased transportation costs and our yield management initiatives.

Capital expenditures for the second quarter of 2023 totaled $39 million. As of June 30, 2023, we had cash and cash equivalents of $342 million.  

2023 Outlook

We expect our 2023 diluted earnings per share will range from $5.80 to $6.40. We estimate revenue will range from $4.3 to $4.5 billion. We project our effective tax rate for the year will be 20.0-21.0%. We expect capital expenditures for containers, tractors, warehousing equipment and technology will range from $140 to $150 million.

Non-GAAP Financial Measure

In this press release, we present EBITDA, a non-GAAP financial measure of profitability defined as earnings before interest, taxes, depreciation and amortization. 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 Net Income, the most directly comparable measure under GAAP. Management believes that EBITDA provides relevant and useful information, which is used by our management as well as by many analysts, investors and competitors in our industry. By providing this non-GAAP measure, management intends to provide investors with a meaningful, consistent comparison of the Company’s profitability for the periods presented. EBITDA should be viewed in addition to, and not as an alternative to or substitute for, measures determined in accordance with GAAP, and is 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 July 27, 2023 to discuss our second quarter 2023 results.

Hosting the conference call will be Phil Yeager, President and CEO. Also participating on the call will be Brian Alexander, Chief Operating Officer, and Geoff DeMartino, 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/BIc90f715b9f6743c8b6a0cc30dedd99b9

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: Geoff DeMartino of Hub Group, Inc., +1-630-271-3623

 
HUB GROUP, INC.
CONSOLIDATED STATEMENTS OF EARNINGS
(in thousands, except per share amounts)
(unaudited)
       
  Three Months Ended June 30,
  2023  2022 
   % of  % of
  AmountRevenue AmountRevenue
Operating revenue $1,040,462 100.0% $1,401,456 100.0%
       
Operating expenses:      
Purchased transportation and warehousing  763,609 73.4%  1,062,983 75.9%
Salaries and benefits  141,823 13.6%  129,499 9.2%
Depreciation and amortization  35,386 3.4%  32,244 2.3%
Insurance and claims  11,676 1.1%  10,645 0.8%
General and administrative  26,757 2.6%  36,213 2.6%
Gain on sale of assets, net  (859)-0.1%  (7,764)-0.6%
Total operating expenses  978,392 94.0%  1,263,820 90.2%
       
Operating income  62,070 6.0%  137,636 9.8%
       
Other income (expense):      
Interest expense, net  (3,116)-0.3%  (1,407)-0.1%
Interest income  2,087 0.2%  5 0.0%
Other, net  69 0.0%  (195)-0.0%
Total other expense, net  (960)-0.1%  (1,597)-0.1%
       
Income before provision for income taxes  61,110 5.9%  136,039 9.7%
       
Provision for income taxes  14,605 1.4%  33,193 2.4%
       
Net income $46,505   $102,846  
       
Earnings per share      
Basic $1.45   $3.06  
Diluted $1.44   $3.03  
       
Basic weighted average number of shares outstanding  32,037    33,651  
Diluted weighted average number of shares outstanding  32,293    33,935  
       


 
HUB GROUP, INC.
CONSOLIDATED STATEMENTS OF EARNINGS
(in thousands, except per share amounts)
(unaudited)
       
  Six Months Ended June 30,
  2023 2022
   % of  % of
  AmountRevenue AmountRevenue
Operating revenue $2,192,727 100.0% $2,699,579 100.0%
       
Operating expenses:      
Purchased transportation and warehousing  1,630,540 74.4%  2,058,248 76.2%
Salaries and benefits  279,254 12.7%  258,238 9.6%
Depreciation and amortization  70,835 3.2%  63,533 2.4%
Insurance and claims  24,359 1.1%  19,938 0.7%
General and administrative  52,298 2.4%  59,435 2.2%
Gain on sale of assets, net  (4,834)-0.2%  (12,509)-0.5%
Total operating expenses  2,052,452 93.6%  2,446,883 90.6%
       
Operating income  140,275 6.4%  252,696 9.4%
       
Other income (expense):      
Interest expense, net  (6,086)-0.3%  (3,110)-0.1%
Interest income  3,463 0.2%  9 0.0%
Other, net  108 0.0%  (63)-0.0%
Total other expense, net  (2,515)-0.1%  (3,164)-0.1%
       
Income before provision for income taxes  137,760 6.3%  249,532 9.3%
       
Provision for income taxes  29,475 1.3%  59,183 2.2%
       
Net income $108,285   $190,349  
       
Earnings per share      
Basic $3.35   $5.66  
Diluted $3.33   $5.61  
       
Basic weighted average number of shares outstanding  32,293    33,647  
Diluted weighted average number of shares outstanding  32,566    33,950  
       


 
HUB GROUP, INC.
CONSOLIDATED BALANCE SHEETS
(in thousands, except share data)
 
  June 30, December 31,
  2023 2022
  (unaudited)  
ASSETS    
CURRENT ASSETS:    
Cash and cash equivalents $342,429  $286,642 
Accounts receivable trade, net  612,163   716,190 
Accounts receivable other  4,612   3,967 
Prepaid taxes  15,258   16,987 
Prepaid expenses and other current assets 15,445   32,914 
TOTAL CURRENT ASSETS  989,907   1,056,700 
     
Restricted investments  20,262   18,065 
Property and equipment, net  783,127   783,683 
Right-of-use assets - operating leases  167,681   102,114 
Right-of-use assets - financing leases  3,744   1,194 
Other intangibles, net  183,634   197,386 
Goodwill  629,407   629,402 
Other assets  22,280   21,537 
TOTAL ASSETS $2,800,042  $2,810,081 
     
