Executive Summary

Q1 2025 revenue fell 8% year-over-year to $0.915B, while diluted EPS was $0.44 (flat YoY) and operating margin improved to 4.1% from 3.7% on cost controls and Logistics margin gains .
Versus consensus, EPS modestly beat while revenue missed and EBITDA modestly beat; management lowered FY 2025 guidance on tariff-related demand uncertainty and reduced capex, removing container purchases in 2025 .
Intermodal volumes rose 8% YoY; brokerage volumes declined 9% amid limited spot opportunities; operational KPIs improved (empty repositioning costs -17%, insourced dray +400bps sequentially, turn times +4%) .
Stock reaction catalysts: lowered FY guide (EPS and revenue), resilience in Intermodal volumes, Mexico JV growth (EASO), and $40M cost reduction program that may support margin trajectory through 2H if demand stabilizes .

What Went Well and What Went Wrong

What Went Well

Operating margin up 40bps YoY to 4.1% driven by yield management, cost containment, and operating efficiency; Logistics margin improved 70bps YoY to 5.7% .
Intermodal volumes +8% YoY with strong execution in bid season and network improvements; local East +13%, local West +5%, Mexico volumes growing significantly via EASO JV .
Cost actions and safety programs reduced insurance and claims; empty repositioning costs -17% YoY, insourced dray increased by ~400bps sequentially, turn times +4% YoY .

Quote: “We remained focused on yield management, cost containment and operating efficiency initiatives, resulting in an operating income margin of 4.1%, a 40-basis point improvement over last year…” .

What Went Wrong

Consolidated revenue declined 8% YoY; Intermodal revenue per load down ~12% due to fuel mix/price; brokerage volumes -9% and revenue per load -10% amid limited spot opportunities .
Tariff uncertainty expected to create a near-term import “air pocket” impacting West Coast demand, pressuring sequential ITS results in Q2 before potential normalization in Q3 .
FY 2025 guidance lowered (EPS, revenue, capex) versus Q4 outlook due to import slowdown risk and consumer uncertainty; base case now excludes peak season surcharges .

Financial Results

Quarterly Trend (GAAP)

Metric	Q3 2024	Q4 2024	Q1 2025
Revenue ($USD Billions)	$0.987	$0.974	$0.915
Operating Income ($USD Millions)	$32.1	$31.5	$37.3
Operating Margin (%)	3.3%	3.2%	4.1%
Net Income ($USD Millions)	$23.6	$24.4	$27.2
Diluted EPS ($USD)	$0.39	$0.40	$0.44
EBITDA ($USD Millions)	$78.8	$78.7	$85.0

Q1 YoY Comparison

Metric	Q1 2024	Q1 2025	YoY Change
Revenue ($USD Billions)	$0.999	$0.915	-8%
Operating Margin (%)	3.7%	4.1%	+40 bps
Diluted EPS ($USD)	$0.44	$0.44	Flat

Segment Breakdown (Q1)

Segment	Revenue ($USD Millions)	Operating Income ($USD Millions)	Margin (%)
Intermodal & Transportation Services (ITS)	$530.0	$14.0	2.7%
Logistics	$411.0	$23.3	5.7%
Inter-segment Eliminations	$(25.8)	—	—

KPIs

KPI	Q1 2025	Prior Period/Context
Intermodal volume growth (YoY)	+8%	—
Intermodal revenue per load	-12% YoY (fuel mix/price)	—
Brokerage volume	-9% YoY	Revenue per load -10%
Empty repositioning costs	-17% YoY	—
Insourced drayage	+400 bps sequentially	>80% insourced
Turn times	+4% YoY	—
Monthly intermodal trends	Jan +18%, Feb +1%, Mar +7%, Apr +6%	—
Boxes stacked	~20–25% stacked; ~35% incremental capacity before new containers	No container purchases in 2025
Cash EPS	$0.55	Spread to GAAP EPS $0.11
Shareholder returns	$21M in Q1 (repurchases + dividends)	—
Net debt / EBITDA	0.4x	Target range 0.75–1.25x

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Diluted EPS	FY 2025	$1.90–$2.40	$1.75–$2.25	Lowered
Revenue	FY 2025	$4.0–$4.3B	$3.6–$4.0B	Lowered
Effective Tax Rate	FY 2025	~25%	~24%	Lowered
Capital Expenditures	FY 2025	$50–$70M	$40–$50M	Lowered
Container Purchases	FY 2025	Not specified	None planned	Eliminated
Peak Season Surcharges	FY 2025	Modest in prior base case (analyst reference)	None in base case; included in upside, below 2024’s ~$5.5M	Lowered

