Hub Group, Inc.

Previous wording

Intermodal and Transportation Solutions. Our ITS segment offers high service, nationwide door-to-door intermodal transportation, providing value, visibility and reliability in both transcontinental and local lanes by combining rail transportation with local trucking. This segment includes our trucking operations which provides our customers with local pickup and delivery as well as high service local and regional trucking transportation using equipment dedicated to their needs. In the first quarter of 2025, approximately 76% of our drayage services was provided by our own fleet. We arrange for the movement of our customers’ freight in one of our approximately 50,000 containers. We contract with railroads to provide transportation for the long-haul portion of the shipment between rail terminals. Drayage between origin or destination and rail terminals are provided by our own trucking operations and third parties with whom we contract. Our dedicated service operation offers fleets of equipment and drivers to each customer on a contract basis, as well as the management and infrastructure to operate according to the customer’s high service expectations. As of March 31, 2025, our trucking transportation operation consisted of approximately 2,300 tractors, 3,300 employee drivers and 4,600 trailers. We also contract for services with approximately 500 independent owner-operators. These assets and contractual services are used to support drayage for our intermodal service offering and to serve our customers who require high service local and regional trucking transportation using equipment dedicated to their needs. Our dedicated service operation offers fleets of equipment and drivers to each customer on a contract basis, as well as the management and infrastructure to operate according to the customer’s high service expectations.

Current wording

Intermodal and Transportation Solutions. Our ITS segment offers high service, nationwide door-to-door intermodal transportation, providing value, visibility and reliability in both transcontinental and local lanes by combining rail transportation with local trucking. This segment includes our trucking operations which provides our customers with local pickup and delivery as well as high service local and regional trucking transportation using equipment dedicated to their needs. In the first six months of 2025, approximately 78% of our drayage services was provided by our own fleet. We arrange for the movement of our customers’ freight in one of our approximately 50,000 containers. We contract with railroads to provide transportation for the long-haul portion of the shipment between rail terminals. Drayage between origin or destination and rail terminals are provided by our own trucking operations and third parties with whom we contract. Our dedicated service operation offers fleets of equipment and drivers to each customer on a contract basis, as well as the management and infrastructure to operate according to the customer’s high service expectations. As of June 30, 2025, our trucking transportation operation consisted of approximately 2,400 tractors, 3,300 employee drivers and 4,500 trailers. We also contract for services with approximately 500 independent owner-operators. These assets and contractual services are used to support drayage for our intermodal service offering and to serve our customers who require high service local and regional trucking transportation using equipment dedicated to their needs. Our dedicated service operation offers fleets of equipment and drivers to each customer on a contract basis, as well as the management and infrastructure to operate according to the customer’s high service expectations.

Previous wording

We are focused on several margin enhancement projects including network optimization, matching of inbound and outbound loads, reducing empty miles, improving our recovery of accessorial costs, increasing our driver and asset utilization, reducing repositioning costs, providing holistic solutions and improving low profit freight. Hub’s top 50 customers represent approximately 66% of revenue for the three months ended March 31, 2025, while one customer accounted for more than 10% of our quarterly revenue in both segments in both 2025 and 2024. We use various performance indicators to manage our business. We closely monitor profit levels for our customers. We also evaluate on-time performance, customer service, cost per load and daily sales outstanding by customer account. Vendor cost changes and vendor service levels are also monitored closely.

Current wording

We are focused on several margin enhancement projects including network optimization, matching of inbound and outbound loads, reducing empty miles, improving our recovery of accessorial costs, increasing our driver and asset utilization, reducing repositioning costs, providing holistic solutions and improving low profit freight. Hub’s top 50 customers represent approximately 68% of revenue for the six months ended June 30, 2025, while one customer accounted for more than 10% of our revenue in both segments for both the six months ended June 30, 2025 and 2024. We use various performance indicators to manage our business. We closely monitor profit levels for our customers. We also evaluate on-time performance, customer service, cost per load and daily sales outstanding by customer account. Vendor cost changes and vendor service levels are also monitored closely.

Previous wording

The following table includes the one customer that represented 10% or more of our quarterly revenue by segment for the three months ending March 31, 2025 and 2024, respectively:

Current wording

The following table includes the one customer that represented 10% or more of our revenue by segment for the six months ending June 30, 2025 and 2024, respectively:

Previous wording

The following table summarizes our operating revenue and operating income by segment (in thousands):

Current wording

The following table summarizes our operating income by segment (in thousands):

Previous wording

Total consolidated operating revenue decreased 8% to $915 million in 2025 from $999 million in 2024.

