Hub Group Inc. (NASDAQ:HUBG) Q2 2020 Earnings Conference Call - Final Transcript
Jul 30, 2020 • 05:00 pm ET
Hello, and welcome to Hub Group's Second Quarter 2020 Earnings Conference Call. Dave Yeager, Hub's CEO; Phil Yeager, Hub's President and Chief Operating Officer; and Geoff DeMartino, Hub's CFO, are joining me on the call. [Operator Instructions]
Any forward-looking statements made during the course of the call are contained in the release represent the Company's best good faith judgment as to what may happen in the future. Statements that are forward-looking can be identified by the use of the words such as 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 the 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.
David P. Yeager
Good afternoon, and thank you for participating in Hub Group's second quarter earnings call. I'm joined today by Phil Yeager, Hub's President and Chief Operating Officer; and Geoff DeMartino, Hub's Chief Financial Officer.
I'd like to begin the call by recognizing Hub's employees who have performed masterfully for our clients during this pandemic. Our office staff continues to operate effectively, while our drivers continue to be on the front lines, delivering essential goods in support of our valued customers. We continue to support our drivers and staff with necessary PPE supplies as well as training to ensure that they remain safe during the pandemic.
As anticipated, the second quarter proved to be very challenging as revenue decreased by 15% year-over-year. All of our business lines declined in revenue due to soft demand, coupled with pricing pressures. We did, however, see our intermodal volumes improve sequentially, with July exhibiting strong demand in certain regions as businesses replenished depleted inventories.
With that, I will turn the call over to Phil, to review our business lines.
Phillip D. Yeager
Thank you, Dave. I would like to start by echoing Dave's remarks and thank our entire Hub Group team for their unwavering commitment to our customers, communities and each other. We've seen an improving demand environment since April, and we are maintaining focus on our key priorities of the differentiated service and an improved cost structure, which will drive long-term growth.
In April, we reviewed our Top 100 customers, which accounted for 80% of 2019 revenue and determined that over 20% were either closed or significantly impacted by the pandemic. Today, over 90% of our customer base is reopened, with the remainder still somewhat impacted as their facilities continue to ramp back up to full production for serving end markets that are still impacted by closures.
I will now discuss our business unit performance. Intermodal volume declined 8% and gross margin as a percentage of sales compressed 220 basis points in the quarter as our improved street performance could not offset a competitive pricing environment, lower