Hub Group Reports Revenue and Earnings Decline for Q1
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Hub Group Inc. experienced a year-over-year decline in revenue and earnings during the first quarter of 2023, the company reported April 27.
The Oak Brook, Ill.-based intermodal and logistics service provider posted net income of $61.8 million, or $1.88 a diluted share, for the three months ending March 31. That compared with $87.5 million, $2.58, during the same time the previous year. The total revenue decreased by 11.2% to $1.15 billion from $1.3 billion.
“The market has shifted from this time last year,” Hub Group CEO Phil Yeager said during a call with investors. “Capacity is loose, customers are more fluid, rail service is improving, inventories are elevated, port volumes are down and the employment market has become more balanced. The improvements that we have made to our company over the past several years through our diversification, technology enhancements, yield and cost discipline and intermodal operating improvements are supporting our ability to successfully compete in this environment.”
The results were mixed when it came to expectations by investment analysts on Wall Street, which had been looking for $1.86 per share and quarterly revenue of $1.24 billion, according to Zacks Consensus Estimate.
Yeager
“We are driving organic and new customer-led growth in our managed transportation and final-mile businesses due to our industry-leading service levels, scale and continuous improvements,” Yeager said. “We have an extremely strong pipeline of new onboardings across all of our offerings and we are bringing value by integrating these otherwise separate solutions to our customers, which provide increased savings and enhanced service.”
The intermodal and transportation services segment revenue decreased 8.7% to $709.2 million from $776.6 million during the same time the previous year. The volumes hauled by the segment were impacted by softer demand conditions with retailer inventory levels increasing from the lows seen in 2021. Operating income for the segment decreased 42.4% to $49.4 million from $85.7 million.
“Rail service has improved, as has customer turn times,” Yeager said. “However, given slower import demand and elevated inventories, as well as a more aggressive pricing environment, volumes have underperformed our expectations. Our in-sourcing of drayage, reduction in third-party spend, improved rail partnerships as well as our enhanced operational discipline and service levels have enabled us to perform well in bid season.”
Logistics segment revenue decreased 13.3% to $469.1 million from $541 million last year. The decline in revenue was driven by lower revenue per load in the brokerage business line and lower managed transportation business line revenue. This was partially offset by revenue from the recently acquired TAGG Logistics. Operating income decreased 1.8% to $28.8 million from $29.4 million the prior year.
“We are maintaining order count and taking share while enhancing margin percentage through our great sales team, improved systems, enhanced purchasing power and successful cross-selling,” Yeager said. “We’re growing our dedicated business with improved returns for organic and new customers. The acquisition of TAGG has been very successful and we are expanding our warehousing footprint to support demand from our cross-selling and in-sourcing synergy opportunities.”
Hub Group ranks No. 13 on the Transport Topics Top 100 list of the largest for-hire carriers in North America.
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