Current wording

Total consolidated operating revenue decreased 8% to $906 million in 2025 from $986 million in 2024.

Previous wording

The following is a summary of operating results and certain items in the condensed consolidated statements of income as a percentage of revenue:

Current wording

The following is a summary of operating results and certain items in the condensed consolidated statements of income as a percentage of revenue (in thousands):

Previous wording

Purchased transportation and warehousing costs decreased 11% to $658 million in 2025 from $740 million in 2024. As a percentage of revenue, purchased transportation and warehousing costs decreased to 71.9% in 2025 from 74.1% in 2024.

Current wording

Purchased transportation and warehousing costs decreased 10% to $656 million in 2025 from $727 million in 2024. As a percentage of revenue, purchased transportation and warehousing costs decreased to 72.4% in 2025 from 73.7% in 2024.

Previous wording

Salaries and benefits increased to $149 million in 2025 from $144 million in 2024. As a percentage of revenue, salaries and benefits increased to 16.3% in 2025 from 14.4% in 2024.

Current wording

Salaries and benefits increased to $143 million in 2025 from $142 million in 2024. As a percentage of revenue, salaries and benefits increased to 15.8% in 2025 from 14.4% in 2024.

Previous wording

Headcount, which includes drivers, warehouse personnel and office employees, was 6,386 as of March 31, 2025 and 5,897 as of March 31, 2024, respectively. The increase in headcount related primarily to additional warehouse and driver team members as well as office employees and drivers due to the EASO transaction.

Current wording

Headcount, which includes drivers, warehouse personnel and office employees, was 6,310, which includes 614 employees of EASO, as of June 30, 2025 and 5,813 as of June 30, 2024, respectively. The increase in headcount related primarily to drivers and warehouse employees due to the EASO acquisition.

Previous wording

Depreciation and amortization expense decreased to $33 million in 2025 from $38 million in 2024. This expense decrease was related primarily to decreased container depreciation expense resulting from changes made in the third quarter of 2024 to the estimated useful lives of our containers. This expense, as a percentage of revenue, decreased to 3.6% in 2025 from 3.8% in 2024. Depreciation expense includes transportation equipment, technology investments, leasehold improvements, warehouse equipment, office equipment and building improvements.

Current wording

Depreciation and amortization expense decreased to $32 million in 2025 from $38 million in 2024. This decrease was related primarily to decreased container depreciation expense resulting from changes made in the third quarter of 2024 to the estimated useful lives of our containers. This expense, as a percentage of revenue, decreased to 3.6% in 2025 from 3.8% in 2024. Depreciation expense includes transportation equipment, technology investments, leasehold improvements, warehouse equipment, office equipment and building improvements.

Previous wording

Net gains on the sale of equipment decreased to $0.1 million in 2025 from $0.5 million in 2024. This decrease resulted from both less units sold and a lower average gain per unit sold in 2025 as compared to 2024.

Current wording

Net gains on the sale of equipment decreased to a loss of $0.1 million in 2025 from a gain of $0.4 million in 2024. This decrease resulted from both less units sold and a lower average gain per unit sold in 2025 as compared to 2024.

Previous wording

The provision for income taxes increased to $8 million in 2025 from $7 million in 2024. We provided for income taxes using an effective rate of 23.7% in 2025 and an effective rate of 21.5% in 2024. The first quarter 2025 effective tax rate exceeded the rate from 2024 as we had a smaller rate benefit related to stock-based compensation in 2025 than in 2024.

Current wording

The provision for income taxes decreased to $8 million in 2025 from $9 million in 2024 due primarily to lower pre-tax income in 2025. We provided for income taxes using an effective rate of 24.0% in 2025 and an effective rate of 22.8% in 2024. The second quarter 2025 effective tax rate of 24.0% was higher than the rate from 2024, as in 2024 we received a one-time benefit from amending state tax returns.

Previous wording

Intermodal and Transportation Solutions (“ITS”) revenue decreased 4% to $530 million primarily due to mix, price and fuel partially offset by higher intermodal volumes of 8%. ITS operating income increased to $14 million, or 2.7% of revenue, as compared to $13 million, 2.4% of revenue in the prior year, due to cost control efforts, lower dedicated start-up costs, and improved insurance and claims expenses.

Current wording

Intermodal and Transportation Solutions (“ITS”) revenue decreased 5% to $1,058 million primarily due to mix, price declines, lower fuel revenue, as well as lower dedicated revenue, partially offset by an increase in intermodal volume. ITS operating income increased 7% to $28 million, or 2.7% of revenue, as compared to $27 million, or 2.4% of revenue in the prior year, primarily due to cost control efforts, lower dedicated start-up costs, and improved insurance and claims expenses.

