HubÆs earnings hit by declining volumes
Hub Group Inc. said it was lowering its earnings guidance for the year because of a decline in intermodal and truck brokerage volume.
The Downers Grove, Ill.-based company said it expects full year 2008 earnings to be in the range of $1.56 to $1.61 per diluted share. Previous earnings guidance for the year had been $1.65 to $1.70 per diluted share.
“Intermodal and truck brokerage volume has been lower than expected due to the rapid downturn in the economy,” the company said. “The biggest volume declines have come from customers in the retail and durable goods segments. The company does not believe it has lost intermodal share in these markets, rather, due to the economy, there has been an overall reduction in freight volumes in these segments.”
Hub said it anticipates intermodal volume to be flat to down 3 percent for the fourth quarter. Truck brokerage revenue will be down 8 percent to 12 percent due to declines in price, volume and fuel. 'The truck brokerage business is experiencing excess capacity in the market which results in downward pressure on prices,” it said.
“The economic downturn has been more dramatic than we anticipated at the time of our last earnings call,” said Dave Yeager, chief executive officer. “While the downturn has impacted volume, our asset-light, variable cost model allows us to be nimble and adjust quickly to market conditions. Our expenses will be more closely aligned with these weaker business conditions. We expect total costs and expenses in the fourth quarter to be between $32 and $33 million. This decrease in expenses is due in part to a reduction in bonuses since Hub will not meet its internal earnings per share target. Hub is very strong financially. We have no debt, $80 million in cash as of Nov. 30, and positive cash flow. We are confident in our ability to adapt to the weak freight market and take advantage of higher freight volumes when the economy improves.”