Quarterlytics / Industrials / Integrated Freight & Logistics / Hub Group

Hub Group

hubg · NASDAQ Industrials
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Ticker hubg
Exchange NASDAQ
Sector Industrials
Industry Integrated Freight & Logistics
Employees 1001-5000
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FY2021 Annual Report · Hub Group
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UNITED STATES 
SECURITIES AND EXCHANGE COMMISSION 
Washington, D.C. 20549 
FORM 10-K 

(Mark One)
☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 

For the fiscal year ended December 31, 2021

OR

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934               

Commission File No. 0-27754 

HUB GROUP, INC. 

(Exact name of registrant as specified in its charter) 

Delaware
(State or other jurisdiction of
incorporation or organization)
2000 Clearwater Drive
Oak Brook, IL
(Address of principal executive offices)

36-4007085
(I.R.S. Employer
Identification No.)

60523
(Zip Code)

Registrant’s telephone number, including area code: (630) 271-3600

Securities registered pursuant to Section 12(b) of the Act:  

Class A Common Stock, par value $0.01 per share

Title of each class

Trading
Symbol(s)
HUBG

Securities registered pursuant to Section 12(g) of the Act:  None

Name of each exchange on which registered
NASDAQ

Indicate by check mark if the Registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.    Yes  ☒  No ☐
Indicate by check mark if Registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.    Yes ☐  No  ☒
Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for 
such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  ☒  No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 229.405 of this chapter) 
during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes  ☒  No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See definitions of “large accelerated filer”, 
“accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one): 

Large accelerated filer

Non-accelerated filer

☒

☐

Emerging growth company

  ☐

Accelerated filer

Smaller reporting company

☐

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting 
standards provided pursuant to Section 13(a) of the Exchange Act.  ☐
Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 
404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report.            ☒ 
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  ☐    No ☒ 
The aggregate market value of the Registrant’s voting stock held by non-affiliates on June 30, 2021, based upon the last reported sale price on that date on the NASDAQ Global Select Market of 
$65.98 per share, was $2,162,250,176. 

On February 18, 2022, the Registrant had 34,029,436 outstanding shares of Class A Common Stock, par value $.01 per share, and 662,296 outstanding shares of Class B Common Stock, par 
value $.01 per share. 

Documents Incorporated by Reference
The Registrant’s definitive Proxy Statement for the Annual Meeting of Stockholders to be held on May 24, 2022 (the “Proxy Statement”) is incorporated by reference in Part III of this Form 10-K 
to the extent stated herein. Except with respect to information specifically incorporated by reference in this Form 10-K, the Proxy Statement is not deemed to be filed as a part hereof. 

 
 
  
  
  
  
  
  
 
 
 
 
  
 
 
 
 
  
 
 
 
 
 
 
 
 
 
  
 
 
 
 
 
 
 
 
 
 
 
   
 
 
 
 
PART I 

 FORWARD LOOKING STATEMENTS

This annual report contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Words such as 
“expects,” “hopes,” “believes,” “intends,” “targets,” “estimates,” “anticipates,” “predicts,” “projects,” “potential,” “may,” “could,” “might,” “should,” and 
variations  of  these  words  and  similar  expressions  are  intended  to  identify  these  forward-looking  statements.  In  particular,  information  appearing  under 
“Business,”  “Risk  Factors,”  and  “Management’s  Discussion  and  Analysis  of  Financial  Condition  and  Results  of  Operations”  includes  forward-looking 
statements. Forward-looking statements are neither historical facts nor assurance of future performance. Instead, they are based on our beliefs, expectations 
and assumptions regarding the future of our business, future plans and strategies, projections, anticipated events and trends, the economy and other future 
conditions. Because forward-looking statements relate to the future, they are subject to inherent uncertainties, risks and changes in circumstances that are 
difficult to predict and many of which are outside of our control. Such considerations may include, but are not limited to, uncertainties caused by adverse 
economic conditions, geopolitical events, the coronavirus ("COVID-19") pandemic, workforce availability and other extraordinary events or circumstances 
that may disrupt our or our customers’ or suppliers’ business and operations.  

Our  actual  results  and  financial  condition  may  differ  materially  from  those  indicated  in  the  forward-looking  statements.  All  forward-looking 
statements made by us in this annual report are based upon information available to us on the date of this report and speak only as of the date in which they 
are made. Except as required by law, we expressly disclaim any obligations to publicly update any forward-looking statements whether written or oral, that 
may be made from time to time, whether as a result of new information, future developments or otherwise. Important factors that could cause our actual 
results and financial condition to differ materially from those indicated in the forward-looking statements, in addition to those described in detail under 
Items 1A “Risk Factors,” include the following as they may be affected, either individually, or in the aggregate, by the effect of the ongoing COVID-19 
pandemic, including any spikes, outbreaks or variants of the virus, as well as any future government actions taken in response to the pandemic, including 
on  our  business  operations,  as  well  as  its  impact  on  general  economic  and  financial  market  conditions  and  on  our  customers,  suppliers,  counterparties, 
employees and third-party service providers:

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the degree and rate of market growth in the intermodal, logistics, truck brokerage and dedicated markets served by us; 

deterioration in our relationships, service conditions or provision of equipment with railroads or adverse changes to the railroads’ operating rules; 

inability to recruit and retain company drivers and owner-operators; 

inability to hire or retain management and other employees who are critical to our continued success;

the  impact  of  competitive  pressures  in  the  marketplace,  including  entry  of  new  competitors  including  digital  freight  matching  companies,  direct 
marketing efforts by the railroads or marketing efforts of asset-based carriers; 

unanticipated changes in rail, drayage, warehousing and trucking company capacity or costs of services; 

the impact on costs of services, service and reliability of further consolidation of railroads;

increases in costs related to any reclassification or change in our treatment of company drivers, owner-operators or other workers due to regulatory, 
judicial and legal decisions, including workers directly contracted with the Company and those contracted to the Company’s vendors; 

joint employer claims alleging that the Company is a co-employer of any workers providing services to a Company contractor;

labor unrest or shortages in the rail, drayage, trucking or warehousing sectors; 

significant deterioration in our customers’ financial condition, particularly in the retail, consumer products and durable goods sectors; 

inability to identify, close and successfully integrate any future business combinations;

fuel shortages or fluctuations in fuel prices; 

increases in interest rates; 

acts of terrorism, military action or geopolitical events, including events that disrupt the global supply chain; 

difficulties in maintaining or enhancing our information technology systems, implementing new systems or protecting against cyber-attacks; 

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increases in costs or operating challenges associated with complying with current or new governmental regulations; 

significant increases to employee health insurance costs; 

loss of one or more of our largest customers; 

expected awards during annual customer bids not materializing;

changes in insurance costs, retention amounts and claims expense; 

losses sustained on matters where the liability materially exceeds available insurance proceeds, if any;

union organizing efforts and changes to current laws, rules and regulations which will aid in these efforts;  

the effects of pandemics;

imposition of new tariffs or trade barriers or withdrawal from or renegotiation of existing free trade agreements which could reduce international 
trade and economic activity; and

disruptions due to adverse weather conditions.

 Item  1.         BUSINESS

General 

Hub Group, Inc. (the “Company”, “Hub”, “we”, “us” or “our”) is a leading supply chain solutions provider that offers comprehensive transportation 
and logistics management services focused on reliability, visibility and value for our customers. Our mission is to continuously elevate each customer’s 
business to drive long term success. Our vision is to build the industry’s premier supply chain solutions. Our service offerings include a full range of freight 
transportation  and  logistics  services,  some  of  which  are  provided  by  assets  we  own  and  operate,  and  some  of  which  are  provided  by  third  parties  with 
whom we contract. Our transportation services include intermodal, truckload, less-than-truckload (“LTL”), flatbed, temperature-controlled, dedicated and 
regional trucking. Our logistics services include full outsource logistics solutions, transportation management services, freight consolidation, warehousing 
and fulfillment, final mile delivery, parcel and international services.

We are one of the largest freight transportation providers in North America. Hub services a large and diversified customer base in a broad range of 
industries, including retail, consumer products and durable goods. We believe our strategy to offer multi-modal supply chain management solutions serves 
to strengthen and deepen our relationships with our customers and allows us to provide a more cost effective and higher service solution.

We employ sales and marketing representatives throughout North America who service local, regional and national accounts. We believe that fostering 
long-term customer relationships is critical to our success and allows us to better understand our customers’ needs and specifically tailor our transportation 
services to them. Our top 50 customers represent approximately 61% of revenue for the year ended December 31, 2021 while one customer accounted for 
more than 10% of our annual revenue. 

Our business is seasonal to the extent that certain customer groups, such as retail, are seasonal. A significant portion of our revenue and earnings is 
related to the provision of services to customers who serve consumer end markets in North America. As such our business generally experiences a higher 
level  of  demand  during  the  time  leading  up  to  the  December  holidays,  as  our  customers  seek  to  build  their  inventories  by  moving  goods  into  their 
distribution centers and retail store locations in the second half of the calendar year.

The  transportation  and  logistics  services  industry  is  highly  competitive.  We  compete  against  intermodal  providers,  logistics  companies,  third  party 
brokers, trucking carriers, transportation management providers, warehousing providers and railroads that market their own services. Competition is based 
primarily  on  freight  rates,  quality  of  service,  reliability,  transit  time  and  scope  of  operations.  Several  transportation  service  companies  and  trucking 
companies, and all of the major railroads, may have substantially greater financial and other resources than we do. 

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Our service offering facilitates our customers’ desires for energy-efficient transportation solutions and assists in meeting their objectives to reduce 
their environmental footprint. Our intermodal service is significantly more fuel efficient as compared to trucking transportation, and we continually seek 
opportunities to convert our customers’ transportation needs from trucking to intermodal. In addition, our logistics offering includes shipment consolidation 
and network optimization services that seek to maximize the amount of freight carried per mile which reduces fuel consumption. One of the objectives of 
our  investment  strategy  is  to  replace  older  model  tractors  with  newer,  more  energy-efficient  equipment.    We  also  evaluate  new  technologies  such  as 
electric-powered tractors that offer attractive environmental benefits to us and our customers. Our GPS-enabled container fleet allows for our truck drivers 
and third party carriers to efficiently locate our containers without driving wasted miles. We are an Environmental Protection Agency (EPA) SmartWay® 
Transport Partner, having been awarded the EPA’s SmartWay® Excellence Award nine times since 2008. Our headquarters building in Oak Brook, IL is 
certified  as  “Gold”  by  the  Leadership  in  Energy  and  Environmental  Design  (LEED®)  organization.  Please  see  the  Investors  section  of  our  website 
(https://investors.hubgroup.com/) for additional information on our environmental, social and governance attributes.

