HUBG 10-K & 10-Q changes, risk factors and insider trading

Our primary business is to transport, and arrange for the transport of, goods and, as a result, our business levels are directly tied to the purchase and production of goods and the rate of growth or decline in domestic and global trade, which are key macroeconomic measurements influenced by, among other things, inflation and deflation, supply chain disruptions, tariffs, interest rates and currency exchange rates, labor costs and unemployment levels, regulatory initiatives and other government activity, fuel and energy prices, public health crises, inventory levels, buying patterns and disposable income, debt levels, and credit and capital availability. When companies purchase and produce fewer goods, we transport and arrange for the transport of fewer goods. Any broad decline in the activity of our customers could result in a decline in our revenue and our ability to maintain our profitability unless we are able to continue growing our business and replace such declining customer demand with new customers and demand.

In general, while we endeavor to prepare for changes in macroeconomic conditions, we have limited ability to foresee macroeconomic changes, including the drivers influencing such changes. Nonetheless, we believe certain trends will likely affect the economy, and by extension our business, in the near and long term. Among these are, uncertainty and instability in the global or domestic economy, geopolitical events, and any other action that governments may take to withdraw from or materially modify international trade arrangements or decrease economic production, consumption and inflation. Significant weather events or patterns, which may become more frequent or common as a result of climate-change, could also affect market conditions in ways that we cannot foresee and impact the volume or health of our customers’ business or our suppliers’ ability to provide us with goods or services. The United States government and foreign governments may take other actions that may impact the purchase and production of goods, including changes to certain trade agreements and imposing tariffstariffs, quotas, or other regulations on certain goods shipped by our customers, that may increase costs for goods transported globally and reduce end-user demand for these products. Demand for, or production of, goods could also decline due to capital constraints, increased interest rates, and non-trade related regulatory actions such as regulations to address climate change.

We also rely on the timely and free flow of goods through open and operational international shipping lanes and ports. Disruptions of these shipping lanes, such as theongoing droughtgeopolitical issues impacting the Panama Canal and ongoing geopolitical conditions, including terrorist acts, impacting the Suez Canal, could create significant risks for our business or provide opportunities with changes to shipping patterns.

There may be labor unrest, including strikes and work stoppages, among workers at various transportation providers and in industries affecting the transportation industry, such as warehousing and ports. We could lose business due to any significant work stoppage or slowdown and, if labor unrest results in increased rates for transportation providers, we may not be able to pass these cost increases on to our customers. Strikes, work slowdowns, or labor shortages among longshoremen and other workers at ports may result in reduced activity at the ports for a time, creating an impact on the transportation industry. Work stoppages occurring among owner-operators in a specific market have increased our operating costs periodically in the past. Strikes, work slowdowns, or labor shortages among railroad employees in either the United States, Canada or anywhere else that our customers’ freight travels by railroadMexico would impact our operations. Any significant work stoppage, slowdown or other disruption, including disruption due to restrictions imposed as a result of a pandemic, involving port employees, railroad employees, warehouse employees or truck drivers could adversely affect our business and results of operations.

Currently, none of our employees are represented by a collective bargaining agreement.agreement in the United States. If in the future our employees decide to unionize, this would increase our operating costs and force us to alter the way we operate causing an adverse effect on our operating results.

Our operations are affected by external factors such as severe weather and other natural occurrences, which may increase in frequency and severity due to climate change, that adversely impactimpacts operating locations where we have vehicles, warehouses and other facilities. These events may disrupt fuel supplies, increase fuel costs, affect the performance of our vehicles, disrupt freight shipments or routes, restrict the availability of our workforce, affect regional economies, destroy our assets, interrupt our business, adversely affect the business or financial condition of our customers, or limit or interrupt the availability of goods or services from our suppliers. While we have been able to avoid or mitigate the impact of these events by, for example, re-routing our equipment or passing on increased costs associated with these events, we may not be able to do so in the future. Insurance to protect against loss of business and other related consequences resulting from these natural occurrences is subject to coverage limitations, depending on the nature of the risk insured. Such insurance may not be sufficient to cover all of our damages or damages to others and this insurance may not continue to be available at commercially reasonable rates. Even with insurance, if any natural occurrence leads to a catastrophic interruption of service, we may not be able to mitigate a significant interruption in operations.

We are partially self-insured for vehicle liability and workers’ compensation claims. Our self-insurance accruals are based on actuarially estimated, undiscounted cost of claims, which includes claims incurred but not reported. While we believe that our estimation processes are well designed and comply with generally accepted accounting principles and other accounting and finance best practices, any projection of losses concerning workers’ compensation and vehicle liability is subject to a considerable degree of variability. The causes of this variability include litigation trends, changes in medical costs, claim settlement patterns and fluctuations in the frequency or severity of accidents. If actual losses incurred are greater than those anticipated, our self-insurance reserves may be insufficient and additional costs could be recorded in our consolidated financial statements. If we suffer a substantial loss in excess of our self-insured limits, the loss and attendant expenses may be covered by traditional insurance and excess insurance thewe Company hashave in place, but if not covered or above such coverages, losses could harm our business, financial condition or results of operations.

