Hub Group Profits Move Slightly Lower

Hub Group Inc. did something few other large publicly traded trucking operations have done in announcing earnings: It reported a slight decline in profits.

Net income for the intermodal, truck brokerage and logistics services provider was $16.4 million for the fourth quarter of 2014, down from $16.5 million a year earlier. Diluted earnings per share were unchanged at 45 cents over the comparable time periods.

Revenue increased 3% to $915 million from $885 million a year earlier for the Illinois-based company.

Income for the year was $51.6 million compared to $69.1 in 2013. Diluted earnings per share for 2014 were $1.40 compared to $1.87 a year earlier.

Hub Group's revenue increased 6% to $3.6 billion from $3.4 billion in 2013.

“Like the rest of the industry, we continued to be challenged with rail service issues throughout the fourth quarter,” said CEO Dave Yeager on an investor conference call. “The service challenges created significant inefficiencies within our Intermodal network and while we do believe that rail service will incrementally improve near-term, it is not expected to become more normalized until the second half of the year. However, we continue to be very optimistic about the future of intermodal.”

The company’s Mark Yeager, vice chairman, president and chief operating officer noted that rail service has improved since hitting a low point in December, but is still below levels from a year ago.

“We also incurred unusually high maintenance and repair expenses associated with older tractors and rail-furnished chassis. Nonetheless, as a result of our efforts, we were able to maintain customer on-time performance above 90% throughout the quarter,” he said. “Rail service appears to have stabilized and late in the quarter, we were able to bring drivers home, terminate most of the expensive leased equipment, and get back into a more normalized maintenance and repair cycle. As discussed last quarter, we have a number of initiatives currently in place designed to lower cost, enhance execution and improve service.”