Our strategy to grow revenue, net income and cash flow includes the following elements: 

• Deepen and diversify our customer relationships through a best-in-class customer experience across all of our service offerings;

• Acquire and organically develop new service offerings for our customers that will diversify our revenue streams and deliver sophisticated supply 

chain logistics solutions;

• Selectively invest in assets, such as containers and tractors, to drive organic growth and reduce our costs;

• Build an industry leading information technology platform to drive growth and efficiency and support future innovations; and

• Sustain a culture that continues to enable innovation, service and teamwork.

We are committed to investing in technology to facilitate the growth of our business while enabling efficiency in our operations. Our digital strategy 
leverages  advanced  technology  for  our  core  operating  systems,  while  investing  in  emerging  technologies  to  achieve  our  business  goals  and  enable 
innovative solutions for our stakeholders which include customers, drivers, vendors and employees.  For example, in 2021 we completed the rollout of 
technology solutions to our trucking field operations. This enables our operating teams to more easily share driver capacity across our terminals and service 
lines and provides a single state of the art mobile experience to our drivers on our HubPro mobile app. In 2021, we also delivered solutions using computer 
visioning, robotic process automation and artificial intelligence to create increased efficiency in our operations and back office functions. This included the 
automation of manual processes, using human augmentation solutions to allow our experienced supply chain professionals to make critical decisions while 
allowing a robot to complete the repeatable tasks, and developing learning-based robots to drive better decision support to the hands of operating teams.

We  carry  commercial  general  liability  insurance  subject  to  a  policy  aggregate  limit,  and  trucker’s  automobile  liability  insurance  with  a  limit  per 
occurrence. Additionally, we have an umbrella excess liability policy and maintain motor truck cargo liability insurance. We contract with various third-
party insurers to manage our business and operational risks and expenses.

Development of the Business

We  have  been  a  leader  in  the  intermodal  industry  since  our  business  was  founded  in  1971.  Today  we  generate  over  $4  billion  in  annual  revenue, 
having grown through the addition of new customers, through cross-selling our services to our customer base, by investing in equipment such as containers 
and tractors, by developing new service offerings, and through the acquisitions of new business lines. For example, over the past several years we have 
invested  in  a  fleet  of  refrigerated  intermodal  containers  that  represents  a  new  service  line  for  us  which  we  have  effectively  marketed  to  our  existing 
customer base.  

We  regularly  evaluate  acquisition  and  divesture  transactions  as  a  component  of  our  strategy  to  enhance  our  core  business  lines  and  diversify  our 

service offerings. Our recent strategic transactions include the following:

Choptank Acquisition. On October 19, 2021, we acquired 100% of the equity interests of Choptank Transport, LLC ("Choptank").  The acquisition 
added scale to our truck brokerage operation, enhanced our refrigerated trucking transportation services offering and complemented our growing fleet of 
refrigerated intermodal containers. The financial results of Choptank, since the date of acquisition, are primarily included in our truck brokerage line of 
business.

NonstopDelivery  Acquisition.  On  December  9,  2020,  we  acquired  NonstopDelivery,  LLC  (“NSD”).  NSD  provides  residential  final  mile  delivery 

services throughout the United States. The financial results of NSD, since the date of acquisition, are included in our logistics line of business.

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Services Provided 

We operate the following lines of business: 

Intermodal.  We  offer  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.  Our  service  offering  is  well  positioned  to  assist  our  customers  in 
reducing  their  transportation  spend  and  achieving  their  carbon  emissions  objectives.  As  an  intermodal  provider,  we  arrange  for  the  movement  of  our 
customers’ freight in containers, typically over long distances of 750 miles or more. We contract with railroads to provide transportation for the long-haul 
portion  of  the  shipment  between  rail  terminals.  Local  pickup  and  delivery  services  between  origin  or  destination  and  rail  terminals  (referred  to  as 
“drayage”) are provided by our Hub Group Trucking, Inc. (“HGT”) subsidiary and third-party local trucking companies.  

In  a  typical  intermodal  transaction,  the  customer  places  an  order  with  us  and  we  determine  the  price  and  arrange  for  the  necessary  intermodal 
equipment  (which  includes  a  container  and  chassis)  to  be  delivered  to  the  customer  by  HGT  or  a  third-party  drayage  company.  We  arrange  for  the 
transportation of the loaded container to a rail terminal where it is transported by a railroad to the destination rail terminal. Our predictive track and trace 
technology then monitors the shipment to ensure that it arrives as scheduled and provides notification to our customer service personnel if there are service 
delays. We then arrange for transportation by a drayage company from the rail terminal to the destination. After unloading, the empty container is made 
available for the next transaction.

As  of  December  31,  2021,  we  owned  approximately  43,750  dry,  53-foot  containers  and  450  refrigerated  53-foot  containers.  We  also  exclusively 

leased approximately 250 dry, 53-foot containers. 

During  2021,  HGT  accounted  for  approximately  50%  of  Hub’s  drayage  needs  by  providing  reliable,  cost  effective  transportation  services  to  our 
customers.  As  of  December  31,  2021,  HGT  operated  trucking  terminals  at  25  locations  throughout  the  United  States,  with  locations  in  many  large 
metropolitan  areas.  As  of  December  31,  2021,  HGT  owned  approximately  1,400  tractors  and  200  trailers,  employed  approximately  1,400  drivers  and 
contracted with approximately 800 owner-operators. 

Logistics. Our logistics business offers a wide range of transportation management services and technology solutions including shipment optimization, 
load consolidation, mode selection, carrier management, load planning and execution, and shipment visibility. We offer multi-modal transportation services 
including full truckload, LTL, intermodal, final mile, railcar, small parcel and international transportation. 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 intermodal and truck brokerage service lines.

Our logistics offering also includes warehousing, cross-docking and consolidation services. Many of the customers for these solutions are consumer 
goods  companies  who  sell  into  the  retail  channel.  We  do  not  own  or  operate  any  warehouses  or  cross-docks.    We  contract  with  third-party  warehouse 
providers  in  seven  markets  across  North  America  to  which  our  customers  ship  their  goods  to  be  stored  and  consolidated,  along  with  goods  from  other 
customers, into full truckload shipments destined to major retailers. These services offer our customers shipment visibility, transportation cost savings, high 
service and compliance with retailers’ increasingly stringent supply chain requirements.

In  December  2020,  we  acquired  NSD  which  added  residential  final  mile  transportation  services  to  our  logistics  offering.  Our  final  mile  services 
include  warehousing,  product  assembly,  inbound  transportation  to  warehouses,  delivery  of  goods  to  residential  locations,  and  reverse  logistics  services. 
Customers for our final mile services include retailers and consumer goods companies. We contract with nearly 200 agents across the United States who 
provide warehousing and transportation to support our final mile offering.

Truck Brokerage. We operate one of the largest truck brokerage operations in the United States, providing customers with a trucking option for their 
transportation needs. Our brokerage does not operate any trucks; instead we match customers’ needs with trucking carriers’ capacity to provide the most 
effective combination of service and price. We have contracts with a substantial base of carriers allowing us to meet the varied needs of our customers. 
Approximately half of our truck brokerage volume is generated from transactions in which we offer lane-based pricing at a fixed rate for periods of up to 
one  year  (referred  to  as  “committed”  pricing).    The  remaining  portion  of  our  volume  is  generated  based  on  shorter  term  transactional  lane-based  rates 
(referred to as “transactional” pricing).

In a typical truck brokerage transaction, the customer places an order with us for trucking transportation. We identify a third party trucking carrier to 
handle the load and coordinate a delivery appointment. Once we receive confirmation that the freight has been picked up, we monitor the movement of the 
shipment until it reaches its destination and the delivery has been confirmed. 

We offer a full range of trucking transportation services, including dry van, expedited, less-than-truckload, refrigerated and flatbed. We substantially 
increased the size of our brokerage service line and increased our refrigerated transportation capabilities through the acquisition of Choptank Transport, 
LLC in October 2021 (“Choptank”). In addition, we intend to deploy Choptank’s best-in-class technology platform across our existing brokerage operation, 
which we expect will result in improved efficiency.

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Dedicated. Our  dedicated  trucking  operation  contracts  with  customers  who  require  high  service  transportation  using  equipment  dedicated  to  their 
needs.  We  offer  a  dedicated  fleet  of  equipment  and  drivers  to  each  customer,  as  well  as  the  management  and  infrastructure  to  operate  according  to  the 
customer’s  high  service  expectations.  Contracts  with  customers  generally  include  fixed  and  variable  pricing  arrangements  and  may  include  charges  for 
early  termination  which  serves  to  reduce  the  financial  risk  we  bear  with  respect  to  the  utilization  of  our  equipment.  Our  dedicated  operation  currently 
operates  a  fleet  of  approximately  1,000  tractors  and  4,600  trailers  at  68  locations  throughout  the  United  States.  As  of  December  31,  2021,  dedicated 
employed approximately 1,100 drivers. 

 Relationships with Transportation and Warehouse Vendors

We  utilize  an  asset-light  strategy  that  employs  a  combination  of  our  company-operated  equipment  as  well  as  assets  operated  by  third  parties  to 
transport and store our customers’ goods, which allows us to optimize our investment in equipment and facilities and reduce the level of capital we employ 
in our business. We are one of the largest purchasers of rail transportation services in North America and generally have multi-year contractual agreements 
with our railroad providers that specify the costs we pay for transportation and related services, as well as service levels and other provisions.  Due to the 
importance  of  our  relationship,  some  of  our  railroad  providers  have  dedicated  support  personnel  to  focus  on  our  day-to-day  service  requirements.  On  a 
regular basis, our senior executives and our railroad providers meet to discuss major strategic issues concerning intermodal transportation. 

Approximately  half  of  our  drayage  services  are  provided  by  HGT  which  owns  a  fleet  of  approximately  1,400  tractors  and  employs  approximately 
1,400  drivers.  In  addition,  HGT  contracts  with  approximately  800  owner-operators  who  supply  their  own  equipment  and  operate  under  our  regulatory 
authority. We also procure drayage services from third parties, and we believe we are one of the largest purchasers of drayage transportation in the United 
States. Our dedicated services are generally handled by our fleet of approximately 1,000 tractors and 4,600 trailers and approximately 1,100 drivers.

Our  brokerage  and  logistics  business  lines  are  significant  purchasers  of  truckload  and  less-than-truckload  transportation  from  third  parties.  We 
contract with a large number of trucking companies that we use to provide these transportation services. Our relationships with these trucking companies 
are important since these relationships determine pricing, load coverage and service that we provide to our customers. 

