Hub Group, Inc. — Call Transcript 2026

Hello, and welcome to the Hub Group Preliminary Q4 and Full Year 2025 Results Conference Call. It is now my pleasure to turn the call over to the company. You may now begin. Hello, and welcome to the Hub Group Preliminary Q4 and Full Year 2025 Results Conference Call. Joining on the call are Phil Yeager, Hub Group's President, Chief Executive Officer, and Vice Chairman, and Kevin Beth, Chief Financial Officer and Treasurer. Statements made on this call that are not historical facts are forward-looking statements. These forward-looking statements are not guarantees of future performance and involve risks, uncertainties, and other factors that might cause the actual performance of Hub Group to differ materially from those expressed or implied by those statements. Further information on these risks and uncertainties are included at the end of our press release and in our most recent Form 10-K and other periodic reports filed with the SEC, which are posted on our website. The financial results that we will be discussing today are preliminary and may change, including as a result of adjustments that may arise in connection with the ongoing audit of our consolidated financial statements for the year ended December 31, 2025. There could be no assurance that the company's final results will not differ from the preliminary results, and any changes could be material. Finally, the preliminary financial results should not be viewed as a substitute for full financial statements prepared in accordance with GAAP and are not necessarily indicative of results that may be achieved in future periods. I now turn the call over to CEO Phil Yeager. Good afternoon, and welcome to Hub Group's conference call to discuss our preliminary Q4 2025 financial results. Joining me today is Kevin Beth, Hub Group's Chief Financial Officer, and Garrett Holland, our Senior Vice President of Investor Relations. Before we dive into our preliminary results, as you saw in the press release we issued this afternoon, in the course of our quarter and year-end closing process, we identified a calculation error that resulted in the understatement of purchased transportation costs and accounts payable. As a result, we are delayed in finalizing our financial results for the Q4 and full year 2025. We will restate results for earlier quarters in 2025 when we file our 10-K. Accuracy and transparency in reporting on our performance is of the utmost importance at Hub Group, and we have taken steps to strengthen and enhance our controls. Kevin will discuss this in greater detail, but as noted in our press release, there is no expected impact on total cash and cash equivalents or operating cash flow for any periods, and we have provided estimated impact of purchased transportation, and warehousing costs for the nine months ended September 30, 2025, based on our team's initial review. Now, I'd like to turn to our preliminary financial results that we are able to review today, along with details on execution of our strategy and trends we are seeing in the market. The last year was a continuation of a challenging market cycle, with stable demand and an oversupply of capacity. We performed well and focused on controlling what we can control, delivering record service levels across our platform, and in particular, our intermodal segment, while managing our costs, adding new business wins, and investing in our business, including equipment, technology, and acquisitions. We executed our strategy while maintaining our strong balance sheet and cash flow profile. 2025 preliminary operating cash flow is approximately $194 million. I will now discuss our segment performance, beginning with ITS. Q4 ITS revenue declined slightly YoY. We experienced a lighter peak season than last year in this segment, while continuing to focus on cost management and operational discipline in both intermodal and dedicated. Intermodal performance remained strong, and we delivered another year of record service and market share gains. For the Q4, volumes increased 1% YoY, while revenue per load was flat, but up 3% sequentially. Transcon volume was up 1%, Local East was down 4%, and Local West was down 1%, while refrigerated volumes increased 150%, and Mexico volumes increased 33%. Intermodal volume finished October, up 2% YoY, down 3% YoY in November, and up 3% YoY in December. In January, intermodal volume decreased 4% YoY, with significant impact from the winter storm against a challenging growth comparison from a year ago, as shippers pulled forward orders ahead of tariffs. We work extremely well with our rail partners during peak, delivering a 90 basis point improvement in YoY on-time performance, positioning us well for intermodal volume growth in 2026 bid season. Throughout the year, our excellent service performance and the consolidation with our rail partners drove enhanced engagement with our customers, who are excited about the opportunity for improved transits and costs in a single rail network, which, along with our consistent focus on cost reduction and efficiency gains, we believe will position us well in intermodal in 2026 and beyond. Given the strong value proposition across our business lines, driven by quality service and savings, especially for the intermodal offering, we remain optimistic regarding the 2026 bid cycle. Incumbency and strong service on awards in recent years is expected to provide a strong foundation to grow from, and new logos have engaged with us to establish service. We remain focused on supporting growth with customers, building on the momentum from business awarded last year, and further improving network balance to reduce backhaul costs. With respect to demand, shippers are cautiously optimistic, with potential benefits from stimulus measures countering lingering inflationary pressure. In Dedicated, revenue declined in the Q4 due to lost sites from earlier in the year, but we were able to partially offset this impact through operational discipline and service improvements. We have significantly improved service levels, which is leading to a strong pipeline of growth opportunities with existing clients, and we are excited about the recent trends in the business. Q4 logistics segment revenue reflects softer demand across business lines, partially offset by new business wins. In CFS, we have performed well through our warehouse consolidation, leading to a 630 basis point improvement YoY in space utilization. We see additional opportunities for further efficiency improvements, and we expect to be better positioned for further growth. In Final Mile, we are in the process of completing the onboarding of significant new business wins, which has helped to offset negative mix and lost sites. In order to successfully onboard the business, we have made investments in the relationships that are continuing into the first quarter to ensure a seamless transition and startup. Although the volume underperformed in the Q4 due to onboarding delays and minor scope changes, we are confident that the steps we are taking now will help drive volume growth well into the future. For the Q4, brokerage volumes declined 10% year over year, with revenue per load down 4% as LTL volume slowed, while truckload and refrigerated volume benefited from project freight and market tightness in the latter portion of the quarter. Market conditions have remained tighter due to weather as we enter 2026, and we are seeing opportunities to support customers with spot opportunities. Our Q4 productivity improved 41% year over year due to our investments in technology and our restructuring, and we expect this to position us well for the current market backdrop and as conditions evolve. Finally, Managed Transportation performed well throughout 2025 and is expected to continue to perform well in 2026, as we brought on new business in the Q4 and have a strong pipeline of additional growth opportunities. Our strong value proposition of continuous improvement, savings, and technology continues to resonate with our clients. Our Q4 productivity improved 12% compared to the prior year, which is enabling our ability to invest in the business and position for growth. We are pleased with our operational performance in 2025 in challenging market conditions. As we look ahead to 2026, we believe we are well positioned to support our customers in this evolving environment and excited about our opportunities for growth. We continue to see signs of tightening capacity due to