Hub Group Sees Q1 Revenue Fall 13% Year Over Year to $999M

"Market conditions have remained soft … largely due to excess truckload capacity that is yet to exit the industry" Yeager said during an earnings call with analysts after the market closed on Thursday.

Hub Group reported first-quarter revenue of $999.5 million, a 13% year-over-year (y/y) decline.

The company reported net income of $27 million, a 56% decline compared to the same period in 2023. Earnings per share came in at 44 cents for the first-quarter.

Hub Group's first-quarter revenue fell short of Wall Street forecasts, which expected revenue of $1.07 billion. The earnings per share results exceeded analysts' expectations, which forecast  40 cents per share.

"This trend is counter to many prior cycles and has led to a prolonged trough in the spot market, which has in turn led to a competitive start to bid season as carriers attempt to deploy latent capacity and spot market pricing is pressuring contract rates" Yeager said. "We're seeing some positive sides of the market, with many customers orienting their purchasing decision to valuable service and costs. However, this capacity attrition is not occurring at a pace that is leading to more stability in the broader truckload environment."

Oak Brook, Illinois-based Hub Group is a provider of intermodal transportation and logistics management solutions.

Hub Group expects full-year earnings to be $1.80 to $2.25 per share, with revenue in the range of $4.3 billion to $4.7 billion.

"The macro environment remains challenging, and while Hub performed well in the first-quarter, we anticipate a prolonged competitive pricing environment impacting our intermodal and brokerage line of businesses" CFO Kevin Beth said. "We now believe that the market inflection point has shifted further out from our fourth-quarter assumptions."

First-quarter revenue for the company's intermodal and transportation solutions (ITS) segment was $552 million, compared to $709 million in the same year-ago period. 

The ITS segment decline in revenue was driven by softer intermodal volume that declined 10% y/y during the first quarter, COO Brian Alexander said during the call.

Hub Group's transcontinental intermodal volume was down 6% y/y, local East intermodal volume declined 2% y/y and local West intermodal volume fell 16% y/y.

"While our dedicated trucking team finished 2023 strong, they ended the year with some headwinds related to startup costs" Alexander said. "We have already seen yield improvements in the second quarter that we expect to continue throughout the rest of the year."

The company's logistics segment generated first-quarter revenue of $480 million, a 2.4% y/y increase compared to $469 million in the prior year.

During the quarter, Hub Group completed a 2-for-1 stock split, purchased $26 million of HUBG shares and paid the company's first quarterly cash dividend of $0.125 per common share.

Hub Group Q1 earnings. $ in millions, except EPS.
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