Hub Group’s third-quarter sales decline due to ‘very soft freight environment’



Oak Brook, Illinois-based Hub Group recorded year-over-year revenue declines in its intermodal transportation and logistics segment. (Photo: Jim Allen/FreightWaves)

Lower demand and oversupply of truckloads in the market led to third-quarter revenue declines across Hub Group’s intermodal and logistics divisions, company officials said.

Oak Brook, Illinois-based intermodal transportation and logistics management solutions provider Hub Group (NASDAQ: HUBG) reported third-quarter earnings after market close on Thursday.

“As we discussed on our last conference call, we felt the third quarter was going to be our toughest period, and that’s the reality. It became,” he said. “The peak season has subsided and we do not expect a sharp change in demand in the fourth quarter. Demand was low in July and August, resulting in lower intermodal volumes.”

Hub Group reported third-quarter net income of $30 million and earnings per share of 97 cents, a 63% year-over-year decline compared to the same period in 2022. The company beat analyst estimates of his $1.17. Earnings per share for the quarter.

Revenue for the quarter was $1.02 billion, compared to analysts’ expectations of $1.17 billion. Third-quarter revenue was down 24% year-over-year compared to 2022, when Hub Group reported his $1.35 billion in revenue.

Hub Group’s full-year 2023 outlook is for adjusted earnings per share in the range of $5.30 to $5.40, with top-line revenue of $4.2 billion. Company officials also expect capital investments in containers, tractors, warehouse equipment and technology to be in the range of $140 million to $150 million.

“Despite a very soft freight environment, logistics accounted for nearly 70% of our operating profit in the quarter, reflecting our strategy to diversify and expand our non-cyclical, non-asset-based services. We are seeing the benefits,” said Yeager. .

Hub Group, like other intermodal carriers, saw a lot of “price” competition for truckload carrier customers during the quarter.

“Pricing was a little more bullish than we expected,” Yeager said. “This time last year, we weren’t necessarily able to move quickly enough on pricing in the first part of the bidding season and ended up incurring some losses. [customers] across the road. We now have an opportunity to take some of that back and we think there’s a significant opportunity to do so given some of the spreads that we’re seeing. ”

Hub Group’s intermodal and transportation solutions third quarter revenue was $595 million, down 30% year-over-year. Intermodal traffic in the quarter was down 16% year over year compared to the same period in 2022.

Logistics revenue for the third quarter was $460 million, compared to $525 million in the year-ago period. The decrease in revenue was due to lower revenue per load in the company’s brokerage service line.

Jaeger said the company expects some intermodal volume growth in 2024 due to rising diesel fuel costs and increased truckloads from the market.

“Looking at the market, we’re starting to see some form of peak season, which is great,” he said. “We are starting to see capacity depletion and a more balanced spot market. Inventories are coming back further. Higher fuel prices are usually good for the shift from long-haul to intermodal transport. I think the only uncertainty is when demand will recover.”

hub group Q3/23 Q3/22 YoY change rate
revenue $1.02 billion $1.35 billion (twenty four%)
Intermodal transportation and transportation solutions $595 million $856 million (30%)
logistics $460 million $525 million (12%)
Adjusted earnings per share $0.97 $2.61 (62%)
Hub Group’s third quarter earnings.

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