regulatory enforcement, along with challenging market conditions and cost inflation, forcing out undercapitalized carriers. However, demand and inventory levels remain balanced, and the consumer has stayed resilient. With increased tax refund disbursements, we are hopeful that supply and demand will move to equilibrium, leading to opportunities for intermodal conversion and growth across all our services. It is too early to determine whether a sustained market inflection is imminent, but we believe we are well positioned regardless of market conditions, due to our best-in-class service and team, efficient cost structure, financial flexibility, and ongoing strategic investments. With stabilizing market conditions and excellent service, as well as rail consolidation expected in 2027, we have the ability to convert business from over the road to rail. We believe our logistics services are well-positioned due to our focus on productivity, service, and continuous improvement. Last, we maintain a strong balance sheet and capital flexibility to invest in our business for the long term. We expect to remain disciplined with capital deployment, continuing a balanced approach, returning capital to shareholders through our dividend and share repurchases, while evaluating potential M&A opportunities that meet appropriate return thresholds. As of today, we have approximately $142 million remaining under our share repurchase program. To sum up, although there is some uncertainty near term in the industry, we see all these drivers creating an exciting backdrop for Hub Group in 2026 and beyond. With that, I will hand the call over to Kevin to discuss our preliminary financial results. Thank you, Phil. Before walking through our preliminary Q4 and full year 2025 financial results and our 2026 outlook, I want to touch on the accounting item outlined in our release that Phil mentioned at the start of the call. The company identified an error that resulted in an understatement of purchased transportation costs and accounts payable in the first nine months of 2025. The total amount of the reduction to accounts payable and purchased transportation costs related to this issue that was recorded during these periods is $77 million. Based on our analysis to date, we estimate the correction of the error will increase purchased transportation and warehousing costs for the nine months ended September 30, 2025, but cannot yet estimate what the resulting increase to purchased transportation and warehousing costs and accounts payable will be. There is no expected impact on Hub's total cash and cash equivalents or operating cash flows for any periods. We are working to report our full and final financial results for 2025 as soon as possible. We plan to include the restated quarterly financial information for Q1, Q2, and Q3 2025 in our 2025 Form 10-K. The team is committed to transparency and resolution of the accounting matter. Now, turning to our preliminary results. For the full year, we expect consolidated operating revenue of $3.7 billion, a 7% decrease over prior year. Full year 2025 ITS segment operating revenue is expected to be approximately $2.2 billion, which includes low single-digit YoY decrease during Q4 intermodal volume growth of 1% and stable revenue per load, despite lower surcharge revenue, was offset by lower dedicated revenue during the quarter. We realized peak surcharges of approximately $900,000 in Q4, representing a YoY difference of $4 million. Full year logistics segment operating revenue is expected to be approximately $1.6 billion, inclusive of a high single-digit YoY decrease during the Q4. Q4 performance reflects lower brokerage revenue, select customer attrition at CFS, and softer underlying final mile demand, partially offset by new customer onboardings. Building on Phil's earlier remarks, peak season activity was largely in line with expectations, but muted overall relative to prior years. We saw select customers reaching out with project freight activity, and we saw pockets of tightness, particularly off the West Coast, to start the quarter. However, many shippers pulled forward inventory over the course of the year and had less urgency to move product. Tightening capacity conditions later in the quarter reflected a combination of lower driver supply from policy actions and weather disruptions. Freight market dynamics clearly remain fluid and closer to balance than any time in recent years. Now turning to our cash flow. Preliminary cash flow from operations for the full year was $194 million. Our full-year CapEx was approximately $45 million, in line with our estimate of less than $50 million. Integrations related to the acquisitions of Marten Intermodal assets and West Coast final mile provider, SITH, LLC, are complete, and the businesses are performing well. Importantly, our balance sheet and financial position remain strong. Debt at December 31, 2025, totaled approximately $229 million, which, after giving effect to cash of approximately $113 million, resulted in net debt of approximately $116 million, a decrease of approximately $50 million compared to December 31, 2024. In 2025, we returned $44 million to shareholders through dividends and stock repurchases. Turning to our preliminary 2026 guidance, revenue is projected to be between $3.65 billion-$3.95 billion for the full year. For our ITS segment, we expect revenue will largely be driven by intermodal volume growth through the year. We expect dedicated performance will be slightly lower compared to 2025 due to lost customer sites, which will continue to offset new awards in the near term. For logistics, excluding our brokerage business, we expect recovering revenue through the year due to new business wins and improving profitability, led by final mile and managed transportation. For brokerage, we expect volume pressure continues in the near term and weighs on logistics segment profitability. For the year, we expect capital expenditures of $35 million-$45 million as we continue to focus on technology projects and opportunistic replacements for tractors, given favorable purchase terms and recent changes for bonus depreciation. We do not plan to purchase containers in 2026. As Phil noted, our capital allocation plan continues to guide us and starts with investing in the business to support long-term growth and improve efficiency across tractors, technology, and container capacity. As you know, we consider M&A opportunistically to complement organic growth, and the bar for M&A is high, given our disciplined due diligence process and return focus. And finally, we remain focused on returning capital directly to shareholders through our quarterly dividend and share repurchases. Our current dividend also returns approximately $7.5 million to shareholders quarterly, and as Phil noted, we have approximately $142 million remaining under our current share repurchase authorization. We expect to continue to balance capital deployment priorities and opportunistically repurchase shares as market conditions and opportunities evolve. Our balance sheet is in great shape and has been fortified by the cash flow resiliency of our operating model through this industry downturn. We remain focused on ways to maximize shareholder value. We will share additional details on the 2026 outlook when we release our full Q4 and full year 2025 financial results. And now, I'll turn it back over to Phil for his closing remarks. Thanks, Kevin. To sum up for today, freight market conditions remain challenging through 2025, but the Hub Group team adapted and remained focused on serving our customers and controlling expenses. To start 2026, we are seeing positive trends in the marketplace, as reflected in improving ISM New Orders and spot market activity. Our balance sheet and cash generation remain strong and should provide significant capital flexibility as we remain disciplined with capital deployment. Operating momentum and a strong focus on execution has carried us into 2026, and we will continue to lead with service as the freight market backdrop evolves. Phil and Joyce Yeager founded this company 55 years ago based on the principles of service, integrity, and innovation, and the success of this business has been, and continues to be, based on living those values every day. We are excited about the growth prospects for Hub Group and extending that legacy of performance. Ladies and gentlemen, this concludes today's call with Hub Group. Thank you for joining. You may now disconnect.

