Hub Group, Inc.

of investor relations. I'd like to start by thanking our thousands of team members across North America for their efforts to support our customers and our Hub Group family through this dynamic market. These efforts drove a 40 basis point improvement in operating margins during the quarter and are setting us up for success, both in the current market and long term. Our customers have taken different approaches to managing through the implementation of tariffs, with the majority taking a wait-and-see approach, while others pulled forward inventory depending on their end markets, product types, and origin of their finished goods. It remains unclear what the near and long-term impacts will be as many of our customers have diversified their vendor base and supply chains to ensure fluidity through these potential disruptions. However, this has also created an increased focus for our customers to drive savings in their supply chain, which is supporting over-the-road conversions to intermodal and increasing the pipeline for our consolidation and managed transportation solutions. There will likely be a near-term impact to import volumes to the West Coast, but the magnitude remains uncertain as our volumes have remained steady. We are closely monitoring the situation while staying in constant communication with our clients on their needs. Through this current turbulence in global trade, we are focusing on what we can control, winning profitable growth across all of our segments by leveraging our great service, decreasing costs through our newly implemented $40 million cost reduction program, and maintaining our strong balance sheet, the lower long-term leverage target, giving us flexibility to invest in our business, return capital to shareholders, which total $21 million in the quarter, identify strategic acquisition opportunities, and preserve our strong culture and team. I will now discuss our business results starting with ITS, where we delivered an 8% increase in year-over-year operating margin due to improvements in dedicated operations, higher intermodal volumes, and the IASO joint venture. This margin improvement was partially offset by slightly lower revenue driven by declines in dedicated volume due to lower demand, as well as small loss sites and lower intermodal revenue per load. Intermodal volumes increased 8% year-over-year due to bid wins, a pull forward of inventory, and benefit from the IASO transaction. Local east volumes increased 13%, local west increased 5%, and transcom shipments were down 1% year-over-year, while we had significant volume growth in Mexico through organic expansion and our joint venture. Revenue decreased due to a 12% decline in revenue per load, which was impacted by fuel mix and price. We are executing well in bid season, onboarding wins with a mix of new and existing customers and networked beneficial lanes due to our excellent service. We are closely monitoring award compliance, and although shipping patterns have been more erratic, we are seeing improvements as we onboard new awards. During the quarter, we reduced insurance expense, increased our in-source dray percentage, drove better container utilization and empty repositioning costs, while cost per dray and driver productivity remained relatively flat year over year. We have further actions in place to enhance these operational areas and anticipate further improvement in the quarters ahead. In dedicated, we are operating in a competitive environment. And while we have had losses of smaller sites to one-way truckload, we've had a strong renewal rate and new wins we are onboarding. We improved our revenue per truck per day by 9% year-over-year in the quarter and are focused on delivering value to our customers through our strong service levels and cost reduction. In logistics, our operating margin percentage improved 70 basis points year-over-year due to improved efficiency in our facilities, as well as the completion of the network alignment initiative, but was offset by lower margins in our brokerage. We experienced a larger decline in revenue of brokerage due to limited spot market opportunities and declining rates, as well as negative mix. This was offset by better relative performance in our contractual logistics offerings. Brokerage volume declined 9% year-over-year with a 10% decline in revenue per load, which was primarily driven by lower fuel price and mix. Our LTL offering is performing well, helping to drive sequential margin improvements from the fourth quarter. We also reduced negative margin shipments by 210 basis points year-over-year and are winning with new and existing customers in bid season while reducing our purchase transportation costs. In our managed solutions, we delivered operating margin percentage improvement in all of our services, the largest being in CFS following the implementation of operational efficiency enhancements and our network alignment initiative completion. This has led to an 1100 basis point improvement in warehouse utilization year over year. We are focused on growth across all of our offerings and improving our cost basis through productivity enhancements, and we have a strong pipeline as we leverage our scale and service to compete and win in the market. With that, I will hand it over to Kevin to discuss our financial results. Thank you, Phil. I will walk through our financial results before commenting on our outlook. Our reported revenue for the first quarter was $915 million. Revenue decreased by 8% compared to last year and was in line with fourth quarter revenue. ITS revenue was $530 million, which is down 4% from prior year's revenue of $552 million, as intermodal volume growth of 8% was offset by lower intermodal revenue per load due to a change in mix and slightly lower dedicated revenue in the quarter. Additionally, lower fuel revenue of approximately $11 million negatively impacted the top line. The logistics segment revenue was $411 million compared to $480 million in the prior year due to lower volume and revenue per load in our brokerage business. Exiting of unprofitable business and CFS and seasonal softness in our managed transportation and final mile lines of business. Lower fuel revenue of $14 million in the quarter also contributed to the decrease. Moving down the P&L, for the quarter, purchase transportation and warehousing costs were $658 million, a decrease of $82 million from the prior year due to strong cost controls as well as lower rail and warehouse expenses. This results in a 220 basis point improvement on a percent of revenue basis when compared to Q1 of 2024. Salaries and benefits of $149 million were $5 million higher than the prior year due to additional employee drivers and warehouse team members and the IASU