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Hub Group, Inc. (HUBG)·Q2 2025 Earnings Summary

Executive Summary

  • Q2 2025 revenue was $905.6M (-8% y/y) and GAAP diluted EPS was $0.42; adjusted EPS was $0.45, with vendor settlement expenses of $2.6M pre-tax in the quarter .
  • Against S&P Global consensus, revenue modestly missed ($905.6M vs $917.4M estimate*) while normalized/Primary EPS modestly beat ($0.45 vs $0.441 estimate*); EBITDA was slightly above consensus (company-reported adjusted EBITDA $85.1M vs $77.3M estimate*, S&P “actual” EBITDA tracked at $81.9M*).
  • Management tightened FY25 guidance: revenue to $3.6–$3.8B (lower upper bound), EPS to $1.80–$2.05 (raised low end, lowered high end), citing limited surcharge assumptions, softer brokerage, and timing risk on Final Mile onboarding .
  • Near-term catalysts: sizable Final Mile wins ($150M annualized starting late Q3/Q4) and the announced Marten Intermodal refrigerated asset acquisition (accretive to Q4 2025 EPS; expands reefer capacity) .

What Went Well and What Went Wrong

  • What Went Well

    • Intermodal and Transportation Solutions (ITS) margins improved: ITS operating margin was 2.7% (+30 bps y/y) with ITS operating income up y/y despite lower revenue per load .
    • Cost actions tracking ahead: general and administrative declined y/y when adjusted for vendor settlements; company increased cost-savings target from $40M to $50M, with additional warehouse alignment opportunities identified .
    • Strategic growth: $150M annualized Final Mile wins begin ramping late Q3/Q4 (“will be onboarding $150,000,000 of net new annualized revenue”) and Marten Intermodal refrigerated assets acquisition expands reefer intermodal scale and is EPS accretive in Q4 .
    • Quote: “Intermodal margin performance and new customer wins for the Final Mile business reflect success with our approach.” — Phil Yeager .

  • What Went Wrong

    • Top-line pressure: consolidated revenue down 8% y/y on lower revenue per unit in intermodal and brokerage, decreased fuel revenue, and sub-seasonal demand across segments .
    • Brokerage softness: Logistics adjusted operating income fell to $22.5M from $25.9M y/y due to lower brokerage margin; management removed expectation of near-term brokerage margin snapback .
    • Vendor settlements: $2.6M pre-tax vendor settlements in Q2 impacted GAAP results; adjusted EPS down $0.02 y/y .
    • Analyst concern: guidance midpoint lowered primarily on weaker brokerage and conservative surcharge assumptions despite positive cost and acquisition tailwinds .

Financial Results

MetricQ2 2024 (oldest)Q1 2025Q2 2025 (newest)
Revenue ($USD Millions)$986.5 $915.2 $905.6
GAAP Diluted EPS ($USD)$0.47 $0.44 $0.42
Adjusted EPS ($USD)$0.47 (no specific non-GAAP disclosed for Q2’24 EPS beyond GAAP)N/A$0.45
Operating Income ($USD Millions)$39.5 $37.3 $34.3
Operating Margin (%)4.0% 4.1% 3.8%
Adjusted Operating Margin (%)N/AN/A4.1%
Adjusted EBITDA ($USD Millions)$89.0 $85.0 $85.1

Segment breakdown (Q2 2025 vs Q2 2024):

Segment MetricQ2 2024Q2 2025
ITS Revenue ($USD Millions)$561.0 $528.2
ITS Operating Income ($USD Millions)$13.6 $14.4
ITS OI Margin (%)2.4% (derived from $13.6/$561.0) 2.7%
Logistics Revenue ($USD Millions)$459.1 $404.3
Logistics GAAP OI ($USD Millions)N/A$19.9
Logistics Adjusted OI ($USD Millions)$25.9 $22.5
Logistics Adjusted OI Margin (%)5.6% (derived) 5.6%

KPIs and operating drivers:

KPIQ1 2025Q2 2025
Intermodal volume YoY+8% +2%
Intermodal revenue per load YoYN/A-9%
Fuel revenue impactN/A~$18M ITS, ~$9M Logistics headwind
In-sourced drayage progressN/A+700 bps toward ~80% goal
MTB repositioning costN/A-43% YoY
Adjusted EBITDA ($M)$85.0 $85.1

Consensus vs actual (S&P Global):

MetricQ2 2025 ConsensusQ2 2025 Actual
Revenue ($USD)$917.4M*$905.6M
Primary EPS ($USD)$0.441*$0.45* (company adjusted EPS $0.45 )
EBITDA ($USD)$77.3M*$81.9M* (company adjusted EBITDA $85.1M )

Values marked with * are retrieved from S&P Global.

