UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_________________
FORM
_________________
CURRENT REPORT
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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).
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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. ☐
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.
(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, 2023 | By: | /s/ Geoffrey F. DeMartino |
| Geoffrey F. DeMartino | ||
| Executive Vice President, Chief Financial Officer and Treasurer | ||
EXHIBIT 99.1
Hub Group, Inc. Reports Second Quarter 2023 Results
Highlights:
- Diluted earnings per share (EPS) of $1.44 for the quarter
- Second quarter revenue of $1.0 billion
- Quarterly operating income of $62 million (6.0% of revenue) driven by performance of our Logistics Segment
- Continued focus on return of capital with $100 million of shares repurchased in the quarter
- Exceptionally strong balance sheet, ending the quarter with cash and cash equivalents of $342 million
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 | |||||||||||
| Amount | Revenue | Amount | Revenue | |||||||||
| 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 | |||||||||||
| Amount | Revenue | Amount | Revenue | |||||||||
| 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 Revenue | 2023 | 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 Income | 2023 | 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 Amortization | 2023 | 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.