Hub Group, Inc.

Hello, and welcome to the Hub Group Preliminary Fourth Quarter and Full Year 2025 Results Conference Call. And it's now my pleasure to turn the call over to the company. You may now begin.

Hello, and welcome to the Hub Group Preliminary Fourth Quarter 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 31st, 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, Bill Yeager.

Good afternoon, and welcome to Hub Group's conference call to discuss our preliminary fourth quarter 2025 financial results. Joining me today is Kevin Best, Upgroup'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 purchase transportation costs and accounts payable. As a result, we are delayed in finalizing our financial results for the fourth quarter 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 to purchase transportation and warehousing costs for the nine months ended September 30th, 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. Fourth quarter ITS revenue declined slightly year over year. 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 fourth quarter, volumes increased 1% year-over-year, while revenue per load was flat, but up 3% sequentially. Transcom volumes 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% year-over-year, down 3% year-over-year in November, and up 3% year-over-year in December. In January, intermodal volume decreased 4% year-over-year, 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 year-over-year 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 fourth quarter 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. Fourth quarter logistics segment revenue reflects softer demand across business lines, partially offset by new business wins. In CFX, we have performed well through our warehouse consolidation leading to a 630 basis point improvement year-over-year 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 myths 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 fourth quarter 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 fourth quarter, 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 fourth quarter 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 its conditions involved. 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 fourth quarter 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 fourth quarter 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 the 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 cross-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 shareware purchases, 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 in your 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.