Guidance Changes

MetricPeriodPrevious Guidance (Q1 2025)Current Guidance (Q2 2025)Change
RevenueFY 2025$3.6B–$4.0B $3.6B–$3.8B Lowered upper bound
Diluted EPSFY 2025$1.75–$2.25 $1.80–$2.05 Raised low end; lowered high end
Effective Tax RateFY 2025~24% ~24.5% Slightly higher
CapexFY 2025$40M–$50M $40M–$50M Maintained
Surcharge assumptionsH2 2025Not specifiedMinimal surcharges embedded at midpoint More conservative
Final Mile onboardingH2 2025Not specified$150M annualized starting late Q3/Q4; timing risk to midpoint Added timing sensitivity

Earnings Call Themes & Trends

TopicQ4 2024 (older)Q1 2025 (older)Q2 2025 (current)Trend
AI/technology initiativesFocus on efficiency and cost; platform investments Continued tech investment, platform readiness for tuck-ins AI layered atop best-in-class platforms; AgenTek AI in Final Mile; decision-support in brokerage Building deployment; productivity gains
Supply chain/tariffs/macroWest Coast volumes strong; transloading; surcharges Bid season pulled forward; pricing stabilizing; strong West Coast demand Tariff-driven shipping pattern shifts; early West Coast peak indications Early peak risk window; cautious surcharge modeling
Intermodal product performance14% volume growth; revenue per load -9% y/y; surcharges High single-digit full-year volume, low single-digit price increases expected +2% volume; revenue per load -9%; ITS margin up; PC costs down Margins stabilizing; yield focus
Final Mile and LogisticsStrong Final Mile and e-comm; brokerage headwinds Logistics margin expansion path from network alignment $150M annualized Final Mile wins; sequential Logistics OI improvements expected Scaling Final Mile; margin resiliency
Rail partners & UP–NS mergerNot discussedNot discussedUP–NS proposed transcontinental network viewed as growth catalyst; single-line benefits Potential structural tailwinds medium term
M&A/refrigerated intermodalActive M&A pipeline Opportunistic tuck-ins; maintain balance sheet strength Acquire Marten Intermodal refrigerated assets; EPS accretive Q4 2025 Strategic scale in reefer IMDL

Management Commentary

  • Strategy and execution: “The team continues to navigate this operating environment with a focus on serving customers, improving productivity, and leveraging growth investments.” — Phil Yeager .
  • Intermodal efficiency: “We increased operating margins through increasing our percentage of in source dray by 700 basis points to our stated 80% goal.” — Phil Yeager .
  • Guidance philosophy: “We stand ready to meet customer needs, but have not incorporated significant peak season surcharges into our guidance at this time.” — Kevin Beth .
  • UP–NS merger impact: “A transcontinental network removes friction in gateways, reduces transit times, provides access to new markets, and increases competition with truck volume…” — Company statement .
  • Refrigerated expansion: “We are excited to more than double Hub Group’s temperature-controlled container fleet… immediately accretive to Q4 2025 EPS.” — Company statement .

Q&A Highlights

  • Surcharges and peak timing: Management expects ITS margin step-up in Q3 with typical moderation in Q4; surcharge dollars modeled conservatively at the midpoint .
  • Brokerage outlook: Removed expectation of near-term margin snapback; now modeling flat volumes and RPU, contributing to midpoint reduction .
  • Final Mile onboarding: $150M annualized wins ramp late Q3/Q4; start-up costs and timing can affect near-term margins; accretive to Logistics margin profile .
  • Refrigerated intermodal acquisition: Expected $0.01–$0.02 accretion in Q4 2025; mid-single-digit accretion in 2026; day-one synergies embedded (chassis, drayage, rail contracts) .
  • Intermodal yield/mix: Revenue per load down 9% on fuel and mix; core prices relatively flat; strong West Coast demand supports network .

Estimates Context

  • Revenue: $905.6M vs $917.4M consensus — modest miss* .
  • Primary EPS: $0.45 vs $0.441 consensus — modest beat*; GAAP diluted EPS was $0.42 .
  • EBITDA: $81.9M “actual” vs $77.3M consensus — beat*; company-reported adjusted EBITDA was $85.1M .
    Values marked with * are retrieved from S&P Global.

Where estimates may adjust:

  • Brokerage margin trajectory now modeled flatter; consensus may lower outer-quarter Logistics assumptions.
  • Final Mile onboarding and refrigerated intermodal accretion introduce upside skew to H2 margins if timing executes as planned .

Key Takeaways for Investors

  • Mix and pricing headwinds continue, but ITS margin resilience and cost actions stabilized profitability; expect sequential margin improvement in Q3 driven by intermodal .
  • Guidance prudently conservative on surcharges; upside if West Coast peak persists and onboarding timing holds — watch Q3 surcharge realization and Final Mile ramp .
  • Strategic expansion in refrigerated intermodal strengthens defensible, higher-margin niches and cross-selling, with near-term EPS accretion in Q4 .
  • Brokerage remains the weak link; management not banking on a snapback — valuation should reflect muted near-term brokerage contribution .
  • Balance sheet remains strong: net debt/EBITDA LTM at 0.3x; capital allocation flexibility for tuck-ins and buybacks .
  • Medium-term structural tailwind if UP–NS transcontinental network proceeds: single-line service could enhance reliability, reduce transit times, and expand TAM for intermodal .
  • Trade tactically around surcharge updates and Q3 volume cadence; thesis-wise, portfolio mix and disciplined execution support improved trough-to-trough margins and FCF .