Speaker 3: Hello, and welcome to the Hub Group Preliminary Q4 and Full Year 2025 Results Conference Call. It is now my pleasure to turn the call over to the company. You may now begin. Hello, and welcome to the Hub Group Preliminary Q4 and Full Year 2025 Results Conference Call. hello and welcome to the hub group preliminary q4 and full year 2025 results conference call It is now my pleasure to turn the call over to the company. it is now my pleasure to turn the call over to the company You may now begin. you may now begin

Speaker 1: Hello, and welcome to the Hub Group Preliminary Q4 and Full Year 2025 Results Conference Call. Joining on the call are Phil Yeager, Hub Group's President, Chief Executive Officer, and Vice Chairman, and Kevin Beth, Chief Financial Officer and Treasurer. Hello, and welcome to the Hub Group Preliminary Q4 and Full Year 2025 Results Conference Call. hello and welcome to the hub group preliminary q4 and full year 2025 results conference call Joining on the call are Phil Yeager, Hub Group's President, Chief Executive Officer, and Vice Chairman, and Kevin Beth, Chief Financial Officer and Treasurer. joining on the call are phil yeager hub group's president chief executive officer and vice chairman and kevin beth chief financial officer and treasurer Statements made on this call that are not historical facts are forward-looking statements. These forward-looking statements are not guarantees of future performance and involve risks, uncertainties, and other factors that might cause the actual performance of Hub Group to differ materially from those expressed or implied by those statements. Statements made on this call that are not historical facts are forward-looking statements. statements made on this call that are not historical facts are forward-looking statements These forward-looking statements are not guarantees of future performance and involve risks, uncertainties, and other factors that might cause the actual performance of Hub Group to differ materially from those expressed or implied by those statements. these forward-looking statements are not guarantees of future performance and involve risks uncertainties and other factors that might cause the actual performance of hub group to differ materially from those expressed or implied by those statements Further information on these risks and uncertainties are included at the end of our press release and in our most recent Form 10-K and other periodic reports filed with the SEC, which are posted on our website. Further information on these risks and uncertainties are included at the end of our press release and in our most recent Form 10-K and other periodic reports filed with the SEC, which are posted on our website. further information on these risks and uncertainties are included at the end of our press release and in our most recent form 10-k and other periodic reports filed with the sec which are posted on our website The financial results that we will be discussing today are preliminary and may change, including as a result of adjustments that may arise in connection with the ongoing audit of our consolidated financial statements for the year ended December 31, 2025. There could be no assurance that the company's final results will not differ from the preliminary results, and any changes could be material. The financial results that we will be discussing today are preliminary and may change, including as a result of adjustments that may arise in connection with the ongoing audit of our consolidated financial statements for the year ended December 31, 2025. the financial results that we will be discussing today are preliminary and may change including as a result of adjustments that may arise in connection with the ongoing audit of our consolidated financial statements for the year ended december 31 2025 There could be no assurance that the company's final results will not differ from the preliminary results, and any changes could be material. there could be no assurance that the company's final results will not differ from the preliminary results and any changes could be material Finally, the preliminary financial results should not be viewed as a substitute for full financial statements prepared in accordance with GAAP and are not necessarily indicative of results that may be achieved in future periods. I now turn the call over to CEO Phil Yeager. Finally, the preliminary financial results should not be viewed as a substitute for full financial statements prepared in accordance with GAAP and are not necessarily indicative of results that may be achieved in future periods. finally the preliminary financial results should not be viewed as a substitute for full financial statements prepared in accordance with gaap and are not necessarily indicative of results that may be achieved in future periods I now turn the call over to CEO Phil Yeager. i now turn the call over to ceo phil yeager

Speaker 4: Good afternoon, and welcome to Hub Group's conference call to discuss our preliminary Q4 2025 financial results. Joining me today is Kevin Beth, Hub Group's Chief Financial Officer, and Garrett Holland, our Senior Vice President of Investor Relations. Before we dive into our preliminary results, as you saw in the press release we issued this afternoon, in the course of our quarter and year-end closing process, we identified a calculation error that resulted in the understatement of purchased transportation costs and accounts payable. Good afternoon, and welcome to Hub Group's conference call to discuss our preliminary Q4 2025 financial results. good afternoon and welcome to hub group's conference call to discuss our preliminary q4 2025 financial results Joining me today is Kevin Beth, Hub Group's Chief Financial Officer, and Garrett Holland, our Senior Vice President of Investor Relations. joining me today is kevin beth hub group's chief financial officer and garrett holland our senior vice president of investor relations Before we dive into our preliminary results, as you saw in the press release we issued this afternoon, in the course of our quarter and year-end closing process, we identified a calculation error that resulted in the understatement of purchased transportation costs and accounts payable. before we dive into our preliminary results as you saw in the press release we issued this afternoon in the course of our quarter and year-end closing process we identified a calculation error that resulted in the understatement of purchased transportation costs and accounts payable As a result, we are delayed in finalizing our financial results for the Q4 and full year 2025. We will restate results for earlier quarters in 2025 when we file our 10-K. Accuracy and transparency in reporting on our performance is of the utmost importance at Hub Group, and we have taken steps to strengthen and enhance our controls. As a result, we are delayed in finalizing our financial results for the Q4 and full year 2025. as a result we are delayed in finalizing our financial results for the q4 and full year 2025 We will restate results for earlier quarters in 2025 when we file our 10-K. we will restate results for earlier quarters in 2025 when we file our 10-k Accuracy and transparency in reporting on our performance is of the utmost importance at Hub Group, and we have taken steps to strengthen and enhance our controls. accuracy and transparency in reporting on our performance is of the utmost importance at hub group and we have taken steps to strengthen and enhance our controls Kevin will discuss this in greater detail, but as noted in our press release, there is no expected impact on total cash and cash equivalents or operating cash flow for any periods, and we have provided estimated impact of purchased transportation, and warehousing costs for the nine months ended September 30, 2025, based on our team's initial review. Kevin will discuss this in greater detail, but as noted in our press release, there is no expected impact on total cash and cash equivalents or operating cash flow for any periods, and we have provided estimated impact of purchased transportation, and warehousing costs for the nine months ended September 30, 2025, based on our team's initial review. kevin will discuss this in greater detail but as noted in our press release there is no expected impact on total cash and cash equivalents or operating cash flow for any periods and we have provided estimated impact of purchased transportation and warehousing costs for the nine months ended september 30 2025 based on our team's initial review Now, I'd like to turn to our preliminary financial results that we are able to review today, along with details on execution of our strategy and trends we are seeing in the market. The last year was a continuation of a challenging market cycle, with stable demand and an oversupply of capacity. Now, I'd like to turn to our preliminary financial results that we are able to review today, along with details on execution of our strategy and trends we are seeing in the market. now i'd like to turn to our preliminary financial results that we are able to review today along with details on execution of our strategy and trends we are seeing in the market The last year was a continuation of a challenging market cycle, with stable demand and an oversupply of capacity. the last year was a continuation of a challenging market cycle with stable demand and an oversupply of capacity We performed well and focused on controlling what we can control, delivering record service levels across our platform, and in particular, our intermodal segment, while managing our costs, adding new business wins, and investing in our business, including equipment, technology, and acquisitions. We executed our strategy while maintaining our strong balance sheet and cash flow profile. 2025 preliminary operating cash flow is approximately $194 million. I will now discuss our segment performance, beginning with ITS. We performed well and focused on controlling what we can control, delivering record service levels across our platform, and in particular, our intermodal segment, while managing our costs, adding new business wins, and investing in our business, including equipment, technology, and acquisitions. we performed well and focused on controlling what we can control delivering record service levels across our platform and in particular our intermodal segment while managing our costs adding new business wins and investing in our business including equipment technology and acquisitions We executed our strategy while maintaining our strong balance sheet and cash flow profile. 2025 preliminary operating cash flow is approximately $194 million. we executed our strategy while maintaining our strong balance sheet and cash flow profile 2025 preliminary operating cash flow is approximately $194 million I will now discuss our segment performance, beginning with ITS. i will now discuss our segment performance beginning with its Q4 ITS revenue declined slightly YoY. We experienced a lighter peak season than last year in this segment, while continuing to focus on cost management and operational discipline in both intermodal and dedicated. Intermodal performance remained strong, and we delivered another year of record service and market share gains. Q4 ITS revenue declined slightly YoY. q4 its revenue declined slightly yoy We experienced a lighter peak season than last year in this segment, while continuing to focus on cost management and operational discipline in both intermodal and dedicated. we experienced a lighter peak season than last year in this segment while continuing to focus on cost management and operational discipline in both intermodal and dedicated Intermodal performance remained strong, and we delivered another year of record service and market share gains. intermodal performance remained strong and we delivered another year of record service and market share gains For the Q4, volumes increased 1% YoY, while revenue per load was flat, but up 3% sequentially. Transcon volume was up 1%, Local East was down 4%, and Local West was down 1%, while refrigerated volumes increased 150%, and Mexico volumes increased 33%. Intermodal volume finished October, up 2% YoY, down 3% YoY in November, and up 3% YoY in December. For the Q4, volumes increased 1% YoY, while revenue per load was flat, but up 3% sequentially. for the q4 volumes increased 1% yoy while revenue per load was flat but up 3% sequentially Transcon volume was up 1%, Local East was down 4%, and Local West was down 1%, while refrigerated volumes increased 150%, and Mexico volumes increased 33%. transcon volume was up 1% local east was down 4% and local west was down 1% while refrigerated volumes increased 150% and mexico volumes increased 33% Intermodal volume finished October, up 2% YoY, down 3% YoY in November, and up 3% YoY in December. intermodal volume finished october up 2% yoy down 3% yoy in november and up 3% yoy in december In January, intermodal volume decreased 4% YoY, with significant impact from the winter storm against a challenging growth comparison from a year ago, as shippers pulled forward orders ahead of tariffs. In January, intermodal volume decreased 4% YoY, with significant impact from the winter storm against a challenging growth comparison from a year ago, as shippers pulled forward orders ahead of tariffs. in january intermodal volume decreased 4% yoy with significant impact from the winter storm against a challenging growth comparison from a year ago as shippers pulled forward orders ahead of tariffs We work extremely well with our rail partners during peak, delivering a 90 basis point improvement in YoY on-time performance, positioning us well for intermodal volume growth in 2026 bid season. We work extremely well with our rail partners during peak, delivering a 90 basis point improvement in YoY on-time performance, positioning us well for intermodal volume growth in 2026 bid season. we work extremely well with our rail partners during peak delivering a 90 basis point improvement in yoy on-time performance positioning us well for intermodal volume growth in 2026 bid season Throughout the year, our excellent service performance and the consolidation with our rail partners drove enhanced engagement with our customers, who are excited about the opportunity for improved transits and costs in a single rail network, which, along with our consistent focus on cost reduction and efficiency gains, we believe will position us well in intermodal in 2026 and beyond. Throughout the year, our excellent service performance and the consolidation with our rail partners drove enhanced engagement with our customers, who are excited about the opportunity for improved transits and costs in a single rail network, which, along with our consistent focus on cost reduction and efficiency gains, we believe will position us well in intermodal in 2026 and beyond. throughout the year our excellent service performance and the consolidation with our rail partners drove enhanced engagement with our customers who are excited about the opportunity for improved transits and costs in a single rail network which along with our consistent focus on cost reduction and efficiency gains we believe will position us well in intermodal in 2026 and beyond Given the strong value proposition across our business lines, driven by quality service and savings, especially for the intermodal offering, we remain optimistic regarding the 2026 bid cycle. Given the strong value proposition across our business lines, driven by quality service and savings, especially for the intermodal offering, we remain optimistic regarding the 2026 bid cycle. given the strong value proposition across our business lines driven by quality service and savings especially for the intermodal offering we remain optimistic regarding the 2026 bid cycle Incumbency and strong service on awards in recent years is expected to provide a strong foundation to grow from, and new logos have engaged with us to establish service. We remain focused on supporting growth with customers, building on the momentum from business awarded last year, and further improving network balance to reduce backhaul costs. With respect to demand, shippers are cautiously optimistic, with potential benefits from stimulus measures countering lingering inflationary pressure. Incumbency and strong service on awards in recent years is expected to provide a strong foundation to grow from, and new logos have engaged with us to establish service. incumbency and strong service on awards in recent years is expected to provide a strong foundation to grow from and new logos have engaged with us to establish service We remain focused on supporting growth with customers, building on the momentum from business awarded last year, and further improving network balance to reduce backhaul costs. we remain focused on supporting growth with customers building on the momentum from business awarded last year and further improving network balance to reduce backhaul costs With respect to demand, shippers are cautiously optimistic, with potential benefits from stimulus measures countering lingering inflationary pressure. with respect to demand shippers are cautiously optimistic with potential benefits from stimulus measures countering lingering inflationary pressure In Dedicated, revenue declined in the Q4 due to lost sites from earlier in the year, but we were able to partially offset this impact through operational discipline and service improvements. We have significantly improved service levels, which is leading to a strong pipeline of growth opportunities with existing clients, and we are excited about the recent trends in the business. In Dedicated, revenue declined in the Q4 due to lost sites from earlier in the year, but we were able to partially offset this impact through operational discipline and service improvements. in dedicated revenue declined in the q4 due to lost sites from earlier in the year but we were able to partially offset this impact through operational discipline and service improvements We have significantly improved service levels, which is leading to a strong pipeline of growth opportunities with existing clients, and we are excited about the recent trends in the business. we have significantly improved service levels which is leading to a strong pipeline of growth opportunities with existing clients and we are excited about the recent trends in the business Q4 logistics segment revenue reflects softer demand across business lines, partially offset by new business wins. In CFS, we have performed well through our warehouse consolidation, leading to a 630 basis point improvement YoY in space utilization. We see additional opportunities for further efficiency improvements, and we expect to be better positioned for further growth. Q4 logistics segment revenue reflects softer demand across business lines, partially offset by new business wins. q4 logistics segment revenue reflects softer demand across business lines partially offset by new business wins In CFS, we have performed well through our warehouse consolidation, leading to a 630 basis point improvement YoY in space utilization. in cfs we have performed well through our warehouse consolidation leading to a 630 basis point improvement yoy in space utilization We see additional opportunities for further efficiency improvements, and we expect to be better positioned for further growth. we see additional opportunities for further efficiency improvements and we expect to be better positioned for further growth In Final Mile, we are in the process of completing the onboarding of significant new business wins, which has helped to offset negative mix and lost sites. In order to successfully onboard the business, we have made investments in the relationships that are continuing into the first quarter to ensure a seamless transition and startup. In Final Mile, we are in the process of completing the onboarding of significant new business wins, which has helped to offset negative mix and lost sites. in final mile we are in the process of completing the onboarding of significant new business wins which has helped to offset negative mix and lost sites In order to successfully onboard the business, we have made investments in the relationships that are continuing into the first quarter to ensure a seamless transition and startup. in order to successfully onboard the business we have made investments in the relationships that are continuing into the first quarter to ensure a seamless transition and startup Although the volume underperformed in the Q4 due to onboarding delays and minor scope changes, we are confident that the steps we are taking now will help drive volume growth well into the future. For the Q4, brokerage volumes declined 10% year over year, with revenue per load down 4% as LTL volume slowed, while truckload and refrigerated volume benefited from project freight and market tightness in the latter portion of the quarter. Although the volume underperformed in the Q4 due to onboarding delays and minor scope changes, we are confident that the steps we are taking now will help drive volume growth well into the future. although the volume underperformed in the q4 due to onboarding delays and minor scope changes we are confident that the steps we are taking now will help drive volume growth well into the future For the Q4, brokerage volumes declined 10% year over year, with revenue per load down 4% as LTL volume slowed, while truckload and refrigerated volume benefited from project freight and market tightness in the latter portion of the quarter. for the q4 brokerage volumes declined 10% year over year with revenue per load down 4% as ltl volume slowed while truckload and refrigerated volume benefited from project freight and market tightness in the latter portion of the quarter Market conditions have remained tighter due to weather as we enter 2026, and we are seeing opportunities to support customers with spot opportunities. Our Q4 productivity improved 41% year over year due to our investments in technology and our restructuring, and we expect this to position us well for the current market backdrop and as conditions evolve. Market conditions have remained tighter due to weather as we enter 2026, and we are seeing opportunities to support customers with spot opportunities. market conditions have remained tighter due to weather as we enter 2026 and we are seeing opportunities to support customers with spot opportunities Our Q4 productivity improved 41% year over year due to our investments in technology and our restructuring, and we expect this to position us well for the current market backdrop and as conditions evolve. our q4 productivity improved 41% year over year due to our investments in technology and our restructuring and we expect this to position us well for the current market backdrop and as conditions evolve Finally, Managed Transportation performed well throughout 2025 and is expected to continue to perform well in 2026, as we brought on new business in the Q4 and have a strong pipeline of additional growth opportunities. Our strong value proposition of continuous improvement, savings, and technology continues to resonate with our clients. Our Q4 productivity improved 12% compared to the prior year, which is enabling our ability to invest in the business and position for growth. Finally, Managed Transportation performed well throughout 2025 and is expected to continue to perform well in 2026, as we brought on new business in the Q4 and have a strong pipeline of additional growth opportunities. finally managed transportation performed well throughout 2025 and is expected to continue to perform well in 2026 as we brought on new business in the q4 and have a strong pipeline of additional growth opportunities Our strong value proposition of continuous improvement, savings, and technology continues to resonate with our clients. our strong value proposition of continuous improvement savings and technology continues to resonate with our clients Our Q4 productivity improved 12% compared to the prior year, which is enabling our ability to invest in the business and position for growth. our q4 productivity improved 12% compared to the prior year which is enabling our ability to invest in the business and position for growth We are pleased with our operational performance in 2025 in challenging market conditions. As we look ahead to 2026, we believe we are well positioned to support our customers in this evolving environment and excited about our opportunities for growth. We continue to see signs of tightening capacity due to regulatory enforcement, along with challenging market conditions and cost inflation, forcing out undercapitalized carriers. We are pleased with our operational performance in 2025 in challenging market conditions. we are pleased with our operational performance in 2025 in challenging market conditions As we look ahead to 2026, we believe we are well positioned to support our customers in this evolving environment and excited about our opportunities for growth. as we look ahead to 2026 we believe we are well positioned to support our customers in this evolving environment and excited about our opportunities for growth We continue to see signs of tightening capacity due to regulatory enforcement, along with challenging market conditions and cost inflation, forcing out undercapitalized carriers. we continue to see signs of tightening capacity due to regulatory enforcement along with challenging market conditions and cost inflation forcing out undercapitalized carriers However, demand and inventory levels remain balanced, and the consumer has stayed resilient. With increased tax refund disbursements, we are hopeful that supply and demand will move to equilibrium, leading to opportunities for intermodal conversion and growth across all our services. However, demand and inventory levels remain balanced, and the consumer has stayed resilient. however demand and inventory levels remain balanced and the consumer has stayed resilient With increased tax refund disbursements, we are hopeful that supply and demand will move to equilibrium, leading to opportunities for intermodal conversion and growth across all our services. with increased tax refund disbursements we are hopeful that supply and demand will move to equilibrium leading to opportunities for intermodal conversion and growth across all our services It is too early to determine whether a sustained market inflection is imminent, but we believe we are well positioned regardless of market conditions, due to our best-in-class service and team, efficient cost structure, financial flexibility, and ongoing strategic investments. With stabilizing market conditions and excellent service, as well as rail consolidation expected in 2027, we have the ability to convert business from over the road to rail. It is too early to determine whether a sustained market inflection is imminent, but we believe we are well positioned regardless of market conditions, due to our best-in-class service and team, efficient cost structure, financial flexibility, and ongoing strategic investments. it is too early to determine whether a sustained market inflection is imminent but we believe we are well positioned regardless of market conditions due to our best-in-class service and team efficient cost structure financial flexibility and ongoing strategic investments With stabilizing market conditions and excellent service, as well as rail consolidation expected in 2027, we have the ability to convert business from over the road to rail. with stabilizing market conditions and excellent service as well as rail consolidation expected in 2027 we have the ability to convert business from over the road to rail We believe our logistics services are well-positioned due to our focus on productivity, service, and continuous improvement. Last, we maintain a strong balance sheet and capital flexibility to invest in our business for the long term. We believe our logistics services are well-positioned due to our focus on productivity, service, and continuous improvement. we believe our logistics services are well-positioned due to our focus on productivity service and continuous improvement Last, we maintain a strong balance sheet and capital flexibility to invest in our business for the long term. last we maintain a strong balance sheet and capital flexibility to invest in our business for the long term We expect to remain disciplined with capital deployment, continuing a balanced approach, returning capital to shareholders through our dividend and share repurchases, while evaluating potential M&A opportunities that meet appropriate return thresholds. As of today, we have approximately $142 million remaining under our share repurchase program. We expect to remain disciplined with capital deployment, continuing a balanced approach, returning capital to shareholders through our dividend and share repurchases, while evaluating potential M&A opportunities that meet appropriate return thresholds. we expect to remain disciplined with capital deployment continuing a balanced approach returning capital to shareholders through our dividend and share repurchases while evaluating potential m&a opportunities that meet appropriate return thresholds As of today, we have approximately $142 million remaining under our share repurchase program. as of today we have approximately $142 million remaining under our share repurchase program To sum up, although there is some uncertainty near term in the industry, we see all these drivers creating an exciting backdrop for Hub Group in 2026 and beyond. With that, I will hand the call over to Kevin to discuss our preliminary financial results. To sum up, although there is some uncertainty near term in the industry, we see all these drivers creating an exciting backdrop for Hub Group in 2026 and beyond. to sum up although there is some uncertainty near term in the industry we see all these drivers creating an exciting backdrop for hub group in 2026 and beyond With that, I will hand the call over to Kevin to discuss our preliminary financial results. with that i will hand the call over to kevin to discuss our preliminary financial results

Speaker 2: Thank you, Phil. Before walking through our preliminary Q4 and full year 2025 financial results and our 2026 outlook, I want to touch on the accounting item outlined in our release that Phil mentioned at the start of the call. The company identified an error that resulted in an understatement of purchased transportation costs and accounts payable in the first nine months of 2025. Thank you, Phil. thank you phil Before walking through our preliminary Q4 and full year 2025 financial results and our 2026 outlook, I want to touch on the accounting item outlined in our release that Phil mentioned at the start of the call. before walking through our preliminary q4 and full year 2025 financial results and our 2026 outlook i want to touch on the accounting item outlined in our release that phil mentioned at the start of the call The company identified an error that resulted in an understatement of purchased transportation costs and accounts payable in the first nine months of 2025. the company identified an error that resulted in an understatement of purchased transportation costs and accounts payable in the first nine months of 2025 The total amount of the reduction to accounts payable and purchased transportation costs related to this issue that was recorded during these periods is $77 million. Based on our analysis to date, we estimate the correction of the error will increase purchased transportation and warehousing costs for the nine months ended September 30, 2025, but cannot yet estimate what the resulting increase to purchased transportation and warehousing costs and accounts payable will be. The total amount of the reduction to accounts payable and purchased transportation costs related to this issue that was recorded during these periods is $77 million. the total amount of the reduction to accounts payable and purchased transportation costs related to this issue that was recorded during these periods is $77 million Based on our analysis to date, we estimate the correction of the error will increase purchased transportation and warehousing costs for the nine months ended September 30, 2025, but cannot yet estimate what the resulting increase to purchased transportation and warehousing costs and accounts payable will be. based on our analysis to date we estimate the correction of the error will increase purchased transportation and warehousing costs for the nine months ended september 30 2025 but cannot yet estimate what the resulting increase to purchased transportation and warehousing costs and accounts payable will be There is no expected impact on Hub's total cash and cash equivalents or operating cash flows for any periods. We are working to report our full and final financial results for 2025 as soon as possible. We plan to include the restated quarterly financial information for Q1, Q2, and Q3 2025 in our 2025 Form 10-K. The team is committed to transparency and resolution of the accounting matter. Now, turning to our preliminary results. For the full year, we expect consolidated operating revenue of $3.7 billion, a 7% decrease over prior year. There is no expected impact on Hub's total cash and cash equivalents or operating cash flows for any periods. there is no expected impact on hub's total cash and cash equivalents or operating cash flows for any periods We are working to report our full and final financial results for 2025 as soon as possible. we are working to report our full and final financial results for 2025 as soon as possible We plan to include the restated quarterly financial information for Q1, Q2, and Q3 2025 in our 2025 Form 10-K. we plan to include the restated quarterly financial information for q1 q2 and q3 2025 in our 2025 form 10-k The team is committed to transparency and resolution of the accounting matter. the team is committed to transparency and resolution of the accounting matter Now, turning to our preliminary results. now turning to our preliminary results For the full year, we expect consolidated operating revenue of $3.7 billion, a 7% decrease over prior year. for the full year we expect consolidated operating revenue of $3.7 billion a 7% decrease over prior year Full year 2025 ITS segment operating revenue is expected to be approximately $2.2 billion, which includes low single-digit YoY decrease during Q4 intermodal volume growth of 1% and stable revenue per load, despite lower surcharge revenue, was offset by lower dedicated revenue during the quarter. We realized peak surcharges of approximately $900,000 in Q4, representing a YoY difference of $4 million. Full year 2025 ITS segment operating revenue is expected to be approximately $2.2 billion, which includes low single-digit YoY decrease during Q4 intermodal volume growth of 1% and stable revenue per load, despite lower surcharge revenue, was offset by lower dedicated revenue during the quarter. full year 2025 its segment operating revenue is expected to be approximately $2.2 billion which includes low single-digit yoy decrease during q4 intermodal volume growth of 1% and stable revenue per load despite lower surcharge revenue was offset by lower dedicated revenue during the quarter We realized peak surcharges of approximately $900,000 in Q4, representing a YoY difference of $4 million. we realized peak surcharges of approximately $900,000 in q4 representing a yoy difference of $4 million Full year logistics segment operating revenue is expected to be approximately $1.6 billion, inclusive of a high single-digit YoY decrease during the Q4. Q4 performance reflects lower brokerage revenue, select customer attrition at CFS, and softer underlying final mile demand, partially offset by new customer onboardings. Building on Phil's earlier remarks, peak season activity was largely in line with expectations, but muted overall relative to prior years. Full year logistics segment operating revenue is expected to be approximately $1.6 billion, inclusive of a high single-digit YoY decrease during the Q4. full year logistics segment operating revenue is expected to be approximately $1.6 billion inclusive of a high single-digit yoy decrease during the q4 Q4 performance reflects lower brokerage revenue, select customer attrition at CFS, and softer underlying final mile demand, partially offset by new customer onboardings. q4 performance reflects lower brokerage revenue select customer attrition at cfs and softer underlying final mile demand partially offset by new customer onboardings Building on Phil's earlier remarks, peak season activity was largely in line with expectations, but muted overall relative to prior years. building on phil's earlier remarks peak season activity was largely in line with expectations but muted overall relative to prior years We saw select customers reaching out with project freight activity, and we saw pockets of tightness, particularly off the West Coast, to start the quarter. However, many shippers pulled forward inventory over the course of the year and had less urgency to move product. Tightening capacity conditions later in the quarter reflected a combination of lower driver supply from policy actions and weather disruptions. Freight market dynamics clearly remain fluid and closer to balance than any time in recent years. We saw select customers reaching out with project freight activity, and we saw pockets of tightness, particularly off the West Coast, to start the quarter. we saw select customers reaching out with project freight activity and we saw pockets of tightness particularly off the west coast to start the quarter However, many shippers pulled forward inventory over the course of the year and had less urgency to move product. however many shippers pulled forward inventory over the course of the year and had less urgency to move product Tightening capacity conditions later in the quarter reflected a combination of lower driver supply from policy actions and weather disruptions. tightening capacity conditions later in the quarter reflected a combination of lower driver supply from policy actions and weather disruptions Freight market dynamics clearly remain fluid and closer to balance than any time in recent years. freight market dynamics clearly remain fluid and closer to balance than any time in recent years Now turning to our cash flow. Preliminary cash flow from operations for the full year was $194 million. Our full-year CapEx was approximately $45 million, in line with our estimate of less than $50 million. Integrations related to the acquisitions of Marten Intermodal assets and West Coast final mile provider, SITH, LLC, are complete, and the businesses are performing well. Now turning to our cash flow. now turning to our cash flow Preliminary cash flow from operations for the full year was $194 million. preliminary cash flow from operations for the full year was $194 million Our full-year CapEx was approximately $45 million, in line with our estimate of less than $50 million. our full-year capex was approximately $45 million in line with our estimate of less than $50 million Integrations related to the acquisitions of Marten Intermodal assets and West Coast final mile provider, SITH, LLC, are complete, and the businesses are performing well. integrations related to the acquisitions of marten intermodal assets and west coast final mile provider sith llc are complete and the businesses are performing well Importantly, our balance sheet and financial position remain strong. Debt at December 31, 2025, totaled approximately $229 million, which, after giving effect to cash of approximately $113 million, resulted in net debt of approximately $116 million, a decrease of approximately $50 million compared to December 31, 2024. In 2025, we returned $44 million to shareholders through dividends and stock repurchases. Importantly, our balance sheet and financial position remain strong. importantly our balance sheet and financial position remain strong Debt at December 31, 2025, totaled approximately $229 million, which, after giving effect to cash of approximately $113 million, resulted in net debt of approximately $116 million, a decrease of approximately $50 million compared to December 31, 2024. debt at december 31 2025 totaled approximately $229 million which after giving effect to cash of approximately $113 million resulted in net debt of approximately $116 million a decrease of approximately $50 million compared to december 31 2024 In 2025, we returned $44 million to shareholders through dividends and stock repurchases. in 2025 we returned $44 million to shareholders through dividends and stock repurchases Turning to our preliminary 2026 guidance, revenue is projected to be between $3.65 billion-$3.95 billion for the full year. For our ITS segment, we expect revenue will largely be driven by intermodal volume growth through the year. Turning to our preliminary 2026 guidance, revenue is projected to be between $3.65 billion-$3.95 billion for the full year. turning to our preliminary 2026 guidance revenue is projected to be between $3.65 billion-$3.95 billion for the full year For our ITS segment, we expect revenue will largely be driven by intermodal volume growth through the year. for our its segment we expect revenue will largely be driven by intermodal volume growth through the year We expect dedicated performance will be slightly lower compared to 2025 due to lost customer sites, which will continue to offset new awards in the near term. For logistics, excluding our brokerage business, we expect recovering revenue through the year due to new business wins and improving profitability, led by final mile and managed transportation. For brokerage, we expect volume pressure continues in the near term and weighs on logistics segment profitability. We expect dedicated performance will be slightly lower compared to 2025 due to lost customer sites, which will continue to offset new awards in the near term. we expect dedicated performance will be slightly lower compared to 2025 due to lost customer sites which will continue to offset new awards in the near term For logistics, excluding our brokerage business, we expect recovering revenue through the year due to new business wins and improving profitability, led by final mile and managed transportation. for logistics excluding our brokerage business we expect recovering revenue through the year due to new business wins and improving profitability led by final mile and managed transportation For brokerage, we expect volume pressure continues in the near term and weighs on logistics segment profitability. for brokerage we expect volume pressure continues in the near term and weighs on logistics segment profitability For the year, we expect capital expenditures of $35 million-$45 million as we continue to focus on technology projects and opportunistic replacements for tractors, given favorable purchase terms and recent changes for bonus depreciation. We do not plan to purchase containers in 2026. For the year, we expect capital expenditures of $35 million-$45 million as we continue to focus on technology projects and opportunistic replacements for tractors, given favorable purchase terms and recent changes for bonus depreciation. for the year we expect capital expenditures of $35 million-$45 million as we continue to focus on technology projects and opportunistic replacements for tractors given favorable purchase terms and recent changes for bonus depreciation We do not plan to purchase containers in 2026. we do not plan to purchase containers in 2026 As Phil noted, our capital allocation plan continues to guide us and starts with investing in the business to support long-term growth and improve efficiency across tractors, technology, and container capacity. As you know, we consider M&A opportunistically to complement organic growth, and the bar for M&A is high, given our disciplined due diligence process and return focus. And finally, we remain focused on returning capital directly to shareholders through our quarterly dividend and share repurchases. As Phil noted, our capital allocation plan continues to guide us and starts with investing in the business to support long-term growth and improve efficiency across tractors, technology, and container capacity. as phil noted our capital allocation plan continues to guide us and starts with investing in the business to support long-term growth and improve efficiency across tractors technology and container capacity As you know, we consider M&A opportunistically to complement organic growth, and the bar for M&A is high, given our disciplined due diligence process and return focus. as you know we consider m&a opportunistically to complement organic growth and the bar for m&a is high given our disciplined due diligence process and return focus And finally, we remain focused on returning capital directly to shareholders through our quarterly dividend and share repurchases. and finally we remain focused on returning capital directly to shareholders through our quarterly dividend and share repurchases Our current dividend also returns approximately $7.5 million to shareholders quarterly, and as Phil noted, we have approximately $142 million remaining under our current share repurchase authorization. We expect to continue to balance capital deployment priorities and opportunistically repurchase shares as market conditions and opportunities evolve. Our current dividend also returns approximately $7.5 million to shareholders quarterly, and as Phil noted, we have approximately $142 million remaining under our current share repurchase authorization. our current dividend also returns approximately $7.5 million to shareholders quarterly and as phil noted we have approximately $142 million remaining under our current share repurchase authorization We expect to continue to balance capital deployment priorities and opportunistically repurchase shares as market conditions and opportunities evolve. we expect to continue to balance capital deployment priorities and opportunistically repurchase shares as market conditions and opportunities evolve Our balance sheet is in great shape and has been fortified by the cash flow resiliency of our operating model through this industry downturn. We remain focused on ways to maximize shareholder value. We will share additional details on the 2026 outlook when we release our full Q4 and full year 2025 financial results. And now, I'll turn it back over to Phil for his closing remarks. Our balance sheet is in great shape and has been fortified by the cash flow resiliency of our operating model through this industry downturn. our balance sheet is in great shape and has been fortified by the cash flow resiliency of our operating model through this industry downturn We remain focused on ways to maximize shareholder value. we remain focused on ways to maximize shareholder value We will share additional details on the 2026 outlook when we release our full Q4 and full year 2025 financial results. we will share additional details on the 2026 outlook when we release our full q4 and full year 2025 financial results And now, I'll turn it back over to Phil for his closing remarks. and now i'll turn it back over to phil for his closing remarks

Speaker 4: Thanks, Kevin. To sum up for today, freight market conditions remain challenging through 2025, but the Hub Group team adapted and remained focused on serving our customers and controlling expenses. To start 2026, we are seeing positive trends in the marketplace, as reflected in improving ISM New Orders and spot market activity. Our balance sheet and cash generation remain strong and should provide significant capital flexibility as we remain disciplined with capital deployment. Thanks, Kevin. thanks kevin To sum up for today, freight market conditions remain challenging through 2025, but the Hub Group team adapted and remained focused on serving our customers and controlling expenses. to sum up for today freight market conditions remain challenging through 2025 but the hub group team adapted and remained focused on serving our customers and controlling expenses To start 2026, we are seeing positive trends in the marketplace, as reflected in improving ISM New Orders and spot market activity. to start 2026 we are seeing positive trends in the marketplace as reflected in improving ism new orders and spot market activity Our balance sheet and cash generation remain strong and should provide significant capital flexibility as we remain disciplined with capital deployment. our balance sheet and cash generation remain strong and should provide significant capital flexibility as we remain disciplined with capital deployment Operating momentum and a strong focus on execution has carried us into 2026, and we will continue to lead with service as the freight market backdrop evolves. Phil and Joyce Yeager founded this company 55 years ago based on the principles of service, integrity, and innovation, and the success of this business has been, and continues to be, based on living those values every day. We are excited about the growth prospects for Hub Group and extending that legacy of performance. Operating momentum and a strong focus on execution has carried us into 2026, and we will continue to lead with service as the freight market backdrop evolves. operating momentum and a strong focus on execution has carried us into 2026 and we will continue to lead with service as the freight market backdrop evolves Phil and Joyce Yeager founded this company 55 years ago based on the principles of service, integrity, and innovation, and the success of this business has been, and continues to be, based on living those values every day. phil and joyce yeager founded this company 55 years ago based on the principles of service integrity and innovation and the success of this business has been and continues to be based on living those values every day We are excited about the growth prospects for Hub Group and extending that legacy of performance. we are excited about the growth prospects for hub group and extending that legacy of performance

Speaker 3: Ladies and gentlemen, this concludes today's call with Hub Group. Thank you for joining. You may now disconnect. Ladies and gentlemen, this concludes today's call with Hub Group. ladies and gentlemen this concludes today's call with hub group Thank you for joining. thank you for joining You may now disconnect. you may now disconnect