We also are exposed to various other types of claims, including cargo loss and damage, property damage, and personal injury. We maintain insurance coverage with third-party insurance carriers for these types of claims as well as for other business and operational risks (including cybersecurity, data privacy, crime, and directors &and officers), but we assume a significant portion of the risk associated with these claims due to high self-insured retention (“SIR”) and deductibles. Our operating results could be adversely affected if any of the following were to occur: (i) the number or the severity of claims increasesincreases, including from increased cargo theft; (ii) we are required to accrue or pay additional amounts because claims prove to be more severe than our original assessment; or (iii) claims exceed our coverage amounts. If the number or severity of claims increases, our operating results could also be adversely affected if the cost to renew our insurance was increased when our current coverage expires. If these expenses increase, and we are unable to offset the increase with higher rates to our customers, our earnings could be materially and adversely affected. In addition, insurance companies generally require us to collateralize our SIR or deductible levels. At December 31, 2023,2024, we had insurance-related surety bonds totaling $46.9 million and letters of credit totaling $0.2$0.4 million. If these collateralization requirements increase, our borrowing capacity could be adversely affected.

Our information technology systems are subject to cyber and other risksrisks, some of which are beyond our control. A security breach, failure or disruption of these services could have a material adverse effect on our business, results of operations and financial position.

There is substantial competition for qualified personnel in the transportation and logistics services industry. The loss of any member of our management team, or other key persons, or the inability to hire key persons, could have an adverse effect on us. We do not have written employment agreements with any of our executive officers and do not maintain key person insurance on any of our executive officers, although we do have restrictive covenant agreements with all of them. Many individuals in the industry are subject to non-competition agreements, reducing the immediate availability of some qualified candidates for job openings. A proposed rulemaking by the Federal Trade Commission (“FTC”), if it is made effective and withstands effective legal challenges, would prevent the use of non-competition agreements in most circumstances in the future. We cannot predict the impact this proposed rule, orof potential future rulemaking at the federal or state level, might havelevel on the recruiting and retention of management and other employees (or our ability to enforce post-termination restrictive covenants). If we lose key members of our senior management team or are unable to effect successful transitions from one executive to another as part of our succession plan, we may not be able to effectively manage our current operations or meet ongoing and future business challenges, and this could have a material adverse effect on our business, financial condition and results of operations.

We cannot guarantee that we will be able to execute acquisitions on commercially acceptable terms. Furthermore, the failure to successfully integrate an acquired business or assets,business, including implementing financial controls and measuresmeasures, successfully managing any minority shareholders or achieving cross-selling objectives, could significantly impact our financial results. Although we believe we have adequate liquidity and capital resources to fund our operations internally, our inability to access the capital markets on favorable terms, or at all, to obtain adequate financing could adversely affect our ability to pursue growth through acquisitions. Financial results most likely to be negatively affected include revenue, gross margin, salaries and benefits, general and administrative expenses, depreciation and amortization, interest expense, net income and our debt level.

We do business with many independent contractors, such as owner operators, contract carriers and warehouse staff, consistent with longstanding industry practices. Legislative, judicial, and regulatory (including tax) authorities have taken actions and rendered decisions that could affect independent contractor classifications. Class action and individual lawsuits have been filed against us and others in our industry, challenging independent contractor classifications. If contingent workers, including independent contractors and temporary workers used for our trucking, warehousing, consolidation,consolidation and fulfillment services or final mile delivery business, are determined to be employees, or the Company a joint employer, then we may incur legal liabilities associated with that determination, such as liability for unpaid wages, overtime, employee health insurance and taxes. If we were to change how we treat contingent workers or reclassify them as employees, then we would likely incur expenses associated with that reclassification, could incur additional ongoing expenses and face the loss of those contingent workers who choose not to become employees. The costs associated with these matters could have a material adverse effect on results of operations and our financial position.

The CompanyWe and various subsidiaries are regulated by the DOT as motor carriers or freight brokers. The DOT prescribes qualifications for acting in these capacities, including surety bond requirements. The transportation industry is subject to DOT regulations regarding, among other things, driver breaks and “restart” rules that can affect the economics of the industry by requiring changes in operating practices or influencing the demand for, and cost of providing, transportation services. The Federal Motor Carrier Safety Administration (“FMCSA”), under the DOT, also manages a compliance and enforcement initiative partnering with state agencies designed to monitor and improve commercial vehicle motor safety. We are audited periodically by the DOT to ensure that we are in compliance with various safety, hours-of-service, and other rules and regulations. If we were found to be out of compliance, the DOT could levy fines and restrict or otherwise impact our operations. We may also become subject to new or more restrictive regulations relating to carbon emissions under climate change legislation or limits on vehicle weight and size. EASO is also subject to transportation regulations in Mexico. Future laws and regulations may be more stringent and require changes in operating practices, influence the demand for transportation services or increase the cost of providing transportation and logistics services, any of which could materially adversely affect our business and results of operations.

We are subject to a wide variety of U.S. federal, state and local laws, non-U.S. laws, regulations and government policies, including in the areas of employment,labor and employment (including immigration), privacy, cybersecurity, securities, anti-corruption, competition and trade, that may change in significant ways. We are not able to accurately predict how new governmental laws and regulations, or changes to existing laws and regulations, will affect the transportation and logistics industry generally, or us in particular. We are also unable to predict how political changes will affect government regulation of the transportation industry. If we incur higher costs as a result of any new regulations and are unable to pass along such costs to our customers, our business may be adversely affected.

TheWe Company isare also subject to certain federal and state environmental laws and regulations, including those of the U.S. Environmental Protection Agency (“EPA”) and the California Air Resources Board (“CARB”). We may become subject to enforcement actions, new or more restrictive regulations, or differing interpretations of existing regulations, which may increase the cost of providing transportation services or adversely affect our results of operations. In addition to EPA and state agency regulations on exhaust emissions with which we must comply, there is an increased legislative and regulatory focus on climate change, greenhouse gas (“GHG”) emissions and the impact of climate change that enhances the possibility of increased regulation of GHG emissions and potentially exposes us to significant new capital or operating expenditures, taxes, fees and other costs. Additionally, the State of California recentlypreviously passed legislation and the SEC has proposed regulations regarding the disclosure of Scope 1, 2 and 3 GHG emissions. Compliance with these regulations could add material costs to our business, including securities and other potential litigation costs arising from our reporting of our GHG emissions, and could increase customer focus on our GHG direct and indirect emissions, which may affect the market for transportation and logistics services in ways that we cannot foresee. Such regulations, together with increased investor and stakeholder interest in climate change and other environmental topics may result in new regulations or customer, supplier or market requirements that could adversely impact our business, or certain stockholders may reduce their holdings of our stock. Limitations on the emission of GHGs, other environmental legislation, or customer GHG requirements could also have an adverse impact on our financial condition, results of operations and liquidity.

The nature of our business exposes us to a variety of litigation risks related to a number of issues, including without limitation, accidents involving our trucks and employees, alleged violations of federal and state laborlabor, employment and employmentimmigration laws, securities laws, environmental liability, privacy and other matters. Accordingly, we are, and in the future may be, subject to legal proceedings and claims that have arisen in the ordinary course of our business, including class and collective allegations. We are also subject to potential governmental proceedings, inquiries, and claims. The parties in such actions may seek amounts from us that may not be covered in whole or in part by insurance. The defense of such lawsuits could result in significant expense and the diversion of our management’s time and attention from the operation of our business. In recent years, several insurance companies have stopped offering coverage to trucking companies as a result of increases in the severity of automobile liability claims and higher costs of settlements and verdicts. This trend has and could continue to adversely affect our ability to obtain suitable insurance coverage and significantly increase our cost for obtaining such coverage, which would adversely affect our financial condition, results of operations, liquidity and cash flows. Costs we incur to defend or to satisfy a judgment or settlement of these claims may not be covered by insurance or could exceed the amount of that coverage or increase our insurance costs and could have a material adverse effect on our financial condition, results of operations, liquidity and cash flows.

We arrange for the movement of freight, a portion of which originates from other countries, including China, into and out of the United States, Mexico and Canada, and we import 53-foot intermodal containers manufactured in China. Adverse developments in laws, policies or practices in the United States and internationally can negatively impact our business and the business of our customers. Recent legislative initiatives, including the Inflation Reduction Act of 2022 and the CHIPs and Science Act of 2022, have included provisions designed to reduce dependence on goods from China and restrict the transfer of certain intellectual property to China. Some importers are considering changes in their supply chain that may include shifting manufacturing capacity to North America or an increase in the importation of goods that are manufactured offshore through ports other than ports on the West Coast of the United States. These initiatives, and future potential initiatives, may result in changes to demand for our services including the potential for less demand for longer haul routes including intermodal services which could materially affect our business, financial conditions and results of operations. Negative domestic and international global trade conditions as a result of social, political or regulatory changes or perceptions (such as those that might be associated with pandemicstariffs or an increased focus on production in the United States), could reduce demand for our intermodal services and materially affect our business, financial conditions and results of operations. We provide services both domestically and to a lesser extent outside of the United States,States (including EASO in Mexico), which subjects our business to various additional risks, including:

uncertainty regarding and changes in tariffs, trade restrictions, trade agreements and taxes;

difficulties in managing or overseeing foreign operations and agents;

TheWe Company hashave registered various trademarks and designs in the United States, Mexico and Canada. These marks play a major role in our business as they strengthen our brand recognition while helping accomplish our marketing strategy. Some of our intellectual property rights related to trademarks, trade secrets, domain names, copyrights, or other intellectual property could be challenged or invalidated or misappropriated or infringed upon, by third parties. Our continued efforts to obtain, enforce, protect and defend our intellectual property against a third-party infringement claim may be ineffective and could result in substantial costs which could adversely impact our corporate reputation, business, results of operations, and financial conditions.

Our success depends on our ability to consistently deliver operational excellence and strong customer service. Our inability to deliver our services and solutions as promised on a consistent basis, or our customers having a negative experience or otherwise becoming dissatisfied, can negatively impact our relationships with new or existing customers and adversely affect our brand and reputation, which could, in turn, adversely affect revenue and earnings growth. Adverse publicity (whether or not justified) relating to activities by our employees, contractors, suppliers, agentssuppliers or others with whom we do business, such as customer service mishaps or noncompliance with laws, could tarnish our reputation and reduce the value of our brand. With the increase in the use of social media outlets such as Facebook, YouTube, TikTok, Instagram, LinkedIn and X (formerly Twitter), adverse publicity can be disseminated quickly and broadly, making it increasingly difficult for us to effectively respond. This unfavorable publicity could also require us to allocate significant resources to rebuild our reputation.

changes in industry research analysts’ recommendations or projections; failure to meet analysts’ and our Company's projections; general political, social, economic and capital market conditions; announcements of developments related to our business or the business of our key customers or vendors; operating and stock performance of other companies deemed to be peers; actions by government regulators; news reports of trends, concerns and other issues related to us or our industry, including changes in regulations; and geopolitical conditions such as acts or threats of terrorism, military conflicts, and the effects of pandemics (such as the coronavirus).pandemics.

Our Class A Common Stock price may fluctuate significantly in the future, and these fluctuations may be unrelatedrelated to our performance. We also cannot predict the effect our dual-class structure may have on the market prices of our Class A Common Stock. General market price declines or market volatility in the future could adversely affect the price of our Class A Common Stock, and the current market price of our Class A Common Stock may not be indicative of future market prices.

We are a leading supply chain solutions provider in North America that offers comprehensive transportation and logistics management services focused on reliability, visibility and value for our customers. Our service offerings include a full range of freight transportation and logistics services, some of which are provided using assets we own and operate, and some of which are provided by third parties with whom we contract. Our services include intermodal, truckload, less-than-truckload, flatbed, temperature-controlled, dedicated and regional trucking. Other services include full outsource logistics solutions, transportation management services, freight consolidation, warehousingconsolidation and fulfillment,fulfillment andservices, final mile deliverydelivery, parcel and international services.

Beginning in the first quarter of 2023, weWe concluded we have two reportable segments - Intermodal and Transportation Solutions,Solutions (“ITS”), and Logistics, which are based primarily on the services each segment provides. Results for the years ended December 31, 2022 and 2021 have been recast to conform with current year presentation.

Intermodal and Transportation Solutions. Our Intermodal and Transportation SolutionsITS segment offers high service, nationwide door-to-door intermodal transportation, providing value, visibility and reliability in both transcontinental and local lanes by combining rail transportation with local trucking. This segment includes our trucking operations which provides our customers with local pickup and delivery as well as high service local and regional trucking transportation using equipment dedicated to their needs. In 2023,2024, approximately 78%73% of our drayage services was provided by our own fleet. We arrange for the movement of our customers’ freight in one of our approximately 50,000 containers. We contract with railroads to provide transportation for the long-haul portion of the shipment between rail terminals. Drayage between origin or destination and rail terminals are provided by our own trucking operations and third parties with whom we contract. Our dedicated service operation offers fleets of equipment and drivers to each customer on a contract basis, as well as the management and infrastructure to operate according to the customer’s high service expectations. As of December 31, 2023,2024, our trucking transportation operation consisted of approximately 2,300 tractors, 2,9003,200 employee drivers and 4,3004,700 trailers. We also contract for services with approximately 460500 independent owner-operators. These assets and contractual services are used to support drayage for our intermodal service offering and to serve our customers who require high service local and regional trucking transportation using equipment dedicated to their needs. Our dedicated service operation offers fleets of equipment and drivers to each customer on a contract basis, as well as the management and infrastructure to operate according to the customer’s high service expectations.

Logistics. Our Logistics segment offers a wide range of non-asset-based services including transportation management, freight brokerage services, shipment optimization, load consolidation, mode selection, carrier management, load planning and execution, warehousing, fulfillment, cross-docking, consolidation and fulfillment services and final mile delivery. Logistics includes our brokerage business which consists of a full range of trucking transportation services, including dry van, expedited, less-than-truckload (“LTL”), refrigerated and flatbed, all of which is provided by third-party carriers with whom we contract. We leverage proprietary technology along with collaborative relationships with third-party service providers to deliver cost savings and performance-enhancing supply chain services to our clients. Our transportation management offering also serves as a source of volume for our ITS segment. Many of the customers for these solutions are consumer goods companies who sell into the retail channel. Our final mile delivery offering provides residential final mile delivery and installation of appliances and big and bulky goods. Final mile operates through a network of independent service providers in company, customer and third-party facilities throughout the continental United States. Our business operates or has access to approximately 117 million square feet of warehousing and cross-dock space across North America, to which our customers ship their goods to be stored and distributed to destinations including residences, retail stores and other commercial locations. These services offer our customers shipment visibility, transportation cost savings, high service and compliance with retailers’ increasingly stringent supply chain requirements.

We are focused on several margin enhancement projects including network optimization, matching of inbound and outbound loads, reducing empty miles, improving our recovery of accessorial costs, increasing our driver and asset utilization, reducing repositioning costs, providing holistic solutions and improving low profit freight. Hub’s top 50 customers represent approximately 64%68% of revenue for fiscal 20232024 while one customer accounted for more than 10% of our annual revenue in 20232024 in both segments. We use various performance indicators to manage our business. We closely monitor profit levels for our top customers. We also evaluate on-time performance, customer service, cost per load and daily sales outstanding by customer account. Vendor cost changes and vendor service levels are also monitored closely.

Uncertainties and risks to our outlook include inflation, increased healthcare costs, a slowdown in consumer spending (driven by, among other factors, rising inflation, tariffs, increases in interest rates, an economic recession and geopolitical concerns), a shift by consumers to spending on services at the expense of goods, an increase of retailers’ inventory levels, the ability of customers to pay our accounts receivable, a significant increase in transportation supply in the marketplace, aggressive pricing actions by our competitors and any inability to pass cost increases, such as transportation and warehouse costs, through to our customers, economic factors such as the impact of potentially increasing tariffs between trading partners, all of which could have a materially negative impact on our revenue, profitability and cash flow in 2024.2025. Exiting of truckload capacity, retail inventory levels declining leading to restocking demand, a return of typical shipping peak season demands and a stronger used tractor market could have a materially positive impact on our revenue, profitability and cash flows in 2024.2025.

Logistics revenue decreased 14% to $1.8 billion primarily driven by lower revenue per load in our brokerage service line and lower managed transportation and final mile service line revenue, partially offset by an increase in consolidation and fulfillment revenue. Brokerage volumes were flat compared to the prior year. Logistics operating income was 6% of revenue in both 2023 and 2022. Operating income was $105 million as compared to $126 million last year, as lower revenue was partially offset by lower purchased transportation costs and our yield management initiatives.

The provision for income taxes decreased to $42 million in 2023 from $111 million in 2022 due to a decrease in pre-tax income. We provided for income taxes using an effective rate of 19.9% in 2023 and an effective rate of 23.7% in 2022. The lower effective tax rate in 2023 resulted primarily from a change in state apportionment methodology.

Our financing and liquidity strategy is to fund operating cash payments and future dividends through cash received from the provision of services, cash on hand, and to a lesser extent, from cash received from the sale of equipment. As of December 31, 2023,2024, we had $187$98 million of cash and cash equivalentsequivalents. andWe $21also had $29 million of restricted investments.cash and $22 million of restricted investments which are held for payments of long-term liabilities. We generally fund our purchases of transportation equipment through the issuance of secured, fixed rate Equipment Notes. In prior years, we have funded our business acquisitions from cash on hand. Our investment agreement with EASO in October 2024 is consistent with this approach. Payments for our other investing activities, such as the construction of our office buildings and our capitalized technology investments, have been funded by cash on hand or cash flows from operations. Cash used in financing activities including the purchase of treasury stock hasand dividend payments have been funded by cash from operations or cash on hand. We expect our newly declared dividend to be funded by cash on hand. We have not historically used our Credit Facility to fund our operating, investing, or financing cash needs, though it is available to fund future cash requirements as needed. Based on past performance and current expectations, we believe cash on hand and cash received from the provision of services, along with other financing sources, will provide us the necessary capital to fund transactions and achieve our planned growth for the next twelve months and the foreseeable future.

Cash provided by operating activities for the year ended December 31, 20232024 was approximately $422$194 million, which resulted primarily from non-cash charges of $210$196 million,million and income of $168$104 millionmillion, andpartially offset by changes in operating assets and liabilities of $44$106 million.

Cash provided by operating activities totaled $194 million in 2024 compared to $422 million in 2023 compared to $458 million in 2022.2023. The $36$228 million decrease in cash flow was primarily due to a decrease in net income of $189 million, partially offset by an increase in the change in assets and liabilities of $103$150 million, a decrease in net income of $64 million and ana increasedecrease in non-cash charges of $50$14 million.

Net cash used in investing activities for the year ended December 31, 20232024 was $373$53 million which included capital expenditures of $51 million and net cash used in acquisitions of $261 million and capital expenditures of $140$14 million, partially offset by proceeds from the sale of equipment of $28$12 million. Capital expenditures of $140$51 million related primarily to tractors of $71 million, containers of $41 million, technology investments of $14$19 million, tractor purchases of $16 million, warehouse equipment of $12$9 million and leaseholdthe improvementsremainder offor $3other million.transportation equipment.

Capital expenditures decreased by approximately $79$89 million in 20232024 as compared to 2022.2023. The 20232024 decrease was due to decreaseddecreases in tractor purchases of $54 million, container purchases of $60$39 million, less spend on our corporate headquarters of $17 million, less technology investments of $9 million and less other transportation equipmentwarehouse purchases of $8 million. These decreases were partially offset by more purchases of warehouse equipment of $12 million, tractors of $3 million and the remainder related to leasehold improvementsimprovements. inThese 2023.decreases were partially offset by increased technology investments of $5 million and increased purchases of other transportation equipment of $4 million.

In 2024,2025, we estimate capital expenditures will range from $55$50 million to $75$70 million. We expect transportation equipment purchases to range from $40$25 million to $45 million, technology investments of approximately $20$25 million andas well as warehouse equipment and other of approximately $10 million.expenditures. We plan to fund these expenditures with a combination of cash and debt.

Net cash used in financing activities for the year ended December 31, 20232024 was $148$201 million which includes cash used for the repayments of long-term debt of $107 million, purchase of treasury stock of $144$68 million, repaymentsdividends paid of long-term debt of $106$30 million, cash used for stock tendered for payments of withholding taxes of $10$11 million andmillion, finance lease payments of $2 million and a distribution to non-controlling interest holders of $1 million, partially offset by proceeds from the issuance of debt of $114$18 million. Our debt balance decreased by $86 million during 2024. Debt incurred in 20232024 was used to fund the purchase of transportation equipment.

The $96$53 million increase in cash used in financing activities for 20232024 versus 20222023 was primarily due to an increase in thedividends purchasepaid of treasury$30 stockmillion, increases in repayments of $34long-term million,debt, andistributions increaseto innon-controlling interests and cash paid for stock related to employee withholding taxes of $2$1 million each and a decrease in proceeds from the issuance of debt of $65$96 million, partially offset by a decrease in the repaymentspurchase of long-termtreasury debtstock of $5$75 million.

In 2023,2024, cash paid for income taxes was $35$44 million, of which $23$34 million related to 20232024 and $12$10 million related to 2022.2023. The $23$34 million of cash paid for income taxes related to 20232024 iswas lessmore than the 20232024 income tax expense of $41$29 million. This difference is a result of favorableunfavorable book to tax differences, primarily those related to compensation,depreciation, which caused 20232024 taxable income to be lessmore than 20232024 financial statement income before taxes. We expect our cash payments infor 2024 forincome taxes in 2025 to beexceed greaterour than bookincome tax expense.

We have standby letters of credit that expire in 2024.2025. As of December 31, 2023 and December 31, 2022, ourOur letters of credit were $1 million as of both December 31, 2024 and $43December million,31, 2023, respectively.

As of December 31, 20232024 and December 31, 2022,2023, we had no borrowings under our respective credit agreementsagreements. and ourOur unused and available borrowings were $349 million as of both December 31, 2024 and $307December million,31, 2023, respectively. We were in compliance with the financial covenants in our credit agreements as of December 31, 20232024 and December 31, 2022.2023.

As of February 16,18, 2024,2025, Hubwe signed various operating and finance leases which had not commenced as of December 31, 2023.2024. Based on the present value of the lease payments, the estimated right-of-use (“ROU”) assets and lease liabilities related to these contracts will total approximately $7.1$2.7 million and $0.3 million for operating and finance leases, respectively.million.

Revenue is recognized when we transfer services to our customers in an amount that reflects the consideration we expect to receive. We account for a contract when it has approval and commitment from both parties, the rights of the parties are identified, payment terms are identified, the contract has commercial substance and collectability of consideration is probable. We generally recognize revenue over time because of continuous transfer of control to the customer. Since control is transferred over time, revenue and related transportation costs are recognized based on relative transit time, which is based on the extent of progress towards completion of the related performance obligation. We enter into contracts that can include various combinations of services, which are capable of being distinct and accounted for as separate performance obligations. Taxes assessed by a governmental authority that are both imposed on and concurrent with a specific revenue-producing transaction, that are collected by the Companyus from a customer, are excluded from revenue. Further, in most cases, we report our revenue on a gross basis because we are the primary obligor as we are responsible for providing the service desired by the customer. Our customers view us as responsible for fulfillment including the acceptability of the service. Service requirements may include, for example, on-time delivery, handling freight loss and damage claims, setting appointments for pick-up and delivery and tracing shipments in transit. We have discretion in setting prices for our services and as a result, the amount we earn varies. In addition, we have the discretion to select our vendors from multiple suppliers for the services ordered by our customers. TheseDue to these factors, discretionwe in setting prices and discretion in selecting vendors, further support reportingreport revenue on a gross basis for most of our revenue.

Intermodal and Transportation Solutions. Our ITS segment offers high service, nationwide door-to-door intermodal transportation, providing value, visibility and reliability in both transcontinental and local lanes by combining rail transportation with local trucking. This segment includes our trucking operations which provides our customers with local pickup and delivery as well as high service local and regional trucking transportation using equipment dedicated to their needs. In the first sixnine months of 2025, approximately 78%83% of our drayage services was provided by our own fleet. We arrange for the movement of our customers’ freight in one of our approximately 50,00051,000 containers. We contract with railroads to provide transportation for the long-haul portion of the shipment between rail terminals. Drayage between origin or destination and rail terminals are provided by our own trucking operations and third parties with whom we contract. Our dedicated service operation offers fleets of equipment and drivers to each customer on a contract basis, as well as the management and infrastructure to operate according to the customer’s high service expectations. As of JuneSeptember 30, 2025, our trucking transportation operation consisted of approximately 2,4002,300 tractors, 3,3003,100 employee drivers and 4,5004,700 trailers. We also contract for services with approximately 500 independent owner-operators. These assets and contractual services are used to support drayage for our intermodal service offering and to serve our customers who require high service local and regional trucking transportation using equipment dedicated to their needs. Our dedicated service operation offers fleets of equipment and drivers to each customer on a contract basis, as well as the management and infrastructure to operate according to the customer’s high service expectations.

We are focused on several margin enhancement projects including network optimization, matching of inbound and outbound loads, reducing empty miles, improving our recovery of accessorial costs, increasing our driver and asset utilization, reducing repositioning costs, providing holistic solutions and improving low profit freight. Hub’s top 50 customers represent approximately 68% of revenue for the sixnine months ended JuneSeptember 30, 2025, while one customer accounted for more than 10% of our revenue in both segments for both the sixnine months ended JuneSeptember 30, 2025 and 2024. We use various performance indicators to manage our business. We closely monitor profit levels for our customers. We also evaluate on-time performance, customer service, cost per load and daily sales outstanding by customer account. Vendor cost changes and vendor service levels are also monitored closely.

The following table includes the one customer that represented 10% or more of our revenue by segment for the sixnine months ending JuneSeptember 30, 2025 and 2024, respectively:

Three Months Ended JuneSeptember 30, 2025 Compared to the Three Months Ended JuneSeptember 30, 2024

Purchased transportation and warehousing costs decreased 10%8% to $656$684 million in 2025 from $727$740 million in 2024. As a percentage of revenue, purchased transportation and warehousing costs decreased to 72.4% in 2025 from 73.7% in 2024.

Purchased transportation and warehousing costs declined as compared to prior year due to rail cost decreases,decreases and lower third-party drayagecarrier andcosts warehousingas costs,we andhave lowerpurchased fuelthird costs.party transportation more effectively. Additionally, our warehouse costs have decreased after the completion of our warehouse space consolidation efforts as part of our Network Alignment Initiative in 2024.

Headcount, which includes drivers, warehouse personnel and office employees, was 6,310,6,604, which includes 614608 employees of EASO, as of JuneSeptember 30, 2025 and 5,8135,900 as of JuneSeptember 30, 2024, respectively. The increase in headcount relatedis primarily due to driversoffice and warehousedriver employees due to the EASO acquisition.

Depreciation and amortization expense decreased to $32$31 million in 2025 from $38$32 million in 2024. This decrease was primarily related primarily to $2 million of decreased computer software and container depreciation expense resulting from changes made in the first and third quarterquarters of 20242025 to the estimated useful lives of our containers.software and containers, respectively. These decreases were partially offset by an increase in depreciation and amortization due to the EASO acquisition. This expense, as a percentage of revenue, decreasedincreased to 3.6%3.4% in 2025 from 3.8%3.3% in 2024. Depreciation expense includes transportation equipment, technology investments, leasehold improvements, warehouse equipment, office equipment and building improvements.

Insurance and claims expense decreasedremained torelatively $11consistent at $10 million in both 2025 from $13 million inand 2024. This decrease was primarily due to decreased claims costs related to auto liability claims. These expenses, as a percentage of revenue, decreasedincreased to 1.2%1.1% in 2025 from 1.3%1.0% in 2024.

General and administrative expenses increaseddecreased to $29$27 million in 2025 from $28$30 million in 2024. These expenses, as a percentage of revenue, increaseddecreased to 3.2%2.9% in 2025 from 2.8%3.0% in 2024.

This increasedecrease in general and administrative expenses wasresulted primarilyfrom duecost tocontrol vendorinitiatives settlementresulting relatedin costsa of $3$2 million incurred in 2025, partially offset by decreasesdecrease in third party service costs and bad debt expense ofa $1 million each.decrease in temporary office labor costs.

Other expenseexpense, net decreased to $1 million in 2025 from $2$1.4 million in 2024. InterestThis decrease is due to an interest expense decreaseddecrease of $0.5 million primarily due to lower overall debt balances whilepartially offset by higher interest rates remainedas relativelywell consistent. Interest income decreased by $0.8 million due to lower invested cash balances. These decreases were partially offset byas a $0.8 million changepositive increase in other,Other, net related to the change in the Peso exchange rate due to the addition of EASO. These changes were partially offset by a decrease in interest income of $0.9 million due to lower invested cash balances.

The provision for income taxes decreasedincreased to $8$10 million in 2025 from $9$7 million in 2024 due primarily to loweran increase in pre-tax income inand 2025.a higher effective tax rate. We provided for income taxes using an effective rate of 24.0%24.9% in 2025 and an effective rate of 22.8%23.2% in 2024. The secondthird quarter 2025 effective tax rate of 24.0%24.9% was higher than the 2024 effective tax rate fromdue 2024,to asan inunfavorable 2024adjustment werelated receivedto a one-time benefit from amending state tax returns.audit recorded in the third quarter of 2025.

SixNine Months Ended JuneSeptember 30, 2025 Compared to the SixNine Months Ended JuneSeptember 30, 2024

Total consolidated operating revenue decreased 8%7% to $1,821$2.76 millionbillion in 2025 from $1,986$2.97 millionbillion in 2024.

Intermodal and Transportation Solutions (“ITS”) revenue decreased 5% to $1,058 million primarily due to mix, price declines, lower fuel revenue, as well as lower dedicated revenue, partially offset by an increase in intermodal volume. ITS operating income increased 7%10% to $28$44 million, or 2.7%3% of revenue, as compared to $27$40 million, or 2.4%2% of revenue in the prior year, primarilyyear due to costlower controlpurchased efforts,transportation costs, lower dedicated start-upequipment costs, and improved insurance and claims expenses.

Logistics revenue decreased 13% to $815$1.22 millionbillion primarily duedriven toby lower volume and revenue per load in our brokerage business, exiting from unprofitable business in consolidation and fulfillment, and sub-seasonalsoftened demand in final mile and managed transportation and final mile businesses. Logistics operating income decreased to $43 million, or 5.3% of revenue, as compared to $50 million, or 5.3% of revenue, due to lower brokerage margins.

Purchased transportation and warehousing costs decreased 10% to $1,314$2.00 millionbillion in 2025 from $1,467$2.21 millionbillion in 2024. As a percentage of revenue, purchased transportation and warehousing costs decreased to 72.2% in 2025 from 73.9% in 2024.

Purchased transportation and warehousing costs declined as compared to prior year due to lower rail,volumes in both the intermodal and brokerage businesses, reductions in external third-party warehouse, third party drayage and carrierwarehouse costs, lower rail, and fuel costs. The reduction in warehouse costs is primarily driven by the completion of our networkNetwork optimizationAlignment projectInitiative in 2024.

The $7 million increase in salaries and benefits expensewas primarily related to increases in driver costs as our usage of company drivers versus third party drayage has increased and warehouse employee costs as we increased our ratio of $11internal staffing of our warehouses, of $13 million. This increase in expenseexpenses was partially offset by lowera office employee related expensedecrease of $4$6 million.million due to a 5% decrease in legacy non-driver, non-warehouse headcount.

Depreciation and amortization expense decreased to $65$96 million in 2025 from $76$108 million in 2024. This decrease was related primarily to $11 million decreased container depreciation expense resulting from changes made in the third quarterquarters of 2024 and 2025 to the estimated useful lives of our containers. Additionally, the decrease is due to a $2 million decrease to computer software depreciation expense resulting from a change made in the first quarter of 2025 to the estimated useful lives of our software. These decreases were partially offset by a $1 million increase in intangible amortization expense. This expense, as a percentage of revenue, decreased to 3.5% in 2025 from 3.8%3.6% in 2024. Depreciation expense includes transportation equipment, technology investments, leasehold improvements, warehouse equipment, office equipment and building improvements.

Insurance and claims expense decreased to $22$32 million in 2025 from $25$35 million in 2024. This decrease was primarily due to decreased claim costs related to auto liability claims in 2025. These expenses, as a percentage of revenue, decreasedremained torelatively consistent at 1.2% in both 2025 from 1.3% inand 2024.

General and administrative expenses increaseddecreased to $56$83 million in 2025 from $55$85 million in 2024. These expenses, as a percentage of revenue, increased to 3.1%3.0% in 2025 from 2.8%2.9% in 2024.

Net gains on the sale of equipment decreased to a loss of $0.1$0.5 million in 2025 from a gain of $0.9$1.3 million in 2024. TheThis decrease resulted from both less units sold and a lower average gain per unit sold in 2025 as compared to 2024.

Other expenseexpense, net decreased to $3$4.0 million in 2025 from $5$6.0 million in 2024. InterestThis decrease is due to an interest expense decreaseddecrease $1.2of $1.8 million primarily due to lower overall debt balances while interest rates remained relatively consistent. Interest income decreased by $0.9 million due to lower invested cash balances. These decreases were partially offset by higher interest rates and a $1.3$2.0 million changepositive increase in other,Other, net related to the change in the Peso exchange rate due to the addition of EASO. These changes were partially offset by a decrease of $1.8 million in interest income due to lower invested cash balances.

The provision for income taxes remainedincreased consistentto at approximately $16$26 million in 2025 from $23 million in 2024 due to an increase in pre-tax income and 2024.a higher effective tax rate. We provided for income taxes using an effective rate of 23.9%24.2% in 2025 as compared to an effective rate of 22.2%22.5% in 2024. The higher effective tax rate was higher in 2025 asis comparedthe result of an unfavorable adjustment related to 2024, as in 2024 we had a one-time benefit from amending state tax returns,audit and in 2025 we had a smaller rate2025 benefit related toon the vestingvest of stock-based compensation than in 2024.compensation.

Our financing and liquidity strategy is to fund operating cash payments and future dividends through cash received from the provision of services, cash on hand, and to a lesser extent, from cash received from the sale of equipment. As of JuneSeptember 30, 2025, we had $137$120 million of cash.cash and cash equivalents. In addition, we had $20.0$21 million of restricted investments and $26.6$27 million of restricted cash, which are held for payments of long-term liabilities and the deferred cash consideration from the EASO transaction, respectively. We generally fund our purchases of transportation equipment through the issuance of secured, fixed rate Equipment Notes.Notes, including our purchase of container assets as part of the Marten Intermodal transaction. In prior years, we have funded our business acquisitions from cash on hand. Our investment agreement with EASO in October 2024 and purchase agreement with SITH in September 2025 are consistent with this approach. Payments for our other investing activities, such as our capitalized technology investments, have been funded by cash on hand or cash flows from operations. Cash used in financing activities,activities including the purchase of treasury stock and dividend payments, have been funded by cash from operations or cash on hand. We have not historically used our Credit Facility to fund our operating, investing, or financing cash needs, though it is available to fund future cash requirements as needed. Based on past performance and current expectations, we believe cash on hand and cash received from the provision of services, along with other financing sources, will provide us the necessary capital to fund transactions and achieve our planned growth for the next twelve months and the foreseeable future.

Cash provided by operating activities for the sixnine months ended JuneSeptember 30, 2025 was approximately $132$160 million, which resulted primarily from net income of $52$81 million plus non-cash charges of $100$161 million, partially offset by the changes in operating assets and liabilities of $20$82 million.

Cash provided by operating activities totaled $132$160 million in 2025 compared to $150$194 million in 2024. The $18$34 million decrease in cash flow was primarily due to a decrease in net income of $4 million and a negativethe change in operating assets and liabilities of $16$49 million, primarily due to the change in accounts payable, partially offset by an increase in non-cash charges of $2$14 million and an increase in net income of $1 million.

Net cash used in investing activities for the sixnine months ended JuneSeptember 30, 2025 was $26$87 million which resulted fromincluded capital expenditures of $30$39 million, purchase of container assets of $53 million resulting from the Marten transaction, and $1 million related to the acquisition of SITH. This activity was partially offset by proceeds from the sale of equipment of $4$7 million. Capital expenditures of $30$39 million related primarily to tractors of $18$19 million, technology investments of $9$15 million, warehouse equipment of $2$4 million,million and the remainder for other transportation equipment of $1 million.equipment.

Capital expenditures decreased by approximately $1$4 million in 2025 as compared to 2024. The 2025 decrease was due primarily to decreases in warehouse equipment purchases of $3 million, container purchases of $2 million as well leasehold improvements and warehousetransportation and other equipment of $3$1 million.million each. These decreases were partially offset by increasesincreased intractor spend on tractorspurchases of $4$3 million.

In 2025, we estimate capital expenditures will range from $40 million to $50 million. We expect the remaining expenditures to focus these expenditures on replacements for tractors that have reached the end of their useful life as well as technology investments.investments and warehouse equipment. We do not plan to purchase containers in 2025. InWe addition to our estimated capital expenditures, we expectplan to fund thethese Marten Intermodal transaction disclosed in Note 8expenditures with equipmentcash debt.on hand.

Net cash used in financing activities for the sixnine months ended JuneSeptember 30, 2025 was $68$53 million which includes cash used for repayments of long-term debt of $52$77 million, purchasesthe purchase of treasury stock of $14 million, dividends paid of $15$23 million, and cash used for stock tendered for payments of withholding taxes of $6$7 million, partially offset by proceeds from the issuance of debt of $19$67 million. Debt incurred in 2025 was used to fund the purchase of transportation equipment.equipment, including the container assets in the Marten transaction.

The $27$112 million decrease in cash used in financing activities for 2025 versus 2024 was primarily due to thea decrease in the purchase of treasury stock of $19$54 million, lessdecrease in cash paid for repayments of long-term debt of $2$4 million, lesscash paid for stock tenderedrelated forto payments ofemployee withholding taxes of $2 million, morecash paid for finance lease payments of $1 million, as well as an increase in proceeds from the issuance of debt of $3 million and a decrease in finance lease payments of $1$50 million.

We have standby letters of credit that expire in 2025.2026. AsOur letters of credit were $1 million as of both JuneSeptember 30, 2025 and December 31, 2024, our letters of credit were $1 million.2024.

As of both JuneSeptember 30, 2025, and December 31, 2024, we had no borrowings under the Credit Agreement and our unused and available borrowings were $449 million and $349 million, respectively. We were in compliance with our debt covenants as of JuneSeptember 30, 2025 and December 31, 2024.

Refer to the company'sCompany's 2024 10-K for a complete discussion regarding our critical accounting policies and estimates. As of JuneSeptember 30, 2025, there were no material changes to our critical accounting policies and estimates.