Earnings Call Themes & Trends

Topic	Q3 2024 (Prior-2)	Q4 2024 (Prior-1)	Q1 2025 (Current)	Trend
Tariffs/Macro	Not emphasized	Not emphasized	Anticipated import “air pocket”; scenarios drive FY guide ranges	Elevated risk focus
Intermodal volumes/mix	+12% volumes	Strong surcharge revenue; +14% volumes	+8% volumes; revenue per load down ~12%	Volume resilient, pricing mix headwinds
Mexico JV (EASO)	JV announced	JV closed; integration	Strong growth; ~4x volumes YoY; cross-selling	Strengthening cross-border
Cost program/efficiency	Network alignment actions	Adjusted margins improved; cost controls	New $40M cost program; insurance, dray, repos costs down	Intensifying cost discipline
Bid season/pricing	Execution; logistics adjusted margins	Adjusted ITS margin improved	48% bids pulled into Q1; pricing flattish for year; 50 new logos	Competitive, rational pricing
Rail service	—	—	“Phenomenal and resilient” partner service; supports conversion	Positive service backdrop
Dedicated	—	—	~90% contract retention; small site losses to 1-way TL	Stable with selective churn
Storage/warehousing	—	—	Expect storage revenue to offset lower transportation	Counter-cyclical buffer

Management Commentary

Strategic focus: “Winning profitable growth across all of our segments… decreasing costs through our newly implemented $40 million cost reduction program” .
Intermodal bid season: “We’ve added 50 new logos thus far through bid season… we think flattish on pricing for the full year” .
Rail partners: “Rail service has been really phenomenal and resilient… confident in ability to manage surge” .
Guidance rationale: “High end assumes short West Coast slowdown… low end assumes extended slowdown and/or weakening consumer” .

Q&A Highlights

Tariff visibility and volumes: Monthly Intermodal momentum (Jan +18%, Feb +1%, Mar +7%, Apr +6%); near-term import slowdown expected but not yet visible; varied customer responses by end-market and sourcing mix .
Pricing and bids: Significant Q1 bid pull-forward (48% of business); pricing flattish; competitive truckload rates reduced near-term conversion, but spread vs truck ~30% supports Intermodal value proposition .
Capacity and operations: ~20–25% boxes stacked; ~35% incremental capacity before container capex; insourced dray +400bps sequentially; turn times +4% YoY .
Capex and containers: FY capex lowered to $40–$50M; no container purchases in 2025; equipment redeployment solutions in Mexico .
Dedicated retention: ~90% retention on contracts; small sites shifting to one-way TL; pipeline of new wins in retail/consumer lanes with Hub density .

Estimates Context

Q1 2025 vs Consensus:
- EPS: Actual $0.44 vs $0.426 estimate → beat by ~$0.014*
- Revenue: Actual $915.2M vs $963.5M estimate → miss by ~$48.3M*
- EBITDA: Actual ~$84.3M vs $81.2M estimate → beat by ~$3.1M*
- Estimate depth: EPS (# est.) 14; Revenue (# est.) 9*

Drivers: Revenue miss driven by lower revenue per unit (fuel mix/price) and brokerage softness; margin/EBITDA support from cost controls, lower rail/warehouse costs, insurance, and efficiency programs .

Values retrieved from S&P Global.*

Estimates Table

Metric	Q1 2024	Q4 2024	Q1 2025
Primary EPS Consensus Mean ($)	0.397	0.479	0.426*
Primary EPS Actual ($)	0.44	0.48	0.44*
Revenue Consensus Mean ($USD Millions)	1,055.7	1,005.4	963.5*
Revenue Actual ($USD Millions)	999.5	973.5	915.2
EBITDA Consensus Mean ($USD Millions)	79.97	80.65	81.17*
EBITDA Actual ($USD Millions)	86.25	81.48	84.32
Primary EPS - # of Estimates	12	13	14*
Revenue - # of Estimates	8	9	9*

Key Takeaways for Investors

FY 2025 guidance reset lower (EPS and revenue), reflecting tariff-driven import uncertainty; base case excludes surcharges, but upside exists if 2H demand rebounds .
Operational execution and $40M cost actions are improving margins and cash generation; watch for continued reductions in purchased transportation, insurance, and network repo costs .
Intermodal pipeline is robust (50 new logos), rail service strong, and conversion spread vs truck (~30%) remains favorable, supporting volume resilience into peak season .
Mexico JV (EASO) provides structural growth tailwinds and equipment flexibility; management actively evaluates M&A to expand solutions in Mexico and logistics .
Balance sheet flexibility (net debt/EBITDA 0.4x; cash $141M) supports buybacks/dividends and selective investments even amid macro uncertainty .
Near-term trading: revenue misses vs consensus and lower FY guide are headwinds; monitor import flows, bid compliance, and storage revenue offsets in Logistics for Q2; margin trajectory hinges on cost saves and mix .
Medium-term thesis: diversified logistics platform, disciplined cost structure, and cross-border capabilities position HUBG to expand margins when pricing improves and demand normalizes .

Hub Group, Inc. (HUBG)·Q1 2025 Earnings Summary