Weak market conditions continue to impact transportation providers financially, according to Phil Yeager, the president and CEO of Hub Group Inc. Yeager stated during an earnings call that the soft market conditions are primarily due to excess truckload capacity that has yet to exit the industry.
Hub Group reported first-quarter revenue of $999.5 million, showing a 13% year-over-year decline. The company also reported a 56% decline in net income, totaling $27 million, compared to the same period in 2023. Earnings per share for the first quarter came in at 44 cents.
Although Hub Group’s first-quarter revenue fell short of Wall Street forecasts, the earnings per share results exceeded expectations. Yeager mentioned that the prolonged trough in the spot market has led to a competitive start to bid season as carriers try to deploy latent capacity, putting pressure on contract rates.
Hub Group, based in Oak Brook, Illinois, provides intermodal transportation and logistics management solutions. The company expects full-year earnings to be in the range of $1.80 to $2.25 per share, with revenue expected to fall between $4.3 billion and $4.7 billion.
Despite a challenging macro environment, Hub Group performed well in the first quarter. However, the company anticipates a prolonged competitive pricing environment affecting its intermodal and brokerage line of businesses. The market inflection point has shifted further out from the fourth-quarter assumptions.
The company’s intermodal and transportation solutions segment experienced a decline in revenue, driven by softer intermodal volume. Hub Group’s transcontinental intermodal volume was down 6% year-over-year, while local East and West intermodal volume also declined.
The dedicated trucking team faced headwinds related to startup costs, but yield improvements have been seen in the second quarter, expected to continue throughout the year. The logistics segment generated a 2.4% year-over-year increase in revenue during the first quarter.
In addition, Hub Group completed a 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 during the quarter. The earnings report for Hub Group’s first quarter is summarized in a table within the article.