transaction. Total legacy headcount, which excludes acquisition employees, drivers, and warehouse employees, was lower than last year by 7% as we continue to manage headcount across the organization. Appreciation and amortization decreased $6 million over Q1 2024 due to our updated useful life assumptions. Insurance and claims expense decreased by $2 million as we continue to see our safety focus and training programs pay dividends. Even after the IASU transaction last quarter, our cost controls allowed our general and administration expenses to remain in line with prior year. As a result, our operating income increased year over year with an operating income margin of 4.1% for the quarter, an increase of 40 basis points over the prior year. ITS quarterly operating margin was 2.7%, a 30 basis point improvement over prior year. First quarter logistics operating margin was 5.7%, a 70 basis point improvement over Q1 2024. EBITDA was $85 million in the first quarter. Overall, Hub earned an ETS of 44 cents in the first quarter, in line with Q1 2024. Now, turning to our cash flow. Cash flow from operations for the first three months of 2025 was $70 million. First quarter capital expenditures totaled $19 million, with the majority of spend related to tractor replacements, with technology making up the remainder of the spend. Our balance sheet and financial position remained strong. Through the first quarter, we returned $21 million to shareholders through dividends and stock repurchases, as we purchased $14 million of shares and issued our quarterly dividend of 12.5 cents per share. Net debt was $140 million, which is 0.4 times EBITDA, below our stated net debt of EBITDA range of 0.75 times to 1.25 times. EBITDA left CapEx with $65 million in the first quarter. We are pleased with our cash EPS of 55 cents. The spread between EPS and cash EPS was 11 cents for the quarter. And we ended the quarter with $141 million of cash. Turning to our 2025 guidance. We expect full year ETS in the range of $1.75 to $2.25 and revenue to be between $3.6 billion to $4 billion for the full year. We project an effective tax rate of approximately 24%. We also expect capital expenditures in the range of $40 to $50 million as we focus on replacement for tractors that have reached their end of life and technology projects. We do not plan to purchase containers in 2025. Our assumptions at the high end of the range include either a short West Coast slowdown of China imports or a strong bounce back of demand in the West Coast, leading to a surge of volume in the back half of the year that allows for increased pricing for peak season surcharges. The low end of the range would be due to an extended slowdown in China imports and or the weakening of consumer spending. The decrease in volume and margin dollars would be partially offset by further cost management efforts. The assumptions in the middle of the range contemplate a volume decrease in the second half of the second quarter due to our customers changing shipping patterns to combat tariffs with a return to directional seasonality in the third quarter as consumer strength holds. Additionally, we should recognize additional cost-saving benefits through the year as the team remains committed to disciplined expense management. For the IPS segment, we expect pricing to be relatively flat for the remainder of the year as we continue to focus on network needs and new customer acquisitions. We think there is upside should we see a bounce back of volume, which would allow for peak season surcharges and pricing increases. Due to the expected second quarter slowdown, we expect sequential operating results to be flat to down from first quarter. Then we would expect to be back to normal seasonal operating income patterns. We expect dedicated revenues to be less than 2024, as new customers are not enough to offset lost customers and demand softness. For logistics, excluding our brokerage business, we expect some general softness in demand, but there should be some mitigating factors affecting revenue. In our warehouse business, if we experience lower transportation revenue, we expect to see an increase in storage revenue. And in our final mile and managed transportation business, we have a good pipeline, which, if onboarded, could offset slower shipping from current customers. For brokerage, we expect volume for the remainder of the year to be slashed down from current volume results with pricing to continue at current levels. The business has potential upside if we see a pronounced bounce back in inventory restocking. We continue to manage what we can control, and our cost savings initiatives have resulted in improved profitability. We are pleased with the progress the team has made as the operating income percentage increased in both segments. ICS with 30 basis points, and logistics with 70 basis points of growth, resulting in a 1% increase in consolidated operating income or growth of 40 basis points on a percent to revenue basis. We also reported Q1 intermodal volume growth of 8%, pre-cash flow of $51 million, and cash EPS of 55 cents. As we manage through this unpredictable environment, our longer-term strategy continues to guide us We remain focused on managing our people costs, reducing discretionary spending, and driving down transportation costs. At the same time, our strong balance sheet allows us to make value-add acquisitions. As I have noted in the past, the important strategic changes we have made to our business, including our focus on yield management, asset utilization, and operating expense efficiency, and investing in asset-light logistics offerings have significantly improved profitability, predictability, pre-cash flow, and returns. We believe these strategic changes allow HUD Group to be successful in a variety of macroeconomic environments. With that, I'll turn it over to the operator to open the line to any questions.

Thank you. I would also like to remind participants that this call is being recorded and a replay will be available on the HUB Group website for 30 days. To ask a question, please press star 11 on your telephone and wait for your name to be announced. To withdraw your question, please press star 11 again. Please stand by while we compile the Q&A roster. Our first question is from Scott Group of Wolf Research LLC. Your question, please.

Hey, thanks. Afternoon, guys. So can you just talk about what percentage of intermodal is tied to West Coast ports? And then maybe I think in the past you give us monthly trends, maybe just give us the monthly trends and what April was. And then I know this is a bunch, but all sort of in the same vein. But it feels like this import cliff is starting this week. So just what you're expecting to happen to your volumes going forward?