We  have  relationships  with  several  national  and  local  operators  of  warehouses  and  cross-dock  facilities  who  provide  a  range  of  services  to  us 
including storage, product handling and related activities. Our final mile operation contracts with nearly 200 local agents who provide warehousing and 
local delivery services.

We require all of our trucking vendors to carry general liability insurance, truckman’s auto liability insurance and cargo insurance. Railroads, which 
are self-insured, provide limited cargo protection. To cover freight loss or damage when a carrier’s liability cannot be established or a carrier’s insurance is 
insufficient  to  cover  the  claim,  we  carry  our  own  cargo  insurance.  We  also  carry  general  liability  insurance  with  a  companion  umbrella  policy  on  this 
general  liability  insurance.  We  maintain  separate  insurance  policies  to  cover  potential  exposure  from  our  company-owned  drayage  and  dedicated 
operations. 

Government Regulations 

The Company and several of our subsidiaries are licensed by the United States Department of Transportation (“DOT”) as brokers in arranging for the 
transportation of general commodities by motor vehicle. To the extent that we perform truck brokerage services, we do so under these licenses. The DOT 
prescribes qualifications for acting in this capacity. Our trucking subsidiaries operate under DOT motor carrier authority. We are licensed by the United 
States Federal Maritime Commissions (“FMC”) as an Ocean Transportation Intermediary authorized to provide ocean freight forwarding and non-vessel 
operating common carrier services, which are regulated by the FMC. Our business is also subject to requirements published by the United States Food and 
Drug  Administration  under  the  Food  Safety  Modernization  Act  regarding  the  use  of  sanitary  transportation  practices  to  ensure  the  safety  of  food 
transported by motor vehicle and rail. To date, compliance with these regulations and licensing requirements has not had a material adverse effect on our 
capital expenditures, earnings or competitive positions. 

There are federal, state and local laws and regulations concerning environmental matters and employee health and safety that apply to the Company’s 
operations.  The  Company  is  also  subject  to  various  federal,  state  and  local  laws  and  government  regulations  related  to  employment  in  the  jurisdictions 
where we conduct business. Complying with these and other laws and regulations has not had a materially adverse effect on the Company’s business. 

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Custom-Trade Partnership Against Terrorism 

One of our subsidiaries achieved Custom-Trade Partnership Against Terrorism (C-TPAT) certification in 2013 and have maintained it since then. C-
TPAT  is  a  voluntary  supply  chain  security  program  led  by  United  States  Customs  and  Border  Protection  focused  on  improving  the  security  of  private 
companies’ supply chains. Companies who achieve C-TPAT certification must have a documented process for determining and alleviating risks throughout 
their international supply chain. This certification allows us to be considered low risk, resulting in expedited processing of our customers’ cargo, including 
fewer customs examinations. 

Human Capital

Hub  conducts  business  and  provides  services  to  customers  through  a  combination  of  non-driver  (e.g.,  office  or  terminal-based)  employees,  driver 
employees,  and  relationships  with  independent  contractors.  As  of  December  31,  2021,  Hub  had  approximately  4,700  employees,  which  included 
approximately  2,400  drivers.  In  addition,  as  of  December  31,  2021  we  contracted  with  approximately  800  independent  contractor  drivers.  We  do  not 
employ any warehouse operations staff. We are not a party to any collective bargaining agreements and consider our relationship with our employees to be 
satisfactory. 

Hub’s success depends in part on our ability to attract and retain skilled staff members and drivers. Our executive management team receives regular 
updates  regarding  headcount  changes,  turnover  rates,  hiring  rates,  manager  training  and  employee  satisfaction.  We  invest  in  the  development  of  our 
employees  through  our  Hub  University  learning  management  system,  which  provides  access  to  a  variety  of  e-learning  courses  and  modules  to  further 
develop  job  skills,  increase  knowledge  of  our  business,  and  promote  adherence  to  safety  and  compliance  procedures.  We  seek  to  offer  a  competitive 
compensation package, which may include incentive compensation elements, as well as an attractive package of employee benefits. We are committed to 
employee engagement and an inclusive culture that values and respects every employee.

Hub strives to create a culture of accountability, safety and teamwork. We set annual performance goals for our operations teams relative to collisions 
and injuries and track performance monthly and year-to-date to ensure accountability. Further, we provide company-wide recognition on a monthly basis 
for employees who are nominated for performance that demonstrates our guiding principles of winning together, innovating with purpose and acting with 
integrity.           

Available Information 

Our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and amendments to reports filed pursuant to 
Sections 13(a) and 15(d) of the Securities Exchange Act of 1934, as amended (“Exchange Act”), are filed with the Securities and Exchange Commission 
(“SEC”). We are subject to the informational requirements of the Exchange Act and file or furnish reports, proxy statements and other information with the 
SEC.  The reports and other information that we file with the SEC are available free of charge on our website at www.hubgroup.com as soon as reasonably 
practicable after we electronically file or furnish such reports to the SEC. In addition, the SEC maintains a website (http://www.sec.gov) that contains our 
annual,  quarterly,  and  current  reports,  proxy  and  information  statements,  and  other  information  we  electronically  file  with,  or  furnish  to,  the  SEC. 
Information  on  the  websites  referenced  in  this  Form  10-K  is  not  incorporated  by  reference  into  this  filing.  Further,  our  references  to  website  URLs  are 
intended to be inactive textual references only.

Item 1A.       RISK FACTORS

Business Environment and Competition Risks

A significant portion of our revenue is derived from intermodal transportation services and from our significant customers.

We  derived  57%  of  our  revenue  from  our  intermodal  services  in  2021,  58%  in  2020  and  57%  in  2019.  As  a  result,  any  decrease  in  demand  for 

intermodal transportation services could have a material adverse effect on our results of operations.

Our 10 largest customers accounted for approximately 42% of our total revenue in 2021, 46% in 2020 and 42% in 2019. In each of the years ended 
December 31, 2021 and 2020, one customer accounted for more than 10% of our annual revenue. While our dedicated and logistics businesses may involve 
long-term customer contracts, those contracts may contain cancellation clauses, and there is no assurance that our current customers will continue to utilize 
our services or continue at the same levels. A reduction in or termination of our services by one or more of our largest customers could have a material 
adverse effect on our revenue and business. While we continue to focus our efforts on diversifying our customer base, we may not be successful in doing 
so.

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Because  we  depend  on  railroads  for  our  operations,  our  operating  results  and  financial  condition  are  likely  to  be  adversely  affected  by  any 
increase in rates, reduction or deterioration in rail service or change in the railroads’ reliance on us to market their intermodal transportation 
services.

We depend on the major railroads in North America for virtually all of the intermodal services we provide. In many regions, rail service is limited to 
one or a few railroads. We primarily rely on contractual relationships with two railroads to support our intermodal business. Consequently, a reduction in, 
or elimination of, rail service to a particular market is likely to materially adversely affect our ability to provide intermodal transportation services to some 
of our customers. Rate increases result in higher intermodal transportation costs, reducing the attractiveness of intermodal transportation compared to truck 
or  other  transportation  modes,  which  could  cause  a  decrease  in  demand  for  our  services.  Further,  our  ability  to  continue  to  expand  our  intermodal 
transportation business is dependent upon the railroads’ ability to increase capacity for intermodal freight and provide consistent and reliable service. Our 
business has, at times,  been adversely affected by situations impacting one or more railroads, including labor shortages, slowdowns or stoppages, adverse 
weather  conditions,  changes  to  rail  operations,  or  other  factors  that  hinder  the  railroads’  ability  to  provide  reliable  transportation  services  and  these 
situations may occur again in the future. To date, our primary railroad providers have chosen to rely on us and other intermodal competitors to market their 
intermodal services rather than fully developing their own marketing capabilities. If one or more of the major railroads reduced their dependence on us or 
decreased  the  capacity  that  they  made  available  to  us,  including  by  servicing  additional  intermodal  marketing  companies,  the  volume  of  intermodal 
shipments we arrange would likely decline, which could have a material adverse effect on our results of operations and financial condition.

Our ability to expand our business or maintain our profitability is adversely affected by a shortage of drivers and capacity.

We derive significant revenue from our intermodal, logistics, truck brokerage and dedicated services and depend on qualified drivers to provide these 
services. There is significant competition for qualified drivers in the transportation industry. Additionally, interventions and enforcements under the Federal 
Motor Carrier Safety Administration (“FMCSA”) Compliance, Safety, Accountability program or other programs may shrink the industry’s pool of drivers 
as those drivers with unfavorable scores may no longer be eligible to drive for us. Driver shortages and reliance on third-party companies for the operation 
of our intermodal, logistics, truck brokerage and dedicated services has, and in the future could, adversely affect our profitability and limit our ability to 
expand our business or retain customers. Most drayage, truckload, final mile, and certain less-than-truckload companies operate relatively small fleets and 
have limited access to capital for fleet expansion. Particularly during recent and future periods of economic expansion, it is difficult for our dedicated and 
HGT operations, and third-party trucking companies, to expand their fleets due to chronic driver shortages. Driver shortages have resulted in increases to 
drivers’ compensation that we may be unable to fully pass on to our customers and have left trucks sitting idle and created difficulty meeting customer 
demands, all of which could adversely affect our growth and profitability.  

  We  operate  in  a  highly  competitive  industry  and  our  business  may  suffer  if  we  are  unable  to  adequately  address  potential  downward  pricing 
pressures and other competitive factors.

The transportation and logistics industry is highly competitive and cyclical. We face competition in all geographic markets and each industry sector in 
which we operate. Increased competition or our inability to compete successfully may lead to a reduction in our volume, reduced revenues, reduced profit 
margins,  increased  pricing  pressure,  or  a  loss  of  customer  relationships,  any  one  of  which  could  affect  our  business  and  financial  results.  Numerous 
competitive factors could impair our ability to maintain our current profitability, including the following:

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•

•

our competitors may periodically reduce their prices to gain business, especially during times of weak economic conditions, which may limit our 
ability to maintain or increase prices or impede our ability to maintain or grow our customer relationships;

our inability to achieve expected customer retention levels or sales growth targets;

• we compete with many other transportation and logistics service providers, some of which have greater capital resources or lower cost structures 

than us;

•

•

our inability to compete with new entrants in the transportation and logistics market that may offer similar services at lower cost or have greater 
technological capabilities;

customers may choose to provide for themselves the services that we now provide;

• many customers periodically accept proposals from multiple carriers for their shipping needs, and this process may depress rates or result in the loss 

of some of our business to competitors;

•

•

•

•

consolidation in the trucking industry may result in larger competitors with greater financial resources than we have;

disruptions to the supply chain or other market factors may limit our ability to purchase equipment from our suppliers;

advances in technology require increased investments to remain competitive, and our customers may not be willing to accept higher prices to cover 
the cost of these investments; and

because cost of capital is a significant competitive factor, any increase in either the cost of our debt or equity as a result of increases in our level of 
credit risk or stock price volatility could have a significant impact on our competitive position.

