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Hub Group beats Q4 EPS estimates, misses on revenue

Hub Group reported year-over-year increases in its logistics, truck brokerage and intermodal/transportation segments during the fourth quarter, raising the company’s revenue to $1.29 billion.

Hub Group Inc. (NASDAQ: HUBG) reported fourth-quarter earnings per share of $2.42, beating Wall Street analysts’ estimates of $2.36. Revenue missed the consensus estimate of about $1.4 billion.

“Our team delivered a record year in 2022. We were able to grow all of our service lines and both revenue and profitability, reaching $1 billion in revenue in both logistics and brokerage for the first time as an organization, while eclipsing $3 billion in intermodal revenue,” Chairman and CEO David Yeager said during an earnings call Thursday.

For full-year 2022, the company reported profit of $356.9 million, or $10.64 per share. Revenue was $5.34 billion.

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

Yeager said the company expects a stronger second half of 2023 “based on continued consumer strength and a need for inventory restocking.”

“While this backdrop may create short-term challenges, we believe that Hub Group is well positioned to grow in this environment,” Yeager said.

Company officials said the outlook for 2023 calls for full-year earnings in the range of $7 to $8 per share, with revenue in the range of $5.2 billion to $5.4 billion.

The company’s fourth-quarter revenue of $1.29 billion was a 2% y/y increase compared with $1.26 billion during the same year-ago quarter. 

Hub Group’s intermodal revenue grew 5% to $802 million, with a 19% increase in revenue per load. Intermodal volume decreased 12% compared to the fourth quarter of 2021.

Volume for the quarter was impacted by a softening in consumer spending, including a 9% decline in volumes in the local West, 9% decline in transcountry and a decline of 17% in the local East, according to COO Brian Alexander.

Despite the fourth-quarter decline, Yeager said he sees positive results for the company’s intermodal business in the second half of 2023.

“With intermodal, we anticipate increased conversion to rail from over-the-road, resulting in an improved and more consistent rail service product,” Yeager said. “That, along with our rapidly increasing interest rate percentage, improved rail agreement and lower outside rail costs, will help our customers reduce costs while driving efficiency and sustainability in their supply chain.”

Gross margin for the quarter was 15.9% of revenue, with operating income of $104 million. Earnings before interest, taxes, depreciation and amorization for the quarter was $148 million.

Fourth-quarter logistics revenue increased 9% to $245 million, while revenue for the full year increased 11% to $989 million.

The company’s truck brokerage segment revenue was $238 million for the fourth quarter, an 11% decline compared to last year.

“We’re very proud of our brokerage team as they performed well against challenging market conditions in the fourth quarter,” Alexander said. “Our acquisition of Choptank helped drive disciplines in our purchasing, as well as cross-selling growth in our LTL and dry van offerings. As we improve purchasing, we’re well positioned to continue our growth through our integrated approach to our customers, with high service levels and expertise in our capacity types, including reefer, dry, LTL and drop trailer.”

Hub Group Q4/22 Q4/21 Y/Y % Change
Intermodal $802 $764 5%
Logistics $245 $224 9%
Truck brokerage $238 $268 (11%)
Total: $1.29B $1.26B 2%
Transportation costs $1.08B $1.04B 4%
Gross margin 15.9%  16.9% (6%)
EPS $2.42 $2.48 (2%)
Hub Group Q4 earnings. $ in millions, except EPS.

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