Multi-modal supply chain solutions provider Hub Group Inc. posted a decline in second-quarter revenue and lowered its outlook for full-year earnings as the freight market continues to challenge transportation providers, company officials said.
Management cited lower revenue per load and decreasing revenue in its intermodal segment as factors impacting second quarter results.
“We just feel that the market, both the macro and the free market, is very hard to predict,” Kevin Beth, Hub Group’s CFO, said during a call with analysts Thursday.
Oak Brook, Illinois-based Hub Group’s (NASDAQ: HUBG) released its second quarter earnings report after the market closed. The company is a provider of intermodal, truck brokerage and logistics services.
Hub Group’s second quarter revenue declined 5% year over year to $986 million, below the $1.09 billion consensus Wall Street estimate.
The company recorded adjusted earnings per share of 47 cents in the second quarter, a 35% year-over-year decrease compared to the same period last year. Analysts predicted earnings of 48 cents per share during the quarter.
“At the end of the day, we think the freight market is very challenging,” Beth said. “It’s a competitive season. We have excess capacity impacting intermodal and brokerage. While we do expect strong volume growth, we are expecting pricing to remain low with price inflection moving into 2025.”
Hub Group expects full-year 2024 earnings to be $1.75 to $2.05 per share, with revenue in the range of $4 billion to $4.3 billion. A quarter ago, the company forecast 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.
“This quarter, we updated assumptions to assume that the challenges that we have experienced the last few quarters will continue throughout the year,” Phil Yeager, president and CEO of Hub Group, said.
The CEO explained several factors that could contribute to higher earnings in 2024 include increasing consumer demand and more customers utilizing intermodal options for transportation.
“If restocking demand is higher than anticipated, there is a more traditional intermodal peak season, then the market allows for surcharge revenue in the second half of the year,” Yeager said. “Another market condition that would push results to the high end of guidance is truck conversions to intermodal, helping to increase intermodal volume growth and increase margins.”
Second-quarter revenue for Hub Group’s intermodal and transportation solutions segment was $561 million, compared to $615 million in the same year-ago period.
Hub Group’s transcontinental intermodal volume was up 8% year over year.
“Second quarter volume growth was 12% over the first quarter, highlighting our momentum and implementation of new contracts,” Hub Group COO Brian Alexander said.
The company’s local East intermodal volume grew 26% year over year and local West intermodal volume fell 3% year over year compared to the second quarter of 2023.
Hub Group’s logistics revenue increased 1.1% year over year to $459 million, as higher final mile revenue helped offset lower revenue in the company’s brokerage business.
Hub Group ended the second quarter with $220 million in cash and cash equivalents. The company has returned $48 million to shareholders through $15 million in dividends and $33 million in share repurchases year-to-date.
Hub GroupQ2/24Q2/23Y/Y % ChangeTotal revenue$986M$1.04B(5%)Intermodal and transportation solutions revenue$561M$615M(10%)Logistics revenue$459M$454M1.1%Earnings per share revenue$0.47$0.72(35%)Hub Group second quarter key performance indicators.
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