Our customers’ and suppliers’ businesses may be negatively affected by various economic and other factors such as recessions, downturns in the 
economy, global uncertainty and instability, the effects of pandemics, changes in United States social, political, and regulatory conditions and/or a 
disruption of financial markets, which may decrease demand for our services or increase our costs.

Adverse economic and other conditions, both in the United States and internationally, can negatively affect our customers’ business levels, the amount 
of  transportation  services  they  need,  their  ability  to  pay  for  our  services  and  overall  freight  levels,  any  of  which  might  impair  our  asset  utilization  and 
profitability. For example, the effects of pandemics (including the coronavirus) may affect international trade, supply chains, travel, employee productivity 
and other economic activities.  Additionally, uncertainty and instability in the global economy, geopolitical events, and any other action that governments 
may take to withdraw from or materially modify international trade arrangements may lead to fewer goods being transported and could have an adverse 
effect on our business, financial conditions and results of operations. The United States government and foreign governments may take other actions that 
may impact United States trade, including imposing tariffs on certain goods, that may have an adverse impact on our business and on goods imported into, 
or exported from, the United States. These potential “trade wars” could increase costs for goods transported globally, which may reduce customer demand 
for these products if the parties having to pay those tariffs increase their prices, or if trading partners limit their trade with countries that impose anti-trade 
measures. If these consequences are realized, the volume of global economic activity may be significantly reduced. Such a reduction could have a material 
adverse effect on our business, results of operations, and financial condition.

Customers  adversely  affected  by  changes  in  United  States  trade  policies  or  otherwise  encountering  adverse  economic  or  other  conditions  may  be 
unable to obtain additional financing or financing under acceptable terms. These customers represent a greater potential for bad debt losses, which may 
require  us  to  increase  our  reserve  for  bad  debt.  Economic  conditions  resulting  in  bankruptcies  of  one  or  more  of  our  large  customers  could  have  a 
significant impact on our financial position, results of operations or liquidity in a particular year or quarter. Further, when adverse economic times arise, 
customers may select competitors that offer lower rates in an attempt to lower their costs and we might be forced to lower our rates or lose freight volumes.

Our suppliers’ business levels also may be negatively affected by adverse economic and other conditions and changes in the political and regulatory 
environment, as well as the effects of geopolitical events, pandemics and other public concerns, both in the United States and internationally, or financial 
constraints,  any  one  of  which  could  lead  to  disruptions  in  the  supply  and  availability  of  equipment,  parts  and  services  critical  to  our  operations.  A 
significant interruption in our normal supply chain could disrupt our operations, increase our costs and negatively impact our ability to serve our customers.

We  are  also  subject  to  cost  increases  outside  of  our  control  that  could  materially  reduce  our  profitability  if  we  are  unable  to  increase  our  rates 
sufficiently. Such cost increases include, but are not limited to, increases in wage rates, fuel prices, interest rates, taxes, tolls, license and registration fees, 
insurance, equipment and healthcare for our employees.

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Our  business  could  be  adversely  affected  by  strikes  or  work  stoppages  by  truck  drivers,  warehouse  employees,  port  employees  and  railroad 
employees, or the decision of our employees to unionize. 

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 in recent years have resulted 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. In recent years, there have been strikes involving railroad workers. Future strikes by railroad employees in the United States, Canada or anywhere else 
that  our  customers’  freight  travels  by  railroad  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. 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.

Relatively  small  increases  in  our  transportation  and  warehouse  costs  that  we  are  unable  to  pass  through  to  our  customers  are  likely  to  have  a 
significant adverse effect on our gross margin and operating income. 

Transportation and warehouse costs represented 86% of our consolidated revenue in 2021, 88% in 2020 and 86% in 2019. Because transportation and 
warehouse  costs  represent  such  a  significant  portion  of  our  costs,  any  increases  in  the  operating  costs  of  railroads,  warehouse  vendors,  and  other 
transportation providers can be expected to result in higher freight rates that we pay to such providers. Transportation costs may increase if we are unable to 
contract with owner-operators or recruit Company employee drivers as this may increase the costs we pay for drivers or force us to use more expensive 
purchased  transportation.  Any  inability  to  pass  cost  increases  to  our  customers  is  likely  to  have  a  significant  adverse  effect  on  our  gross  margin  and 
operating income and cash flows.  

Our business depends on the availability of fuel. Fuel availability and cost are affected by natural or man-made disasters, adverse weather conditions, 
political  events,  disruption  or  failure  of  technology  or  information  systems,  price  and  supply  decisions  by  oil  producing  countries  and  cartels,  terrorist 
activities, armed conflict and world supply and demand imbalance. We do not maintain fuel storage and pumping stations at all of our facilities. Therefore, 
a disruption in the global fuel supply resulting from factors outside of our control, hence increasing the demand for fuel traditionally used by trucks could 
have a material adverse effect on our business, results of operations, financial condition and cash flows. 

Additionally, fuel costs can be very volatile and fuel price fluctuations occur due to factors outside our control. Significant increase in fuel prices or 
fuel taxes that we are unable to offset by any fuel surcharges or freight rate increases could have an adverse impact on our business operations. We have a 
fuel  surcharge  program  in  place  with  many  of  our  customers.  These  fuel  surcharges  typically  allow  us  the  ability  to  recover  the  costs  associated  with 
volatile fuel prices. Our inability to time the fuel surcharges billed to customers with the change in fuel costs could affect our operations. Rapid increases in 
fuel costs could also have a material adverse effect on our operations or future profitability. 

Extreme  or  unusual  weather  conditions  can  disrupt  our  operations,  impact  freight  volumes,  and  increase  our  costs,  all  of  which  could  have  a 
material adverse effect on our business results.

  Our  operations  are  affected  by  external  factors  such  as  severe  weather  and  other  natural  occurrences,  including  floods,  fires,  hurricanes  and 
earthquakes that adversely impact operating locations where we have vehicles, warehouses and other facilities. As a result, our vehicles and facilities may 
be damaged, our workforce may be unavailable, fuel costs may rise, and significant business interruptions could occur. In addition, the performance of our 
vehicles could be adversely affected by extreme weather conditions. 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. This 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.

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Our insurance program may not be sufficient to cover all anticipated risks and liabilities associated with our operations. 

We are partially self-insured for certain employee medical coverage losses, excluding employees covered by health maintenance organizations. We 
generally have an individual stop loss deductible per enrollee unless specific exposures are separately insured. We accrue a contingent liability based upon 
examination of historical trends, historical actuarial analysis, our claims experience, total plan enrollment (including employee contributions), population 
demographics,  and  other  various  estimates.  Self-insurance  reserves,  net  income,  and  cash  flows  could  be  materially  affected  if  future  claims  differ 
significantly from our historical trends and assumptions.

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, 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 the Company has 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, Directors & 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 increases; (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  freight  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, 2021, we had insurance-related letters of credit totaling $41.3 million. If these collateralization requirements increase, 
our borrowing capacity could be adversely affected.

Pandemics could materially and adversely affect our business, financial condition and results of operations, the ultimate impacts of a pandemic, 
including COVID-19, on our business, financial condition and results of operations depends on future developments and other factors that are 
highly  uncertain  and  will  be  affected  by  the  scope  and  duration  of  a  pandemic  (including  variants  and  resurgences)  and  actions  taken  by 
individuals, companies and governmental authorities in response to such a pandemic.

The ongoing COVID-19 pandemic (including variants and resurgences) has caused and is expected to continue to cause significant disruption in the 
international  and  United  States  economies  and  financial  markets  and  has  had  and  may  continue  to  have  a  significant  effect  on  our  business,  financial 
condition and results of operations. In response to the COVID-19 pandemic, federal, state and foreign governments have taken actions, such as imposing 
restrictions  on  travel  and  business  operations,  advising  or  requiring  individuals  to  limit  or  forego  their  time  outside  of  their  homes,  ordering  temporary 
closures  or  other  restrictions  of  businesses,  and  imposing  requirements  related  to  vaccines,  masks,  testing  and  other  measures  on  companies  and 
individuals, that may continue to impact our business, financial conditions and results of operations and those of our customers and suppliers.

The ultimate duration of the pandemic and of responsive governmental actions is uncertain and evolving, particularly as new variants have emerged. 
New and changing government and private actions to address the COVID-19 pandemic have been occurring regularly. We have been closely monitoring 
the COVID-19 pandemic and government responses thereto and its impacts and potential impacts on our business, including operational challenges from 
the need to protect employee health and safety. These circumstances and other consequences of the pandemic, have resulted in significant adverse effects 
for  many  different  types  of  businesses  who  are  our  customers  or  suppliers,  including,  among  others,  those  in  the  retail,  travel,  hospitality  and  food  and 
beverage industries, which can result in volatility in customers’ need for our services or suppliers’ availability to provide products and services to us.

We have been deemed an essential business and have been permitted to continue to operate in all of the jurisdictions in which we operate, including 
jurisdictions that have mandated the closure of certain businesses, and we expect to be permitted to continue to operate in the future. Nevertheless, there is 
no assurance that we will continue to be permitted to operate under every future government order or other restriction and in every location and government 
requirements  may  have  an  adverse  impact  on  our  business  operations,  including  with  respect  to  availability  of  truck  drivers  in  the  sectors  in  which  we 
operate.

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In addition, the COVID-19 pandemic has caused, and may in the future continue to cause, disruptions, and in some cases severe disruptions, to the 
business and operations of our customers and suppliers as a result of quarantines, worker absenteeism as a result of illness or other factors, social distancing 
measures, consumer concerns, and other travel, health-related, business or other restrictions. Certain of our customers have been, and may in the future be, 
required to close or operate at a lower capacity. There can be no assurance that any decrease in revenues or volume resulting from the COVID-19 pandemic 
will be offset by increased revenues or volume in the future. The ultimate effects of the COVID-19 pandemic on the broader economy and the markets that 
we serve are not known nor is the ultimate length of the restrictions and circumstances described above and any accompanying effects.

The further spread of the COVID-19 virus, as well as ongoing or new governmental, regulatory and private sector responses to the pandemic, may 
materially disrupt economic activity generally and in the areas in which we operate. This could result in further decline in demand for our services, and 
could negatively affect, among other things, our liquidity, regulatory capital and our growth strategy. Any one or more of these developments could have a 
material adverse effect on our business, financial condition and results of operations.