Previous wording

Logistics revenue decreased 14% to $411 million primarily due to lower volume and revenue per load in our brokerage business, exiting of unprofitable business in consolidation and fulfillment, and seasonal softness in managed transportation and final mile businesses. Logistics operating income decreased to $23 million, 5.7% of revenue, as compared to $24 million, 5.0% of revenue, due to positive contribution from consolidation and fulfillment, managed transportation, and final mile fully offset a lower brokerage margin.

Current wording

Logistics revenue decreased 13% to $815 million primarily due to lower volume and revenue per load in our brokerage business, exiting from unprofitable business in consolidation and fulfillment, and sub-seasonal demand in managed transportation and final mile businesses. Logistics operating income decreased to $43 million, or 5.3% of revenue, as compared to $50 million, or 5.3% of revenue, due to lower brokerage margins.

Previous wording

Purchased transportation and warehousing costs declined as compared to the prior year due to lower rail and third-party warehouse costs. The reduction in warehouse costs is primarily driven by the completion of our network optimization project in 2024.

Current wording

Purchased transportation and warehousing costs declined as compared to prior year due to lower rail, third-party warehouse, third party drayage and carrier costs, and fuel costs. The reduction in warehouse costs is primarily driven by the completion of our network optimization project in 2024.

Previous wording

Insurance and claims expense decreased to $11 million in 2025 from $13 million in 2024. This decrease was primarily due to less claim expenses related to auto liability claims in 2025. These expenses, as a percentage of revenue, decreased to 1.2% in 2025 from 1.3% in 2024.

Current wording

Insurance and claims expense decreased to $22 million in 2025 from $25 million in 2024. This decrease was primarily due to decreased claim costs related to auto liability claims in 2025. These expenses, as a percentage of revenue, decreased to 1.2% in 2025 from 1.3% in 2024.

Previous wording

Our financing and liquidity strategy is to fund operating cash payments and future dividends through cash received from the provision of services, cash on hand, and to a lesser extent, from cash received from the sale of equipment. As of March 31, 2025, we had $113 million of cash. In addition, we had $18 million of restricted investments and $28 million of restricted cash, which are held for payments of long-term liabilities and the deferred cash consideration from the EASO transaction, respectively. We generally fund our purchases of transportation equipment through the issuance of secured, fixed rate Equipment Notes. In prior years, we have funded our business acquisitions from cash on hand. Payments for our other investing activities, such as our capitalized technology investments, have been funded by cash on hand or cash flows from operations. Cash used in financing activities, including the purchase of treasury stock and dividend payments have been funded by cash from operations or cash on hand. We have not historically used our Credit Facility to fund our operating, investing, or financing cash needs, though it is available to fund future cash requirements as needed. Based on past performance and current expectations, we believe cash on hand and cash received from the provision of services, along with other financing sources, will provide us the necessary capital to fund transactions and achieve our planned growth for the next twelve months and the foreseeable future.

Current wording

Our financing and liquidity strategy is to fund operating cash payments and future dividends through cash received from the provision of services, cash on hand, and to a lesser extent, from cash received from the sale of equipment. As of June 30, 2025, we had $137 million of cash. In addition, we had $20.0 million of restricted investments and $26.6 million of restricted cash, which are held for payments of long-term liabilities and the deferred cash consideration from the EASO transaction, respectively. We generally fund our purchases of transportation equipment through the issuance of secured, fixed rate Equipment Notes. In prior years, we have funded our business acquisitions from cash on hand. Payments for our other investing activities, such as our capitalized technology investments, have been funded by cash on hand or cash flows from operations. Cash used in financing activities, including the purchase of treasury stock and dividend payments, have been funded by cash from operations or cash on hand. We have not historically used our Credit Facility to fund our operating, investing, or financing cash needs, though it is available to fund future cash requirements as needed. Based on past performance and current expectations, we believe cash on hand and cash received from the provision of services, along with other financing sources, will provide us the necessary capital to fund transactions and achieve our planned growth for the next twelve months and the foreseeable future.

Previous wording

Cash provided by operating activities for the three months ended March 31, 2025 was $70 million, which resulted primarily from net income of $27 million, non-cash charges of $50 million partially offset by changes in operating assets and liabilities of $7 million.

Current wording

Cash provided by operating activities for the six months ended June 30, 2025 was approximately $132 million, which resulted primarily from net income of $52 million plus non-cash charges of $100 million, partially offset by the changes in operating assets and liabilities of $20 million.

