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Hub Group, Inc. Reports First Quarter 2024 Results
Source: Nasdaq GlobeNewswire / 25 Apr 2024 16:05:31 America/New_York
Highlights:
- Diluted earnings per share (EPS) of $0.44 for the quarter
- First quarter revenue of $1.0 billion
- GAAP Quarterly operating income of $37 million (3.7% of revenue)
- Executing on Capital Allocation Plan including completing our stock split, purchasing $26 million of shares during the quarter and paying the company’s first quarterly cash dividend of $0.125 per common share
- Ended the quarter with cash and cash equivalents of $195 million
- Integration of Final Mile acquisition is ahead of our expectations and contributed $64 million to revenue in the first quarter
- Recognized by The Home Depot® as the 2023 Intermodal Carrier of the Year, Online Big & Bulky Carrier of the Year, and the Dedicated Van Carrier of the Year. Named Outstanding Partnership of the Year by Target®.
OAK BROOK, Ill., April 25, 2024 (GLOBE NEWSWIRE) -- Hub Group, Inc. (NASDAQ: HUBG) announced first quarter 2024 net income of $27 million and diluted earnings per share of $0.44. Net income for first quarter 2023 was $62 million, or $0.94 per diluted share.
“I am pleased with the team’s performance in the first quarter, resulting in $1.0 billion of revenue, in-line with fourth quarter performance despite normal seasonal declines and challenging market conditions. Our yield management, cost containment and operating efficiency initiatives resulted in operating income margin of 3.7% of revenue, an improvement over the fourth quarter. The team continues to execute on our key strategic priorities including diversification of our business and a focus on cost management that will lead to enhanced earnings stability and growth over the long term,” said Phil Yeager, Hub Group’s Vice Chairman of the Board of Directors, President and Chief Executive Officer.
First Quarter 2024 Results
Consolidated revenue for the first quarter of 2024 was $1.0 billion as compared to $1.2 billion in first quarter 2023. The revenue decline was driven by the impact of the January winter storm, lower volumes in ITS and brokerage, and lower fuel revenue, partially offset by contributions from the Final Mile acquisition. Purchased transportation and warehousing costs as a percent of revenue decreased 1.1% to prior year due to the impact of the Final Mile acquisition and Hub’s cost management efforts as drayage, equipment, rail and repositioning costs decreased in the quarter. As anticipated, salaries and benefits increased from the prior year due to merit and incentive compensation increases as well as headcount associated with the acquisition, excluding the acquisition, legacy headcount declined by 9%. Insurance and claims costs were in-line with prior year as we continue to make safety a top priority. Depreciation and amortization expense increased as compared to prior year driven by the Final Mile acquisition. General and administrative expenses increased $1.7 million as compared to prior year driven by costs associated with the integration of the Final Mile acquisition of $2.7 million, partially offset by cost management efforts. Gain on sale was minimal, whereas the prior year benefitted from strong used truck pricing resulting in a headwind of $3.5 million. Operating income for the first quarter was $37 million (3.7% of revenue) as compared to $78 million (6.8% of revenue) in the prior year. EBITDA (non-GAAP) for the quarter was $87 million.
First quarter Intermodal and Transportation Solutions (“ITS”) Segment revenue was $552 million, as compared to $709 million in the prior year due to soft market conditions, lower accessorial revenue, lower fuel revenue of $32 million, and lower volumes of 10%. ITS operating income decreased to $13 million (2.4% of revenue) due to January storms, as well as start-up costs and a larger than expected auto claim settlement in our Dedicated line of business.
First quarter Logistics Segment revenue was $480 million, an increase of 2.4% compared to $469 million in the prior year, as Final Mile revenue more than offset lower revenue per load in our brokerage business. First quarter operating income was $24 million, or 5.0% of revenue a decline of 1.1% from prior year as positive contribution from the acquisition only partially offset lower brokerage margin.
Capital expenditures for the first quarter of 2024 totaled $18 million as we continued to invest in our tractor fleet, technology, and expansion of our multipurpose warehouse footprint. As of March 31, 2024, we had cash and cash equivalents of $195 million following the acquisition of Final Mile for $261 million in the fourth quarter. In the first quarter, we completed our 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.