Although we are taking precautions to protect the safety and well-being of our team members, customers and suppliers, no assurance can be given that 
the steps being taken will be adequate or deemed to be appropriate, nor can we predict the level of disruption which will occur to our team members’ ability 
to provide customer support and service. If we are unable to recover from a business disruption on a timely basis, our business, financial condition and 
results of operations could be materially and adversely affected. We may also incur additional costs to remedy damages caused by such disruptions, which 
could further adversely affect our business, financial condition and results of operations.  

Technology and Cybersecurity Risks

If we fail to maintain and enhance our information technology systems, or if we fail to successfully implement new technology or enhancements, 
we may be at a competitive disadvantage and lose customers. 

Technology is critical to our operations and our ability to compete effectively as a transportation and logistics provider. We expect our customers to 
continue  to  demand  more  sophisticated  technology-driven  solutions  from  their  suppliers  and  we  must  enhance  or  replace  our  information  technology 
systems in response. This may involve significant research and development costs, implementation costs and potential operational challenges. To keep pace 
with changing technologies and customer demand, we continue to make investments in our technology, as well as invest in emerging technology to further 
drive innovation and efficiency. Recent investments include implementing new order management, transportation management, contract management and 
financial  management  processes  and  systems.    Technology  and  new  market  entrants  may  also  disrupt  the  way  we  and  our  competitors  operate.  As 
technology improves and new companies enter the freight brokerage sector, our customers may be able to find alternatives to our services for matching 
shipments with available freight hauling capacity. We must continue to develop innovative emerging technologies to source, track and provide visibility to 
capacity to further improve customer outcomes.  

If  we  fail  to  successfully  implement  critical  technology,  if  our  technology  does  not  provide  the  anticipated  benefits  or  it  does  not  meet  market 
demands, we may be placed at a competitive disadvantage and could lose customers, materially adversely impacting our financial condition and results of 
operations.  

Our  information  technology  systems  also  depend  upon  the  Internet,  third-party  service  providers,  global  communications  providers,  satellite-based 
communications  systems,  the  electric  utilities  grid,  electric  utility  providers  and  telecommunications  providers  as  well  as  their  respective  vendors.  The 
services and service providers have all experienced significant system failures and outages at some point in the past. We have minimal control over the 
operation, quality, or maintenance of these services or whether vendors will improve their services or continue to provide services that are essential to our 
business. Disruptions due to transitional challenges in upgrading or enhancing our technology systems; failures in the services upon which our information 
technology platforms rely, including those that may arise from adverse weather conditions or natural calamities, such as floods, hurricanes, earthquakes or 
tornadoes;  illegal  acts,  including  terrorist  attacks;  human  error  or  systems  modernization  initiatives;  and/or  other  disruptions,  may  adversely  affect  our 
business, which could increase our costs or result in a loss of customers that could have a material adverse effect on our results of operations and financial 
position.

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Our  information  technology  systems  are  subject  to  cyber  and  other  risks  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. 

We rely heavily on the proper functioning and availability of our information systems for our operations as well as for providing value-added services 
to our customers. Our information systems, including our accounting, communications and data processing systems, are integral to the efficient operation 
of our business. It is critical that the data processed by these systems remain secure, as it often includes competitive customer information, confidential 
transaction data, employee records and key financial and operational results and statistics. The sophistication of efforts by hackers, foreign governments, 
cyber-terrorists,  and  cyber-criminals,  acting  individually  or  in  coordinated  groups,  to  launch  distributed  denial  of  service  attacks,  ransomware  or  other 
coordinated  attacks  that  may  cause  service  outages,  gain  inappropriate  or  block  legitimate  access  to  systems  or  information,  or  result  in  other  business 
interruptions has continued to increase in recent years. We utilize third-party service providers who have access to our systems and certain sensitive data, 
which  exposes  us  to  additional  security  risks,  particularly  given  the  complex  and  evolving  laws  and  regulations  regarding  privacy  and  data  protection. 
While we and our third-party service providers have experienced cyber-attacks and attempted breaches of our and their information technology systems and 
networks or similar events from time to time, no such incidents have been, individually or in the aggregate, material to us. Cyber incidents that impact the 
security,  availability,  reliability,  speed,  accuracy  or  other  proper  functioning  of  our  systems,  information  and  measures,  including  outages,  computer 
viruses, theft or misuse by third parties or insiders, break-ins and similar disruptions, could have a significant adverse impact on our operations.

It is difficult to fully protect against the possibility of power loss, telecommunications failures, cyber-attacks, ransomware and other cyber incidents in 
every potential circumstance that may arise. A significant cyber incident, including system failure, security breach, disruption by malware or ransomware, 
or  other  damage,  could  interrupt  or  delay  our  operations,  damage  our  reputation  and  brand,  cause  a  loss  of  customers,  expose  us  to  a  risk  of  loss  or 
litigation, result in regulatory scrutiny, investigations, actions, fines or penalties and/or cause us to incur significant time and expense to remedy such an 
event, any of which could have a material adverse impact on our results of operations and financial position. Furthermore, any failure to comply with data 
privacy, biometric privacy, data security or other laws and regulations could result in claims, legal or regulatory proceedings, inquiries or investigations. To 
comply with this changing landscape, we may be required to further segregate our systems and operations, implement additional controls, or adopt new 
systems , all of which could increase the cost and complexity of our operations.  In addition, our insurance intended to address costs associated with aspects 
of cyber incidents, network failures and privacy-related concerns, may not sufficiently cover all types of losses or claims that may arise.

Operational Risks

We depend on third parties for equipment and services essential to operate our business, and if we fail to secure sufficient equipment and services, 
we could lose customers and revenue. 

We depend on third parties for transportation equipment, such as tractors, containers, chassis, and trailers and certain services such as transportation, 
warehousing and cross docks necessary for the operation of our business. Our industry has experienced equipment, transportation and warehouse capacity 
shortages in the past, particularly during the peak shipping season in the fall. Market disruptions related to the COVID-19 pandemic have contributed to 
recent shortages of such equipment and services and this situation may continue. A substantial amount of intermodal freight originates at or near the major 
West Coast ports, which have historically had the most severe equipment shortages. As an asset-light freight transportation management company, if we 
cannot  secure  sufficient  transportation  equipment  and  warehouse  services  at  a  reasonable  price  from  third  parties  to  meet  our  customers’  needs,  our 
customers may seek to have their transportation and warehousing needs met by other providers with their own assets. This could have a material adverse 
effect on our business, results of operations and financial position.

Our residential final mile delivery service exposes us to risks associated with vendors delivering to residential customers. 

While we do not operate any equipment or employ any drivers that are used in the provision of final mile services, our vendors’ trucks and drivers 
operate in residential environments that expose such vendors (and potentially us) to the risk of property damage, personal injury and other claims including 
from operating on residential streets and from entering into end-consumers’ homes.  If any of these vendors do not reliably and safely perform their 
obligations, our vendors and us could be exposed to liability or reputational harm.

12

 
The  ability  to  hire  or  retain  management  and  other  employees  is  critical  to  our  continued  success,  and  the  loss  of  or  inability  to  hire  such 
personnel could have a material adverse effect on our business, financial condition and results of operations.

There is substantial competition for qualified personnel in the transportation services industry. Many individuals in the industry are subject to non-
competition agreements, severely limiting our ability to hire qualified personnel to compete in the market-place. As all key employees devote their full time 
to our business, 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 man insurance on any of our executive 
officers, although we do have restrictive covenant agreements with all of them. 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. 

Our growth could be adversely affected if we are not able to pursue our acquisition strategy or to successfully integrate acquired businesses. 

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, including implementing financial controls and measures 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 from debt or capital sources could adversely affect our ability to pursue growth through 
acquisitions. Financial results most likely to be negatively affected include, but are not limited to, revenue, gross margin, salaries and benefits, general and 
administrative expenses, depreciation and amortization, interest expense, net income and our debt level.

Legal, Regulatory and Compliance Risks

  We  use  a  significant  number  of  independent  contractors,  such  as  owner  operators,  in  our  businesses.    Legislative,  judicial  and  regulatory 
authorities  may  continue  to  take  actions  or  render  decisions  that  could  affect  the  independent  contractor  classification,  which  could  have  a 
significant adverse impact on our gross margin and operating income. 

We do business with a large number of independent contractors, such as owner-operators, 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.  See Item 3 - Legal 
Proceedings for further discussion and see Note 15 to the consolidated financial statements under “Legal Matters” for a description of material pending 
litigation and regulatory matters affecting us and certain risks to our business presented by such matters. If independent contractors are determined to be 
employees,  or  the  Company  a  joint  employer  of  warehousemen  used  for  our  consolidation  or  final  mile  delivery  business,  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  independent  contractors  or  reclassify  independent  contractors  to  employees,  then  we  would  likely  incur  expenses  associated  with  that 
reclassification, could incur additional ongoing expenses and face the loss of those independent contractor drivers 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. 

We operate in a highly regulated industry, and changes in existing regulations or costs of compliance with, or liability for violation of, existing or 
future regulations or antiterrorism measures could have a material adverse effect on our business.

The  Company  and  various  subsidiaries  are  regulated  by  the  DOT  as  motor  carriers  and/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  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. 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 services, any of which could materially adversely affect our business and 
results of operations.

13

 
We  are  subject  to  a  wide  variety  of  U.S.  federal  and  state  and  non-U.S.  laws,  regulations  and  government  policies,  including  in  the  areas  of 
employment, 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 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.

 Our failure to comply with any existing or future laws, rules or regulations to which we are, or may become subject, whether actual or alleged, could 
have a material adverse effect on our business and on our ability to access the capital required to operate our business. Among other things, any such failure 
could expose us to reputational harm, loss of business, fines, penalties or potential litigation liabilities, including costs, settlements and judgments, as well 
as the loss of operating authority and restrictions on our operations.

 Furthermore, terrorist attacks or other geopolitical events, along with any government response to such events, may adversely affect our financial 
condition, results of operations or liquidity. Our fleet, other key infrastructure and information technology systems may be targets or indirect casualties of 
acts of terror, other harmful acts, or war. Further, because transportation assets continue to be a target of terrorist activities, federal, state, local and foreign 
governmental bodies are proposing and, in some cases, have adopted legislation and regulations relating to security issues that impact the transportation 
industry, including checkpoints and travel restrictions on large trucks. If additional security measures disrupt or impede the timing of our operations, we 
may fail to meet the requirements of our customers or incur increased expenses to do so. In addition, complying with these or future regulations could 
continue  to  increase  our  operating  costs  and  reduce  operating  efficiencies.  We  maintain  insurance  coverages  addressing  these  risks;  however,  such 
insurance may be inadequate or become unavailable, be limited in scope of coverage, premiums charged for some or all of the insurance could increase 
dramatically, or regulations may change. These changes could exacerbate the effects of an act of terrorism or other event on our business, resulting in a 
significant business interruption, increased costs and liabilities and decreased revenues or an adverse impact on results of operation.

