Net Income Falls at Hub Group, Echo

Photos by Hub Group and Echo

Hub Group Inc. and Echo Global Logistics Inc. reported weaker third-quarter earnings as pressure on profit margins continued to hurt results in the sector.

Hub Group net income slipped 9.6% to $17.9 million, or 54 cents per share, while Echo’s net income fell 32% to $2.4 million, or 8 cents.

Earlier this week, largest broker C.H. Robinson posted weaker earnings due to margin compression. Previously, third-quarter results at other broker operations also showed a decline in margins.

Results at Hub Group declined, despite a 4% rise in revenue to $933 million. The margin pressure was apparent in the company’s intermodal unit, where shipments rose by 5% but revenue rose just 1%. Margins in the Hub unit that includes logistics as well as intermodal were reflected in the 16% drop in profit before interest and taxes.

The Mode unit of Hub boosted profit on that basis by 8% on a 6% gain in revenue.

“The challenging intermodal pricing environment contributed to the decline in income in this quarter,” CEO Dave Yeager said in a statement.

At Echo, revenue rose 2% to $460.2 million, but the average profit margin on shipments slipped 1.85 percentage points to 17.6%. Echo’s net revenue, the amount remaining after paying for transport, fell 7.5%.

More than 80% of Echo’s revenue was generated from transactional rather than contract business. Nearly 70% of its business is truckload.

"Softer pricing resulting from prolonged market weakness contributed to net revenue margin decline, which impacted our profitability,” said Doug Waggoner, CEO of Echo.

Hub ranks No. 29 and Echo ranks 35 on the Transport Topics Top 50 list of the largest logistics companies in the United States, Canada and Mexico.