2024 Outlook
We expect our 2024 diluted earnings per share will range from $1.80 to $2.25. We estimate revenue of approximately $4.3 to $4.7 billion for the full year and we continue to project an effective tax rate of approximately 24%. We expect capital expenditures for the full year in the range of $45 million to $65 million.
Non-GAAP Financial Measure
In this press release, we present a certain non-GAAP financial measure. 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 the most directly comparable measures under GAAP, along with an explanation why management believes this non-GAAP financial measure provide relevant and useful information. This non-GAAP financial measure should be viewed in addition to, and not as an alternative to or substitute for, measures determined in accordance with GAAP, and are 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 April 25, 2024 to discuss our first quarter 2024 results.
Hosting the conference call will be Phil Yeager, Vice Chairman of the Board of Directors, President and CEO. Also participating on the call will be Brian Alexander, Executive Vice President, Chief Operating Officer, and Kevin Beth, 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/BIa963a2fc05ca4d6e8871ed6c9e9f700e 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- Lorna Williams, Investor Relations, +1-630-481-3632, lornawilliams@hubgroup.com
HUB GROUP, INC. CONSOLIDATED STATEMENTS OF EARNINGS (in thousands, except per share amounts) (unaudited) Three Months Ended March 31, 2024 2023 % of % of Amount Revenue Amount Revenue Operating revenue $ 999,493 100.0 % $ 1,152,265 100.0 % Operating expenses: Purchased transportation and warehousing 740,172 74.1 % 866,931 75.2 % Salaries and benefits 144,497 14.4 % 137,431 11.9 % Depreciation and amortization 38,331 3.8 % 35,449 3.1 % Insurance and claims 12,618 1.3 % 12,683 1.1 % General and administrative 27,234 2.7 % 25,541 2.2 % Gain on sale of assets, net (498 ) -0.0 % (3,975 ) -0.3 % Total operating expenses 962,354 96.3 % 1,074,060 93.2 % Operating income 37,139 3.7 % 78,205 6.8 % Other income (expense): Interest expense, net (2,506 ) -0.3 % (1,593 ) -0.1 % Other, net (170 ) -0.0 % 38 0.0 % Total other expense, net (2,676 ) -0.3 % (1,555 ) -0.1 % Income before provision for income taxes 34,463 3.4 % 76,650 6.7 % Provision for income taxes 7,410 0.7 % 14,870 1.3 % Net income $ 27,053 $ 61,780 Earnings per share Basic $ 0.44 $ 0.95 Diluted $ 0.44 $ 0.94 Basic weighted average number of shares outstanding 61,325 65,098 Diluted weighted average number of shares outstanding 61,666 65,676 HUB GROUP, INC. CONSOLIDATED BALANCE SHEETS (in thousands, except share data) March 31, December 31, 2024 2023 (unaudited) ASSETS CURRENT ASSETS: Cash and cash equivalents $ 195,362 $ 187,270 Accounts receivable trade, net 588,957 600,197 Accounts receivable other 4,940 3,358 Prepaid taxes 10,078 17,331 Prepaid expenses and other current assets 28,621 41,089 TOTAL CURRENT ASSETS 827,958 849,245 Restricted investments 20,393 20,763 Property and equipment, net 777,209 791,692 Right-of-use assets - operating leases 209,171 210,742 Right-of-use assets - financing leases 2,152 2,522 Other intangibles, net 295,943 304,607 Goodwill 735,460 733,695 Other non-current assets 22,984 22,781 TOTAL ASSETS $ 2,891,270 $ 2,936,047 LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES: Accounts payable trade $ 320,919 $ 349,378 Accounts payable other 18,179 14,471 Accrued payroll 31,964 21,731 Accrued other 126,475 121,253 Lease liability - operating leases 45,775 44,690 Lease liability - financing leases 1,253 1,579 Current portion of long term debt 104,035 105,108 TOTAL CURRENT LIABILITIES 648,600 658,210 Long term debt 230,775 245,574 Other non-current liabilities 52,932 55,287 Lease liability - operating leases 175,481 177,699 Lease liability - financing leases 823 865 Deferred taxes 160,443 163,767 STOCKHOLDERS' EQUITY: Preferred stock, $.01 par value; 2,000,000 shares authorized; no shares issued or outstanding in 2024 and 2023. - - Common stock Class A: $.01 par value; 97,337,700 shares authorized; 72,303,228 shares issued in 2024 and 75,524,189 shares issued in 2023; 61,847,444 shares outstanding in 2024 and 62,200,921 shares outstanding in 2023. 