Previous wording

Cash provided by operating activities totaled $70 million in 2025 compared to $81 million in 2024. The $11 million decrease in cash flow was primarily due to decreases in non-cash charges of $1 million plus a decrease in the change of assets and liabilities of $10 million.

Current wording

Cash provided by operating activities totaled $132 million in 2025 compared to $150 million in 2024. The $18 million decrease in cash flow was primarily due to a decrease in net income of $4 million and a negative change in operating assets and liabilities of $16 million, primarily due to the change in accounts payable, partially offset by an increase in non-cash charges of $2 million.

Previous wording

Net cash used in investing activities for the three months ended March 31, 2025 was $16 million which resulted from capital expenditures of $19 million, partially offset by proceeds from the sale of equipment of $3 million. Capital expenditures of $19 million related primarily to tractors of $13 million, technology investments of $4 million, and warehouse equipment of $2 million.

Current wording

Net cash used in investing activities for the six months ended June 30, 2025 was $26 million which resulted from capital expenditures of $30 million, partially offset by proceeds from the sale of equipment of $4 million. Capital expenditures of $30 million related primarily to tractors of $18 million, technology investments of $9 million, warehouse equipment of $2 million, and other transportation equipment of $1 million.

Previous wording

Capital expenditures increased by approximately $2 million in 2025 as compared to 2024. The 2025 increase was due primarily to increased spend on tractors of $3 million and warehouse equipment of $1 million, partially offset by less spend on containers of $2 million.

Current wording

Capital expenditures decreased by approximately $1 million in 2025 as compared to 2024. The 2025 decrease was due to decreases in container purchases of $2 million and warehouse equipment of $3 million. These decreases were partially offset by increases in spend on tractors of $4 million.

Previous wording

In 2025, we estimate capital expenditures will range from $40 million to $50 million. We expect to focus these expenditures on replacements for tractors that have reached the end of their useful life as well as technology investments. We do not plan to purchase containers in 2025.

Current wording

In 2025, we estimate capital expenditures will range from $40 million to $50 million. We expect to focus these expenditures on replacements for tractors that have reached the end of their useful life as well as technology investments. We do not plan to purchase containers in 2025. In addition to our estimated capital expenditures, we expect to fund the Marten Intermodal transaction disclosed in Note 8 with equipment debt.

Previous wording

Net cash used in financing activities for the three months ended March 31, 2025 was $40 million which includes repayments of long-term debt of $26 million, purchase of treasury stock of $14 million, dividends paid and cash for stock tendered for payments of withholding taxes of $7 million each, partially offset by the proceeds from the issuance of debt of $14 million. Debt incurred in 2025 was used to fund the purchase of transportation equipment.

Current wording

Net cash used in financing activities for the six months ended June 30, 2025 was $68 million which includes repayments of long-term debt of $52 million, purchases of treasury stock of $14 million, dividends paid of $15 million, and cash for stock tendered for payments of withholding taxes of $6 million, partially offset by proceeds from the issuance of debt of $19 million. Debt incurred in 2025 was used to fund the purchase of transportation equipment.

Previous wording

The $18 million decrease in cash used in financing activities for 2025 versus 2024 was primarily due to a decrease in the purchase of treasury stock of $12 million, increased proceeds from the issuance of debt of $3 million, a decrease in stock tendered for payments of withholding taxes of $2 million, and a decrease in repayments of long-term debt of $1 million.

Current wording

The $27 million decrease in cash used in financing activities for 2025 versus 2024 was primarily due to the decrease in the purchase of treasury stock of $19 million, less repayments of long-term debt of $2 million, less stock tendered for payments of withholding taxes of $2 million, more proceeds from the issuance of debt of $3 million and a decrease in finance lease payments of $1 million.

Previous wording

At March 31, 2025, and December 31, 2024, we had no borrowings under our respective credit agreements. Our unused and available borrowings were $349 million. We were in compliance with the financial covenants in our credit agreements as of March 31, 2025 and December 31, 2024.

Current wording

As of both June 30, 2025, and December 31, 2024, we had no borrowings under the Credit Agreement and our unused and available borrowings were $449 million and $349 million, respectively. We were in compliance with our debt covenants as of June 30, 2025 and December 31, 2024.

Previous wording

Refer to the company's 2024 Annual Report on Form 10-K for a complete discussion regarding our critical accounting policies and estimates. As of March 31, 2025, there were no material changes to our critical accounting policies and estimates.

Current wording

Refer to the company's 2024 10-K for a complete discussion regarding our critical accounting policies and estimates. As of June 30, 2025, there were no material changes to our critical accounting policies and estimates.