Our  operations  are  subject  to  various  environmental  laws  and  regulations,  including  legislative  and  regulatory  responses  to  climate  change. 
Compliance  with  environmental  requirements  could  result  in  significant  expenditures  and  the  violation  of  these  requirements  could  result  in 
substantial fines or penalties. 

We are subject to various federal, state and local governmental laws and regulations that govern, among other things, the emission and discharge of 
hazardous materials into the environment, the presence of hazardous materials at our properties or in our vehicles, fuel storage tanks, the transportation of 
certain materials and the discharge or retention of storm water. Under certain environmental laws, we could also be held responsible for any costs relating 
to contamination at our past or present facilities and at third-party waste disposal sites, as well as costs associated with the clean-up of accidents involving 
our vehicles. Environmental laws have become and may continue to be increasingly more stringent over time, and there can be no assurance that our costs 
of  complying  with  current  or  future  environmental  laws  or  liabilities  arising  under  such  laws  will  not  have  a  material  adverse  effect  on  our  business, 
operations or financial condition.

From time to time, we arrange for the movement of hazardous materials at the request of our customers. As a result, we may be subject to various 
environmental  laws  and  regulations  relating  to  the  handling  of  hazardous  materials.  If  we  are  involved  in  a  spill  or  other  accident  involving  hazardous 
materials,  or  if  we  are  found  to  be  in  violation  of  applicable  laws  or  regulations,  we  could  be  subject  to  substantial  fines  or  penalties  and  to  civil  and 
criminal liability, any of which could have an adverse effect on our business and results of operations. 

The Company is 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 emissions and the impact of global warming that enhances the possibility of increased regulation of 
greenhouse gas emissions and potentially exposes us to significant new taxes, fees and other costs. We are also subject to environmental, sustainability and 
governance (“ESG”) issues. This increased focus on ESG issues may result in new regulations and/or customer, supplier or market requirements that could 
adversely impact our business, or certain shareholders who may reduce their holdings of our stock. Limitations on the emission of greenhouse gases, other 
environmental legislation, or customer ESG requirements have had and could have an adverse impact on our financial condition, results of operations and 
liquidity.     

14

 
We are subject to the risks of litigation and governmental inquiries, which could have a material adverse effect on our business.

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  labor  and  employment  laws,  securities  laws,  environmental  liability  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.

 Changes in immigration laws could increase the costs of doing business or otherwise disrupt our operations.

We  have  hired  individuals,  including  Information  Technology  (“IT”)  employees,  from  outside  the  United  States.  We  have  employee  drivers  and 
owner-operator  drivers  who  are  immigrants  to  the  United  States.  We  engage  third  party  consultants,  including  for  various  IT  projects,  who  may  utilize 
personnel from outside the United States. If immigration laws are changed or if new more restrictive government regulations are enacted or increased, our 
access to qualified and skilled personnel may be limited, the costs of doing business may increase and our operations may be disrupted.

Our business may be affected by uncertainty or changes in United States or global social, political or regulatory conditions. 

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. 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 pandemics) could 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, which subjects our 
business to various additional risks, including:

•

•

•

•

•

•

•

•

•

•

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

varying tax regimes, including consequences from changes in applicable tax laws;

difficulties in managing or overseeing foreign operations and agents;

complying with laws applicable to international business, such as anti-corruption, trade, foreign currency and maritime laws;

different liability standards;

the price and availability of fuel;

higher levels of credit risk;

difficulties in integrating acquired companies with foreign operations;

uncertainty and changes to political and regulatory regimes as a result of changing social, political, regulatory and economic environments in the 
United States and internationally; and

geopolitical conditions, such as national and international conflict, including terrorist acts and the effects of pandemics (such as COVID-19) and 
government responses to pandemics.

If we do not correctly anticipate changes in social, political or regulatory conditions or their impact on the transportation industry, we may not alter 
our  business  practices  in  time  to  avoid  adverse  effects.  Additionally,  the  occurrence  or  consequences  of  any  of  these  factors  may  restrict  our  ability  to 
operate in the affected region and/or decrease the profitability of our operations in that region.

15

 
Our suppliers may also be affected by changes in the political and regulatory environment, both in the United States and internationally. Negative 
impacts on our suppliers could result in disruptions in the supply and availability of equipment or services needed for our business that could in turn affect 
our ability to operate and serve our customers as planned. Additionally, changes to current United States international trade agreements may lead to fewer 
goods transported and we may need to restructure certain terms of business with suppliers or customers. 

General Risks

Our failure to implement or market new and existing services to existing and potential customers could have an adverse effect on our operations. 

We  expect  to  continue  expanding  our  service  offerings.  In  the  event  we  implement  new  service  offerings,  we  may  devote  substantial  resources  to 
educating our employees and customers on such offerings with no assurance that a sufficient number of customers will use such additional services. If we 
add  new  services,  we  may  not  identify  trends  correctly  or  may  not  be  able  to  bring  new  services  as  quickly,  effectively  or  price-competitively  as  our 
competitors. Our failure to implement new services or market any existing or future services to our current customer base and/or new customers could have 
a material adverse impact on our operations and profitability.

Our inability to defend our intellectual property could damage our reputation and incur costs that have a negative impact on our operations or 
financial condition. 

 The Company has 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. 

Damage  to  our  reputation  through  unfavorable  publicity  or  the  actions  of  our  employees,  certain  suppliers  or  independent  contractors  could 
adversely affect our financial condition.

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,  agents  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, Instagram, LinkedIn and 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.

16

 
The market value of our common stock may fluctuate and could be substantially adversely affected by various factors.

We expect that the market price of our common stock will continue to fluctuate due to a variety of factors, many of which are beyond our control. 

These factors include, among others:

•

•

•

•

•

•

•

•

•

actual or anticipated variations in earnings, financial or operating performance or liquidity;

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;

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).

Our common stock price may fluctuate significantly in the future, and these fluctuations may be unrelated to our performance. General market price 
declines or market volatility in the future could adversely affect the price of our common stock, and the current market price of our common stock may not 
be indicative of future market prices.

Item 1B.       UNRESOLVED STAFF COMMENTS 

None.

SUPPLEMENTARY ITEM.         INFORMATION ABOUT OUR EXECUTIVE OFFICERS

Pursuant to Instructions to Item 401 of Regulation S-K, we have included information on our executive officers in this Part I. 

The table sets forth certain information as of February 1, 2022 with respect to each person who is an executive officer of the Company. 

Name

David P. Yeager
Phillip D. Yeager
Vincent C. Paperiello
Geoffrey F. DeMartino
Kevin W. Beth
Vava R. Dimond
Michele L. McDermott
Thomas P. LaFrance

Age
68
34
51
44
47
55
51
60

Position

  Chairman of the Board of Directors and Chief Executive Officer
  President and Chief Operating Officer
  President, Intermodal and Chief Solutions Officer
  Executive Vice President, Chief Financial Officer and Treasurer
  Executive Vice President and Chief Accounting Officer
  Executive Vice President and Chief Information Officer
  Executive Vice President and Chief Human Resources Officer
  Executive Vice President and General Counsel and Corporate Secretary

David P. Yeager has served as our Chairman of the Board since November 2008 and as Chief Executive Officer since March 1995. From March 1995 
through November 2008, Mr. Yeager served as Vice Chairman of the Board. From October 1985 through December 1991, Mr. Yeager was President of Hub 
City Terminals (Hub Chicago). From 1983 to October 1985, he served as Vice President, Marketing of Hub Chicago. Mr. Yeager founded the St. Louis Hub 
in 1980 and served as its President from 1980 to 1983. Mr. Yeager founded the Pittsburgh Hub in 1975 and served as its President from 1975 to 1977. Mr. 
Yeager received a Masters in Business Administration degree from the University of Chicago Booth School of Business and a Bachelor of Arts degree from 
the University of Dayton. Mr. Yeager is the father of Phillip D. Yeager.

17

 
 
  
  
 
 
 
 
 
 
 
 
 
 
Phillip D. Yeager was named President and Chief Operating Officer in July 2019. Prior to this appointment, Mr. Yeager served as Chief Commercial 
Officer overseeing Intermodal and Truck Brokerage operations as well as sales, pricing, solutions and account management since January 2018. Mr. Yeager 
formerly held the role of Executive Vice President, Account Management and Intermodal Operations since January 2016 after serving as Vice President of 
Account Management and Business Development from February 2014 to January 2016. Mr. Yeager joined the Company in 2011 as the Director of Strategy 
and Acquisitions. Prior to joining the Company, Mr. Yeager served as Assistant Vice President of Commercial Banking at BMO Harris Bank, and as an 
investment  banking  analyst  for  Lazard  Freres  &  Co.  Mr.  Yeager  earned  his  Bachelor  of  Arts  degree  from  Trinity  College,  and  a  Master  of  Business 
Administration degree from the University of Chicago Booth School of Business. Mr. Yeager is the son of David P. Yeager. 

Vincent C. Paperiello was named President of Intermodal and Chief Solutions Officer in July 2021 after serving as Chief Solutions Officer since July 
2019. Since joining the Company in 1993, Mr. Paperiello has held a variety of operational, logistics management and business intelligence positions with 
the  Company.  In  his  current  role,  he  is  responsible  for  our  Intermodal  business  and  our  go-to-market  analytics  organization,  ensuring  that  we  are 
developing and delivering pricing and solutions that propel our customers’ businesses. Mr. Paperiello is a member of the Professional Pricing Society and 
the Intermodal Association of North America, a leading industry trade association representing the combined interest of the intermodal freight industry. Mr. 
Paperiello received a Bachelor of Arts degree in History from Western Illinois University and a Master of Business Administration – Finance degree from 
DePaul University’s Kellstadt Graduate School of Business. 

Geoffrey F. DeMartino has served as Executive Vice President, Chief Financial Officer, and Treasurer since July 2020. In this role Mr. DeMartino has 
responsibility  for  our  financial  reporting,  financial  operations,  investor  relations,  debt  and  equity  financing,  and  corporate  development  activities.  Mr. 
DeMartino joined the Company in 2016 as Vice President, Corporate Development and Strategy and led our acquisition and divestiture activities. Prior to 
joining the Company he spent over 15 years in various financial roles, including corporate development and investment banking. Mr. DeMartino received a 
Bachelor’s degree in Economics from Northwestern University.