     
LIABILITIES AND STOCKHOLDERS' EQUITY   
CURRENT LIABILITIES:    
Accounts payable trade $293,005  $344,751 
Accounts payable other  12,213   15,563 
Accrued payroll  23,292   66,669 
Accrued other  128,825   132,324 
Lease liability - operating leases  35,687   29,547 
Lease liability - financing leases  2,365   1,175 
Current portion of long term debt  98,350   101,741 
TOTAL CURRENT LIABILITIES 593,737   691,770 
     
Long term debt  238,213   240,724 
Non-current liabilities  48,832   43,505 
Lease liability - operating leases  141,450   78,557 
Lease liability - financing leases  1,288   - 
Deferred taxes  165,786   155,923 
     
STOCKHOLDERS' EQUITY:    
Preferred stock, $.01 par value; 2,000,000 shares authorized;   
no shares issued or outstanding in 2023 and 2022. -   - 
Common stock    
Class A: $.01 par value; 97,337,700 shares authorized; 41,312,185   
shares issued in both 2023 and 2022; 31,402,008 shares outstanding   
in 2023 and 32,646,621 shares outstanding in 2022. 413   413 
Class B: $.01 par value; 662,300 shares authorized;   
574,903 shares issued and outstanding in both 2023 and 2022. 6   6 
     
Additional paid-in capital  214,356   208,165 
Purchase price in excess of predecessor basis, net of tax   
 benefit of $10,306  (15,458)  (15,458)
Retained earnings  1,889,867   1,781,582 
Accumulated other comprehensive loss (136)  (214)
Treasury stock; at cost, 9,910,177 shares in 2023   
and 8,665,564 shares in 2022  (478,312)  (374,892)
TOTAL STOCKHOLDERS' EQUITY 1,610,736   1,599,602 
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY$2,800,042  $2,810,081 
     


 
HUB GROUP, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
     
  Six Months Ended June 30,
  2023 2022
     
     
Cash flows from operating activities:    
Net income $108,285  $190,349 
Adjustments to reconcile net income    
to net cash provided by operating activities:   
Depreciation and amortization  91,474   71,922 
Impairment of right-of-use asset  2,012   - 
Deferred taxes  10,837   3,279 
Compensation expense related to share-based compensation plans 10,615   10,237 
Gain on sale of assets, net  (4,834)  (12,509)
Changes in operating assets and liabilities, net of acquisitions:   
Restricted investments  (2,197)  5,200 
Accounts receivable, net  103,270   (93,767)
Prepaid taxes  1,729   (2,166)
Prepaid expenses and other current assets 17,469   9,664 
Other assets  (1,899)  (2,517)
Accounts payable  (55,085)  3,380 
Accrued expenses  (47,700)  23,251 
Non-current liabilities  (12,595)  (5,588)
Net cash provided by operating activities 221,381   200,735 
     
Cash flows from investing activities:    
Proceeds from sale of equipment  15,135   18,584 
Purchases of property and equipment  (65,635)  (85,942)
Acquisitions, net of cash acquired  108   - 
Net cash used in investing activities (50,392)  (67,358)
     
Cash flows from financing activities:    
Purchase of treasury stock  (100,026)  - 
Repayments of long term debt  (56,191)  (54,114)
Stock withheld for payments of withholding taxes (7,818)  (5,715)
Finance lease payments  (1,501)  (1,059)
Proceeds from issuance of debt  50,289   66,194 
Net cash (used in) provided by financing activities (115,247)  5,306 
     
     
Effect of exchange rate changes on cash and cash equivalents 45   9 
     
Net increase in cash and cash equivalents 55,787   138,692 
Cash and cash equivalents beginning of period 286,642   159,784 
Cash and cash equivalents end of period $342,429  $298,476 
     


 
HUB GROUP, INC.
FINANCIAL INFORMATION BY SEGMENT
(in thousands)
(unaudited)
        
 Three Months Six Months
 Ended June 30, Ended June 30,
Operating Revenue2023 2022 2023 2022
Intermodal and Transportation Solutions$614,632  $875,150  $1,323,881  $1,651,720 
Logistics 453,549   548,613   922,690   1,089,597 
Inter-segment eliminations (27,719)  (22,307)  (53,844)  (41,738)
Total operating revenue$1,040,462  $1,401,456  $2,192,727  $2,699,579 
        
        
 Three Months Six Months
 Ended June 30, Ended June 30,
Operating Income2023 2022 2023 2022
Intermodal and Transportation Solutions$31,777  $100,601  $80,981  $186,297 
Logistics 30,293   37,035   59,294   66,399 
Total operating income$62,070  $137,636  $140,275  $252,696 
        
        
 Three Months Six Months
 Ended June 30, Ended June 30,
Depreciation and Amortization2023 2022 2023 2022
Intermodal and Transportation Solutions$27,117  $25,383  $54,003  $49,758 
Logistics 8,269   6,861   16,832   13,775 
Total depreciation and amortization$35,386  $32,244  $70,835  $63,533 
        


 
RECONCILIATION OF NET INCOME TO EBITDA (1)
(in thousands)
(unaudited)
        
 Three Months Six Months
 Ended June 30, Ended June 30,
        
 2023 2022 2023 2022
        
Net Income$46,505  $102,846  $108,285  $190,349 
        
Interest Expense, net 1,029   1,402   2,623   3,101 
        
Depreciation and Amortization 45,664   36,729   91,474   71,922 
        
Provision for Income Taxes 14,605   33,193   29,475   59,183 
        
EBITDA$107,803  $174,170  $231,857  $324,555 
        

(1)   See the “Non-GAAP Financial Measure” section of this release for the definition of EBITDA and a discussion of this non-GAAP financial measure.