755 755 Class B: $.01 par value; 662,300 shares authorized; 574,903 shares issued and outstanding in both 2024 and 2023. 6 6 Additional paid-in capital 208,932 209,830 Retained earnings 1,968,361 1,949,110 Accumulated other comprehensive loss (137 ) (129 ) Treasury stock; at cost, 10,455,784 shares in 2024 and 13,323,268 shares in 2023 (555,701 ) (524,927 ) TOTAL STOCKHOLDERS' EQUITY 1,622,216 1,634,645 TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 2,891,270 $ 2,936,047 HUB GROUP, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands) (unaudited) Three Months Ended March 31, 2024 2023 Cash flows from operating activities: Net income $ 27,053 $ 61,780 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization of intangibles and right-of-use assets 49,605 45,810 Deferred taxes (3,025 ) 4,901 Non-cash share-based compensation expense 4,040 5,238 Gain on sale of assets, net (498 ) (3,975 ) Changes in operating assets and liabilities, net of acquisitions: Restricted investments 370 (1,122 ) Accounts receivable, net 9,652 18,951 Prepaid taxes 7,253 7,605 Prepaid expenses and other current assets 12,468 13,617 Other non-current assets (880 ) (653 ) Accounts payable (24,755 ) (17,705 ) Accrued expenses 11,462 (40,065 ) Non-current liabilities (12,229 ) (5,007 ) Net cash provided by operating activities 80,516 89,375 Cash flows from investing activities: Proceeds from sale of equipment 3,442 10,172 Purchases of property and equipment (17,524 ) (26,845 ) Acquisitions, net of cash acquired - 108 Net cash used in investing activities (14,082 ) (16,565 ) Cash flows from financing activities: Repayments of long term debt (27,422 ) (29,237 ) Purchase of treasury stock (25,756 ) - Stock withheld for payments of withholding taxes (8,486 ) (7,606 ) Dividends paid (7,626 ) - Finance lease payments (606 ) (888 ) Proceeds from issuance of debt 11,550 20,831 Net cash used in financing activities (58,346 ) (16,900 ) Effect of exchange rate changes on cash and cash equivalents 4 18 Net increase in cash and cash equivalents 8,092 55,928 Cash and cash equivalents beginning of period 187,270 286,642 Cash and cash equivalents end of period $ 195,362 $ 342,570 HUB GROUP, INC. FINANCIAL INFORMATION BY SEGMENT (in thousands) (unaudited) Three Months Ended March 31, Operating Revenue 2024 2023 Intermodal and Transportation Services $ 552,033 $ 709,249 Logistics 480,224 469,141 Inter-segment eliminations (32,764 ) (26,125 ) Total operating revenue $ 999,493 $ 1,152,265 Three Months Ended March 31, Operating Income 2024 2023 Intermodal and Transportation Services $ 13,031 $ 49,379 Logistics 24,108 28,826 Total operating income $ 37,139 $ 78,205 Three Months Ended March 31, Depreciation and Amortization 2024 2023 Intermodal and Transportation Services $ 27,049 $ 27,142 Logistics 11,282 8,307 Total depreciation and amortization $ 38,331 $ 35,449 RECONCILIATION OF NET INCOME TO EBITDA (1) (in thousands) (unaudited) Three Months Ended March 31, 2024 2023 Net Income $ 27,053 $ 61,780 Interest Expense, net 2,506 1,593 Depreciation and Amortization (2) 49,605 45,810 Provision for Income Taxes 7,410 14,870 EBITDA $ 86,574 $ 124,053 (1) By providing this non-GAAP measure of EBITDA, management intends to provide investors with a meaningful, consistent comparison of the Company’s profitability for the periods presented.
(2) Includes depreciation of property and equipment, amortization of intangible assets and amortization of right-of-use assets.