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Hub Group reported year-over-year increases in its intermodal, logistics and truck brokerage segments during the third quarter, boosting the company’s quarterly revenue to $1.4 billion.

Hub Group Inc. (NASDAQ: HUBG) reported third-quarter earnings per share of $2.61, beating Wall Street analysts’ estimates of $2.46. Revenue for the quarter came in at $1.35 billion versus the consensus estimate of $1.4 billion. 

Company officials said the outlook for 2023 calls for growth in earnings per share, but they lowered the forecast for full-year revenue to $5.5 billion, down from a previous guidance of $5.6 billion to $5.7 billion.

Hub Group also calls for gross margin as a percentage of revenue ranging from 16.5% to 16.7%, compared to a previous guidance of 15.8% to 16%. The company expects capital expenditures for 2022 to range from $240 million to $250 million.

“The results from the third quarter reflect our strategy of diversification which allows Hub Group to be more resilient during all economic environments and helps us to mitigate the cyclical nature of the transportation market,” Chairman and CEO David Yeager said during an earnings call Thursday.

Yeager said the company expects a strong finish to 2022 but sees some uncertainty heading into 2023.

“The fourth quarter is generally the peak of the holiday shipping season,” Yeager said. “However, judging by the feedback from our clients, this peak will be muted versus historic norms. In the end of 2022, we do acknowledge the potential for a continued softening economy.”

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

The company’s third-quarter revenue of $1.35 billion was a 26% year-over-year increase compared with $1.07 million during the same year-ago quarter. 

Hub Group’s intermodal revenue gew 22% to $853.5 million, with a 31% increase in revenue per load, despite a 6% decline in volume.

Volume for the quarter was impacted by customer behavior in advance of the threatened rail strike in September, Hub Group officials said. 

Yeager said the company has taken several steps to improve its “resiliency in a down market.”

“With a recent acquisition and organic growth, our non-asset-based businesses represent a growing part of the overall results and will generate significant free cash flow while deepening our value to our customers,” Yeager said.

In August, Hub Group acquired omnichannel fulfillment company Tagg Logistics for $103 million in cash. The acquisition expands Hub Group’s warehouse footprint and adds an e-commerce offering to its platform.

Hub Group acquired truck brokerage Choptank Transport Inc. — which specializes in refrigerated transportation — for $130 million in cash in 2021. 

“I think we have a really good playbook that we’ve run and have a great reputation as an acquirer,” said Phil Yeager, president and COO. “I think if you look at our most recent acquisitions, with Tagg and Choptank, and [last-mile delivery provider] NonstopDelivery, all of those are much more resilient models, both from a margin profile as well as the stickiness of the business, in particular warehousing, consolidation and home delivery. We feel very good about the adjustments we’ve made to the suite of services, because it’s also helping to make our business stickier on the intermodal and brokerage side, which can be much more volatile historically.”

Hub GroupQ3/22Q4/21Y/Y % Change
Truck brokerage$250$153.263%
Transportation costs$1.1B$917,50519%
Gross margin16.5%14.7%12%
Hub Group Q3 earnings. $ in millions, except EPS.

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