A final mile business Hub Group acquired from Forward Air late last year contributed $64 million in Q1 revenue, the company said in an earnings report.
The Oak Brook, Illinois-based firm’s logistics segment, which includes final mile, on Thursday reported revenues of $480 million, a 2.4% year-over-year improvement. Overall quarterly revenue fell just shy of $1 billion, after it notched $1.2 billion a year earlier.
Hub Group got a quick return on its $262 million December acquisition of Forward Air’s final mile business, and the company is on the hunt for more M&A deals.
President and CEO Phil Yeager told analysts he expects final mile to ramp up further in Q3 and Q4 as contracts being negotiated now get signed. He said the segment experienced a spring surge as its brokerage arm leveraged its newly acquired final mile assets to cross-sell other services to customers and land new business.
“Some of those wins have already started,” Yeager said.
Final mile revenues buoyed Hub Group’s quarterly financial results in an otherwise dismal freight market quarter, which was also hampered by severe January weather.
The company’s intermodal and transportation segment reported revenues of $552 million, a drop from $709 million in Q1 of last year.
Executives remained upbeat, bolstered by the performance of its final mile purchase, and said they seek more opportunities to strengthen the company’s position when the market turns. Hub Group reported Q1 cash and equivalents of $195.3 million, giving it flexibility for future acquisitions.
“We’ve done quite good at integrations at this point ... and so I think we are back in the market,” Yeager told analysts on Thursday.
Yeager said future acquisitions would focus on building its non-asset-based logistics platforms, including brokerage.
“Now it’s about adding specializations or scale to those, and I think that will continue to be the focus for us,” he said. “We have targets that we are really focused on but really have a great pipeline, and I'm pretty pleased with how our team is doing in identifying new opportunities and vetting them very quickly.”
