Hub Group Posts Q2 Profit, Revenue Gains
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Hub Group Inc. reported strong growth in second-quarter profits and revenue as it benefited from the robust rebound in the U.S. freight market.
The Oak Brook, Ill.-based intermodal and logistics service provider’s net income rose 101.5% to $26.6 million from $13.2 million in the same quarter a year earlier. Diluted earnings per share doubled to 78 cents from 39 cents.
Revenue climbed 5.9% to $981.3 million compared with $779.2 million for the second quarter of 2020.
Hub’s operating income rose 75.7% to $36.9 million from $21 million in the same period a year earlier.
Yeager
“Unprecedented freight market conditions,” drove the growth, CEO Dave Yeager said in a July 29 news release.
All of Hub’s business segments posted second-quarter gains:
• Intermodal revenue increased 23% to $550 million, helped by a 7% rise in volume and a 15% gain in revenue per load. The segment’s gross margin increased as higher prices, cost recovery and volume growth more than offset increased purchased transportation costs and higher equipment repositioning expenses, the company said.
• Logistics revenue rose 25% to $222 million. The company’s growth in business with retailers contributed to the gain.
• Truck brokerage revenue grew 62% in the quarter to $140 million due to a 55% increase in revenue per load and 5% volume growth. Hub said that contractual freight accounted for 51% of total brokerage volume in the second quarter compared with 64% in the 2020 period.
• Dedicated transportation revenue rose 1% compared with the prior year to $69 million due to growth from existing and new customers, offset by the impact of business the company exited. The segment’s gross margin decreased because higher maintenance, repair and purchased transportation expenses were not fully offset by growth in revenue.
The company provided near-term and long-term guidance.
It expects 2021 diluted earnings per share will range from $3.50 to $3.70 and that revenue will grow in the high-teen percentage range. Hub said its gross margin as a percentage of revenue will range from 12.5% to 13%.
Longer term, the intermodal company has a revenue target of $5.5 billion to $6.5 billion in 2025.
“We expect to achieve this level of revenue primarily through organic growth driven by our superior customer experience, and the technology and equipment investments we will continue to make in our business, as well as through acquisitions of nonasset logistics businesses,” the company said in a statement.
Hub said its capital expenditures for this year will range from $165 million to $175 million. The funds will be spent on containers, tractors and technology.
It plans to add 3,000 containers, which amounts to growth of about 2,750 after the retirement of older units. Hub plans to purchase about 700 tractors to replace older trucks.
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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