Kevin W. Beth was promoted to Executive Vice President and Chief Accounting Officer in July 2020. Mr. Beth joined the Company in October 2003 
as  Corporate  Controller  and  served  as  Controller  and  Assistant  Treasurer  beginning  in  March  2007.  He  has  been  instrumental  in  transforming  the 
Company’s financial systems and leading the accounting organization through the integration of acquisitions, divestures, and implementation of accounting 
standards. Mr. Beth is a Certified Public Accountant and held various auditing and corporate accounting positions prior to joining the Company. Mr. Beth 
received a Bachelor of Science degree in Accounting from the University of Illinois.

Vava R. Dimond was named an Executive Vice President of the Company in May 2016 and Chief Information Officer in April 2015 after serving as 
the  Interim  Chief  Information  Officer  since  September  2014.  Ms.  Dimond  began  her  career  with  the  Company  in  June  2013  as  the  Vice  President  of 
Business  Engineering,  responsible  for  overseeing  the  Company’s  Business  Intelligence,  Business  Engineering  and  Program  Management  projects  and 
processes. Previously, Ms. Dimond spent 16 years in the transportation industry and held several leadership positions within Information Technology. Ms. 
Dimond earned her Bachelor of Science degree in Economics from South Dakota State University. Ms. Dimond will retire effective March 1, 2022 and will 
provide consulting support to the Company through June 30, 2022.

Michele L. McDermott joined the Company in August 2019 as our Chief Human Resources Officer (“CHRO”). Ms. McDermott has nearly 25 years 
of  experience  in  human  resources  and,  prior  to  joining  the  Company,  served  as  Senior  Vice  President  of  Human  Resources  at  Assurance  Agency  from 
October 2015 through July 2019 and in a variety of executive roles at National Express Corporation prior to her employment with Assurance Agency. As 
CHRO,  Ms.  McDermott  is  responsible  for  developing  the  Company’s  employees,  managing  diverse  workforces,  and  implementing  strategic  plans  for 
benefits, safety programs and technology systems. Ms. McDermott earned a Bachelor of Science in Business Administration from Lewis University and a 
Master of Business Administration, Operations and Finance from DePaul University’s Kellstadt Graduate School of Business. Ms. McDermott is a Society 
for Human Resources Management Senior Certified Professional and has received her Senior Professional in Human Resources certification from the HR 
Certification Institute.

Thomas P. LaFrance joined the Company as Executive Vice President, General Counsel and Corporate Secretary in August 2021.  In this role, Mr. 
LaFrance leads the Company’s legal, compliance and governance efforts. Mr. LaFrance has over 30 years of global legal experience in multiple sectors, 
including having served as general counsel of General Electric Company's transportation and security technology divisions, as well as senior legal roles at 
Wabtec Corporation, National Grid plc, and United Technologies Corporation. Earlier in his career, Mr. LaFrance was a partner at the law firm Goodwin 
Proctor. Mr. LaFrance graduated with a Bachelor of Arts degree in Economics from Boston College and received his J.D. from Georgetown University Law 
Center.

18

 
Item 2.  PROPERTIES 

As of December 31, 2021, we directly, or indirectly through our subsidiaries, operated 43 offices throughout the United States, Canada and Mexico, 
including our headquarters in Oak Brook, Illinois. All of our office space except for our headquarters is leased. Most office leases have initial terms of 
more than one year, and many include options to renew. While some of our leases expire in the near term, we do not believe that we will have difficulty in 
renewing them or in finding alternative office space. We believe that our offices are adequate for the purposes for which they are currently used. 

Item 3.  LEGAL PROCEEDINGS 

The  Company  is  a  party  to  litigation  in  the  ordinary  course  of  our  business,  including  at  various  times,  claims  for  personal  injury  and/or  property 
damage, bankruptcy preference claims, employment-related claims, including putative class actions, and claims regarding freight lost or damaged in transit, 
improperly shipped or improperly billed. Some of the lawsuits to which we are a party are covered by insurance and are being defended by our insurance 
carriers. Some of the lawsuits are not covered by insurance and we defend those ourselves. We do not believe that the outcome of this litigation will have a 
materially adverse effect on our financial position or results of operations. For a discussion of certain specific litigation involving the Company, see Note 
15 to the consolidated financial statements under “Legal Matters,” which discussion and note are incorporated herein by reference.  

Item 4.  MINE SAFETY DISCLOSURES 

Not applicable.

19

 
 
PART II

Item 5.  MARKET FOR REGISTRANTS COMMON EQUITY AND RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES 

OF EQUITY SECURITIES 

Our  Class  A  Common  Stock  (“Class  A  Common  Stock”)  trades  on  the  Nasdaq  Global  Select  Market  tier  of  the  Nasdaq  Stock  Market  under  the 
symbol “HUBG.” There is no established trading market for shares of our Class B Common Stock (the “Class B Common Stock” together with the Class A 
Common Stock, the “Common Stock”). 

On February 11, 2022, there were approximately 414 stockholders of record of the Class A Common Stock and in addition, there were an estimated 
18,546 beneficial owners of the Class A Common Stock whose shares were held by brokers and other fiduciary institutions. On February 11, 2022, there 
were 9 holders of record of our Class B Common Stock.

Issuer Purchases of Equity Securities

On May 23, 2019, our Board of Directors authorized the purchase of up to $100 million of our Class A Common Stock. Under the program, the shares 
may  be  repurchased  in  the  open  market  or  in  privately  negotiated  transactions,  from  time  to  time  subject  to  market  and  other  conditions.  We  did  not 
purchase any stock under this authorization during the fourth quarter of 2021. The approved share repurchase program does not obligate us to repurchase 
any dollar amount or number of shares and the program may be extended, modified, suspended, or discontinued at any time.  

We purchased 64,153 shares of Class A Common Stock related to employee withholding upon vesting of restricted stock in the fourth quarter of 2021. 
The  table  below  gives  information  on  a  monthly  basis  regarding  the  number  of  shares  delivered  to  us  by  employees  to  satisfy  the  mandatory  tax 
withholding requirement upon vesting of restricted stock during the fourth quarter of 2021:

Total
Number of
Shares
Purchased

Average
Price Paid
Per Share

Total Number of
Shares Purchased as
Part of Publicly
Announced Plan

10/1/2021 - 10/31/2021
11/1/2021 - 11/30/2021
12/1/2021 - 12/31/2021
Total

409  
1,700  
62,044  
64,153  

  $
  $
  $
  $

77.76  
82.28  
79.18  
79.26  

Maximum Value of
Shares that May Yet
Be Purchased Under
the Plan
(in 000’s)

-  
-  
-  
-  

  $
  $
  $
  $

-  
-  
-  
75,002  

We  were  incorporated  in  1995  and  have  never  paid  cash  dividends  on  either  the  Class  A  Common  Stock  or  the  Class  B  Common  Stock.  The 
declaration and payment of dividends are subject to the discretion of the Board of Directors. Any determination as to the payment of dividends will depend 
upon our results of operations, capital requirements and financial condition of the Company, and such other factors as the Board of Directors may deem 
relevant.  Accordingly,  there  can  be  no  assurance  that  the  Board  of  Directors  will  declare  or  pay  cash  dividends  on  the  shares  of  Common  Stock  in  the 
future. Our certificate of incorporation requires that any cash dividends must be paid equally on each outstanding share of Class A Common Stock and 
Class  B  Common  Stock.  Our  credit  facility  prohibits  us  from  paying  dividends  on  the  Common  Stock  if  there  has  been,  or  immediately  following  the 
payment of a dividend there would be, a default or an event of default under the credit facility. We are currently in compliance with the covenants contained 
in the credit facility. 

20

 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
   
 
   
 
   
 
   
Performance Graph

The following line graph compares the Company’s cumulative total stockholder return on its Class A Common Stock since December 31, 2016 with 
the  cumulative  total  return  of  the  Nasdaq  Stock  Market  Index  (NQUSBT)  and  the  Nasdaq  Trucking  and  Transportation  Index  (NQUSB27707).  These 
comparisons assume the investment of $100 on December 31, 2016 in each index and in the Company’s Class A Common Stock and the reinvestment of 
dividends. 

Item 6.   RESERVED 

21

 
 
 
 
Item 7.   MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS 

This section of the Form 10-K generally discusses 2021 and 2020 items and year-to-year comparisons between 2021 and 2020. Discussions of 2019 
items  and  year-to-year  comparisons  between  2020  and  2019  that  are  not  included  in  this  Form  10-K  can  be  found  in  “Management's  Discussion  and 
Analysis of Financial Condition and Results of Operations” in Part II, Item 7 of the Company's Annual Report on Form 10-K for the fiscal year ended 
December 31, 2020, which is incorporated herein by reference.

EXECUTIVE SUMMARY 

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 by assets we own and operate, and some of which are provided by third parties with whom we contract. Our transportation services 
include  intermodal,  truckload,  less-than-truckload,  flatbed,  temperature-controlled,  dedicated  and  regional  trucking.  Our  logistics  services  include  full 
outsource  logistics  solutions,  transportation  management  services,  freight  consolidation,  warehousing  and  fulfillment,  final  mile  delivery,  parcel  and 
international services. 

We service a large and diversified customer base in a broad range of industries, including retail, consumer products and durable goods. We believe our 
strategy to offer multi-modal supply chain management solutions serves to strengthen and deepen our relationships with our customers and allows us to 
provide a more cost effective and higher service solution.

We provide services in four lines of business. Our intermodal line of business 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. We arrange for the 
movement of our customers’ freight in one of our approximately 44,000 containers. We contract with railroads to provide transportation for the long-haul 
portion of the shipment between rail terminals. Local pickup and delivery services between origin or destination and rail terminals are provided by our 
HGT subsidiary and third-parties with whom we contract.  

Our  logistics  business  offers  a  wide  range  of  transportation  and  logistics  management  services  and  technology  solutions  including  shipment 
optimization, load consolidation, mode selection, carrier management, load planning and execution, warehousing and shipment visibility. We offer multi-
modal transportation services including full truckload, less-than-truckload, intermodal, final mile, railcar, small parcel and international transportation. All 
of our services are provided on a non-asset basis, as underlying transportation or warehousing services are provided by other of Hub’s business lines or by 
third parties. In late 2020, we acquired NSD which provided us with a final mile delivery capacity.

Our truck brokerage operation offers a full range of trucking transportation on a non-asset basis, as we match customers’ shipping needs with trucking 
carriers’ capacity to provide the most effective combination of service and price. Our services include dry van, expedited, less-than-truckload, refrigerated 
and  flatbed.  We  substantially  increased  the  size  of  our  brokerage  service  line,  and  increased  our  refrigerated  transportation  capabilities,  through  the 
acquisition of Choptank Transport, LLC in October 2021 (“Choptank”). Approximately half of our truck brokerage volume is generated from committed 
pricing transactions, with the remainder consisting of loads that are priced on a transactional basis.   

