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Hub Group Inc.’s third-quarter revenue and profit fell year over year due to ongoing weakness in the freight market.
The company reported third-quarter revenue of $987 million, a 3.7% year-over-year decrease from $1 billion reported in the third quarter of 2023.
Oak Brook, Illinois-based Hub Group (NASDAQ: HUBG) is a provider of intermodal, truck brokerage and logistics services.
Hub Group’s adjusted earnings per share came in at 52 cents, compared to the 48-cent EPS reported in the third quarter last year.
Analysts predicted earnings of 49 cents per share during the quarter and revenue of $1.09 billion.
“The broader North American transportation market is showing signs of recovery, with a pull-forward peak season, capacity exits, a resilient consumer and inventory replenishment,” Phil Yeager, president and CEO of Hub Group, said during a call Wednesday with analysts after the market closed. “However, we are anticipating a more constructive framework for the market due to continued strength and demand, along with small carrier capacity exits and minimal growth in capital expenditures in the industry.”
Yeager said revenue was impacted by lower revenue per load in the company’s intermodal and brokerage segments. The drop in revenue per load was partially offset by intermodal volume growth.
“Intermodal volumes increased 12% year over year in the quarter, as we continue to convert volume from over the road due to our excellent service product and a pulled forward West Coast peak,” Yeager said. “Revenue per load was down 16% year over year, which was impacted by fuel price on a year-over-year basis. We continued our momentum in the local East with volumes up 39%, local West increased 6% as we onboarded peak volumes later in the quarter, and transcon was up 1%.”
Yeager said the company’s growth in Mexico has been strong during the quarter. On Oct. 8, Hub Group announced a joint venture with Mexico-based EASO, which is expected to bolster Hub Group’s revenue growth south of the border.
“Along with these strong results prior to any EASO volume, we continued our growth in Mexico with 15% of year-over-year volume growth during the third quarter,” Yeager said.
Hub Group slightly lowered its full-year outlook to $1.85 to $1.95 and revenue of $4 billion. In the second quarter, company officials said they expected full-year 2024 earnings to be $1.75 to $2.05 per share, with revenue in the range of $4 billion to $4.3 billion.
Kevin Beth, Hub Group’s CFO, said fourth-quarter freight volumes have been lower than expected.
“Fourth-quarter volumes that we’re guiding through are low double digits, with price down mid to single digits,” Beth said. “We had a 12% increase in volume in October, so we’re feeling that that’s really good. But with the rest of the quarter, we think the pull forward has eaten into some of that original expectations of the volume.”