Hub Group, Inc. Reports First Quarter 2021 Results

Highlights:        

• Strong freight market conditions and continued growth with strategic customers led to 10% revenue growth in the quarter despite weather challenges in February
• Revenue growth and focus on operating efficiency resulted in first quarter net income of $17 million or $0.51 of diluted earnings per share
• Generated EBITDA (non-GAAP)¹ of $56 million in the quarter, with over $226 million in cash and cash equivalents at quarter end
• Celebrated our 50^th anniversary on April 19th

OAK BROOK, Ill., May 05, 2021 (GLOBE NEWSWIRE) -- Hub Group, Inc. (NASDAQ:HUBG) announced first quarter 2021 net income of $17.2 million, or diluted earnings per share of $0.51. Net income for first quarter 2020 was $13.2 million, or $0.40 per diluted share.  

“Strong freight market conditions, growth with our strategic customers, and our focus on providing a world-class customer experience resulted in 10% revenue growth in the quarter. Hub Group is well positioned for 2021 and beyond due to demand in the marketplace for high service levels and cost-effective solutions. In April we celebrated our 50^th anniversary, and I want to thank all who have been part of this outstanding accomplishment, including our customers, employees, drivers, vendors, and carriers. We are excited about the future and look forward to the next 50 years,” said Dave Yeager, Hub Group’s Chairman and Chief Executive Officer.  

Q1 2021 Results

Revenue for the first quarter of 2021 increased by 10% to $920 million compared with $839 million for the first quarter of 2020. Operating income for the quarter was $24 million versus $20 million for the first quarter of 2020. Revenue growth in the first quarter, combined with our ongoing focus on cost control, led to EBITDA¹ (non-GAAP) of $56 million.

First quarter intermodal revenue increased 6% to $506 million due to a 2% increase in volume and a 4% increase in revenue per load. We estimate that winter storms impacted our volume growth by approximately 600 basis points. Intermodal gross margin declined compared to the prior year due to increased purchased transportation costs, the impact of winter storms and higher equipment repositioning costs, partially offset by volume growth and higher prices.  

First quarter logistics revenue increased 8% to $217 million due to growth of our retail supplier solutions services and the addition of NonstopDelivery (“NSD”), partially offset by the impact of lost customers. Gross margin increased due to actions we have taken to drive improved profitability, higher revenue and the acquisition of NSD, partially offset by higher warehousing costs.

Truck brokerage revenue grew 30% in the quarter to $127 million despite a 6% decline in volume. Contractual freight represented 51% of total brokerage volume in the first quarter of 2021 as compared to 64% in 2020. Truck brokerage gross margin increased relative to first quarter 2020 due to revenue per load growth in both contractual and transactional freight, partially offset by the impact of higher purchased transportation costs.

Dedicated revenue increased 11% compared to the prior year to $69 million due to growth from existing and new customers, partially offset by the impact of business we exited. Dedicated gross margin increased primarily due to our profit improvement actions and growth in revenue, partially offset by higher driver costs.

Costs and expenses decreased slightly to $85 million in the first quarter of 2021 due primarily to lower professional fees, higher gains on the sale of equipment and a reduction in travel expense, partially offset by increased costs resulting from the acquisition of NSD and an increase in salaries and benefits expense related to variable compensation.

Capital expenditures for the first quarter of 2021 totaled $10 million. At March 31, 2021, we had cash and cash equivalents of $226 million.

2021 Outlook

We expect that our 2021 diluted earnings per share will range from $3.20 to $3.40. We estimate revenue will grow in the mid-teens percentage range for 2021, and that gross margin as a percentage of revenue will range from 12.5% to 13.0%. We estimate our costs and expenses will range from $365 million to $380 million for the year. We project our effective tax rate for 2021 will range from 24% to 25%.

We expect capital expenditures for fiscal year 2021 to range from $165 to $175 million and primarily consist of investments to support growth in the business, including containers, tractors and technology. For 2021 we expect to add 3,000 containers, which will result in net growth of approximately 2,750 after retirements of containers that have reached end of life. We are also planning to add approximately 700 tractors to replace older units and support growth in our drayage and dedicated fleets.

Non-GAAP Financial Measure

In this press release, we present EBITDA, a non-GAAP financial measure defined as earnings before interest, taxes, depreciation and amortization. As required by the rules of the Securities and Exchange Commission (“SEC”), we have provided herein a reconciliation of the non-GAAP financial measure contained in this press release to the most directly comparable measure under GAAP. Management believes that EBITDA provides relevant and useful information, which is used by our management as well as by many analysts, investors and competitors in our industry. By providing this non-GAAP measure, management intends to provide investors with a meaningful, consistent comparison of the Company’s profitability for the periods presented. EBITDA should be viewed in addition to, and not as an alternative to or substitute for, measures determined in accordance with GAAP, and is not necessarily comparable to non-GAAP measures that may be presented by other companies.   

CONFERENCE CALL

Hub Group, Inc. will hold a conference call at 5:00 p.m. Eastern Time on May 5, 2021 to discuss our first quarter 2021 results.

Hosting the conference call will be Dave Yeager, Chairman and Chief Executive Officer. Also participating on the call will be Phil Yeager, President and Chief Operating Officer, and Geoff DeMartino, Executive Vice President, Chief Financial Officer and Treasurer.

This call is being webcast and can be accessed through the Investors link on Hub Group’s web site at www.hubgroup.com. The webcast is listen-only. Those interested in participating in the question and answer session should follow the telephone dial-in instructions below.

To participate in the conference call by telephone, please register at: