Hub Group Inc. (NASDAQ:HUBG) Q4 2018 Earnings Conference Call Transcript

Feb 07, 2019 • 05:00 pm ET

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Hub Group Inc. (NASDAQ:HUBG) Q4 2018 Earnings Conference Call Transcript

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Presentation
Operator
Operator

Hello and welcome to Hub Group's Fourth Quarter 2018 Earnings Conference Call. Dave Yeager, Hub's CEO; Don Maltby, Hub's President and Chief Operating Officer; and Terri Pizzuto, Hub's CFO are joining me on this call. At this time all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. (Operator Instructions)

Any forward-looking statements made during the course of the call or contained in the release represent the company's best good faith judgment as to what may have happen in the future. Statements that are forward-looking can be identified by use of words, believe, expect, anticipate, and project and variations of these words. Please review the cautionary statements in the release.

In addition, you should refer to the disclosures in the company's Form 10-K and other SEC filings regarding factors that could cause actual results to differ materially from those projected in these forward-looking statements. As a reminder, this conference is being recorded.

It is now my pleasure to turn the call over to your host, Dave Yeager. You may now begin.

Executive
David P. Yeager

Good afternoon and thank you for participating in Hub Group's fourth quarter earnings call. We had another very strong quarter and a record year in 2018, as we continue to increase revenue, while reducing expenses in our network.

We put a significant amount of effort into improving service and profitability, in all of our business lines resulting in a 72% increase in operating income for the year. This focused, coupled with the strategic investments we're making in our Elevate Technology, provides a platform for continued profitable growth. Intermodal had a seller quarter, as volume was up 5%. Peak season intermodal, exceeded our expectations, as pricing and volume were strong through year-end. The intermodal team had a solid operating plan that was extremely well-executed.

We're bullish on our intermodal plan for 2019. We believe prices will increase in the mid- to high-single digits, while volumes will continue to grow, as Hub continues to provide best-in-class solutions to our customers. Another highlight for the fourth quarter was our closing the acquisition of CaseStack on December 3. CaseStack is non-asset based, focusing on the growing warehouse consolidation market and LTL brokerage markets. CaseStack's strong retail and consumer products focus is very complementary to Hub, where those segments represent 70% of our business.

We're pleased with the synergies we captured and have a robust pipeline of future opportunities. CaseStack has a very talented workforce, a solid management team and we welcome them to the Hub Group family.

With that I'll turn the call over to Don, to talk about the performance of our other business lines.

Executive
Donald G. Maltby

Thank you Dave. As Dave mentioned, we are pleased with our 2018 performance and feel confident in our ability to deliver strong results in 2019. Now let's talk about the business. We had a challenging quarter in truck brokerage, as our spot business declined due to higher contractual rates, which locked-in more committed capacity in the market, at lower amount of volume