Our dedicated trucking business line contracts with customers who require high service transportation using equipment dedicated to their needs. We 
offer a dedicated fleet of approximately 1,000 tractors and 4,600 trailers to our customers, as well as the driver staffing, management and infrastructure to 
operate according to the customer’s high service expectations. Over the last several years we have begun to combine certain aspects of our dedicated and 
HGT  operations  in  order  to  drive  efficiency  and  reduce  costs,  including  a  shared  services  model  for  driver  recruiting,  asset  management  and  safety 
functions, as well as sharing drivers and equipment between dedicated and HGT.

In  2021,  we  experienced  favorable  market  conditions  for  our  services.  Demand  for  our  services  continued  to  show  strength,  as  North  American 
consumer  spending,  particularly  on  the  types  of  goods  that  our  customers  offer,  remained  robust.    Retail  inventory  levels  remain  near  historically  low 
levels, indicating a need by our customers to move goods as they restock their distribution centers and stores. The response to the COVID-19 pandemic 
caused  many  changes  in  consumer  behavior,  including  a  propensity  for  consumers  to  shift  spending  from  services  toward  goods,  and  also  to  increase 
spending on household goods.  

Available  transportation  capacity  in  North  America  continues  to  be  constrained  by  high  levels  of  demand,  shortages  of  available  drivers,  and 
challenges with the production of new tractors and other equipment. These factors resulted in strong demand for our transportation capacity in 2021, as 
well as rising prices for our services and those of our competitors.

22

 
 
We expect these conditions to continue in 2022. In order to meet customer demand, we have taken several important actions. We are increasing our 
capacity  to  handle  additional  volume  by  ordering  over  6,500  new  containers  which  we  expect  will  be  delivered  in  2022.  Included  in  this  order  is  a 
significant expansion of our refrigerated intermodal container fleet, as we believe there is a large opportunity to sell this expanded service to our existing 
customer base. During 2021, we increased the level of compensation we pay to our drivers in order to increase our hiring and ability to handle additional 
intermodal loads and we intend to offer competitive compensation in 2022 to retain and attract drivers. We have seen strong demand for final mile delivery 
services as a result of the factors noted above.

We are working 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.    We  use  various  performance  indicators  to  manage  our  business.  We  closely  monitor  profit  margins  on  a  lane-level  and 
customer-level basis. We also evaluate on-time performance, customer service, cost per load and customer-level accounts receivable as a multiple of daily 
sales. Vendor cost changes and vendor service performance are also monitored closely.

During 2021 we also took delivery of a large number of new tractors, and we expect to do the same in 2022. A portion of these new units represent 
replacements  for  older  tractors.  These  replacements  will  allow  us  to  reduce  operating  costs  as  new  equipment  generally  features  lower  repair  and 
maintenance  costs,  while  also  consuming  less  fuel  per  mile  operated,  which  has  both  financial  and  environmental  benefits.  In  addition,  we  recognized 
approximately $19 million of gains on the sale of older tractors in 2021 due to the strength in the market for used equipment. We expect this strength in 
gains on sales of our older tractors to continue in 2022 though likely not to the same level as 2021.  

Uncertainties and risks to our outlook include the following: a slowdown in consumer spending, a shift by consumers to spending on services at the 
expense of goods, 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, all of which could have a materially negative impact on our revenue, 
profitability and cash flow in 2022. 

Strategic Transactions 

On October 19, 2021, we acquired 100% of the equity interests of Choptank. Total consideration for the transaction was $127.6 million in cash and 
the  settlement  of  accounts  receivable  due  from  Choptank  of  $0.3  million.  In  connection  with  the  acquisition,  we  granted  approximately  $22  million  of 
restricted stock to Choptank's senior management team, which is subject to certain vesting conditions. 

On December 9, 2020, we acquired 100% of the equity interests of NSD. Total consideration for the transaction was $105.9 million which consisted 
of cash paid of $89.8 million, of which $0.1 million was paid in the second quarter of 2021 as part of the post-closing true-up, and the settlement of Hub’s 
accounts receivable due from NSD of $16.1 million. 

RESULTS OF OPERATIONS 

Year Ended December 31, 2021 Compared to Year Ended December 31, 2020 

The following table summarizes our revenue by business line (in thousands): 

Intermodal
Logistics
Truck brokerage
Dedicated

Total revenue

$

$

2021

Years Ended
December 31,

2,391,494  
887,388  
688,867  
264,634  
4,232,383  

  $

  $

23

2020

2,029,186  
767,279  
431,127  
268,052  
3,495,644  

 
  
 
 
 
 
 
   
 
 
   
 
   
 
   
 
The following is a summary of operating results and certain items in the consolidated statements of income as a percentage of revenue:

Revenue
Transportation costs
Gross margin

Costs and expenses:

Salaries and benefits
General and administrative
Depreciation and amortization

Total costs and expenses

Operating income

Revenue 

2021

4,232,383    
3,632,743    
599,640    

247,240    
76,476    
37,467    
361,183    

238,457    

100.0%
85.8%
14.2%

5.9%
1.8%
0.9%
8.6%

5.6%

Years Ended
December 31,

  $

  $

$

$

2020

3,495,644    
3,070,207    
425,437    

188,777    
99,597    
31,237    
319,611    

105,826    

100.0%
87.8%
12.2%

5.4%
2.9%
0.9%
9.2%

3.0%

Revenue increased 21.1% to $4.2 billion in 2021 from $3.5 billion in 2020. Intermodal revenue increased 17.9% to $2.4 billion primarily due to a 
20.6% increase in revenue per load, partially offset by a 2.2% decrease in volume. Logistics revenue increased 15.7% to $887.4 million primarily due to 
growth  of  our  consolidation  solutions  services  and  the  contribution  of  our  final  mile  operations,  partially  offset  by  the  impact  of  lost  customers.  Truck 
brokerage  revenue  increased  59.8%  to  $688.9  million  primarily  due  to  a  44.8%  increase  in  revenue  per  load  and  a  10.3%  increase  in  volume,  which 
includes the contribution of Choptank since the acquisition in October 2021. Dedicated’s revenue decreased 1.3% to $264.6 million primarily due to the 
impact of business we exited, partially offset by growth with new accounts.

Transportation Costs

Transportation costs increased to $3.6 billion in 2021 from $3.1 billion in 2020. Transportation costs in 2021consisted of purchased transportation 
costs of $2.9 billion and equipment and driver related costs of $687.0 million. Transportation costs in 2020 consisted of purchased transportation costs of 
$2.4 billion and equipment and driver related costs of $643.5 million. The 21.4% increase in purchased transportation costs was primarily due to increased 
rail costs, increased fuel costs, increased truck brokerage volume, higher third-party carrier costs and the impact of the NSD and Choptank acquisitions, 
partially  offset  by  decreased  repositioning  costs  and  decreased  container  stacking  charges.  Equipment  and  driver  related  costs  increased  6.8%  in  2021 
primarily due to higher driver wages and increased repairs and maintenance expense, partially offset by decreased equipment depreciation expense, and 
decreased usage of our internal drayage resources to 50% of total drayage moves in 2021 from 56% in 2020.

Gross Margin 

Gross margin increased 40.9% to $599.6 million in 2021 from $425.4 million in 2020. The $174.2 million gross margin increase was the result of 
increases in intermodal, logistics, and truck brokerage, partially offset by a decrease in dedicated. Intermodal gross margin increased primarily due to a 
20.6% increase in revenue per load, partially offset by a 2.2% decrease in volume, increased purchased transportation costs, and internal drayage costs. 
Logistics  gross  margin  increased  primarily  due  to  yield  management,  higher  revenue,  and  the  contribution  of  final  mile  operations,  partially  offset  by 
higher warehousing and transportation costs. Truck brokerage gross margin increased due to revenue per load growth in both committed and transactional 
freight,  a  10.3%  increase  in  volume,  including  the  contribution  of  Choptank,  partially  offset  by  the  impact  of  higher  purchased  transportation  costs. 
Dedicated gross margin decreased due to business we exited, partially offset with growth from new customers, lower insurance costs and lower third-party 
carrier costs.

As a percentage of revenue, gross margin increased to 14.2% in 2021 from 12.2% in 2020 due to the aforementioned factors. Intermodal gross margin 
as a percentage of revenue increased 350 basis points. Logistics gross margin as a percentage of revenue increased 170 basis points. Truck brokerage gross 
margin as a percentage of revenue decreased 190 basis points. Dedicated gross margin as a percentage of revenue decreased 240 basis points.

24

 
 
 
 
 
 
 
 
   
 
   
 
   
 
 
 
   
   
   
 
 
 
   
   
 
   
 
   
 
   
 
   
 
   
 
 
 
   
 
 
 
 
CONSOLIDATED OPERATING EXPENSES 

Salaries and Benefits 

Salaries and benefits increased to $247.2 million in 2021 from $188.8 million in 2020. As a percentage of revenue, salaries and benefits increased to 
5.9% in 2021 from 5.4% in 2020. The increase of $58.5 million was primarily due the addition of NSD and Choptank, increases in employee bonuses of 
$36.2 million, salaries of $6.5 million, payroll taxes of $4.7 million, employee benefits of $4.3 million, commissions of $3.8 million and restricted stock 
expense of $3.0 million. Headcount as of December 31, 2021 and 2020 was 2,304 and 1,989, respectively, which excludes driver headcount, the costs for 
which are included in transportation costs. The increase in headcount is due primarily to the addition of Choptank employees.  

General and Administrative

General  and  administrative  expenses  decreased  to  $76.5  million  in  2021  from  $99.6  million  in  2020.  As  a  percentage  of  revenue,  these  expenses 

decreased to 1.8% in 2021 from 2.9% in 2020. 

The decrease of $23.1 million in general and administrative expense was primarily due to gains on sales of transportation equipment of $19.2 million, 
which was an increase of $20.1 million compared to 2020, as well as decreases of $5.9 million related to non-reoccurring donations of refrigerated trailers 
in support of COVID-19 efforts made in 2020 and $2.2 million in professional services related primarily to a consulting project in 2020. The decreases 
were partially offset by an increase in legal claim expense.

Depreciation and Amortization 

Depreciation and amortization increased to $37.5 million in 2021 from $31.2 million in 2020. This increase related primarily to the amortization of 
intangibles related to the acquisitions of both NSD and Choptank as well as increases in depreciation of computer software. This expense as a percentage of 
revenue remained consistent at 0.9% in both 2021 and 2020.

Other Expense, Net

Other expense decreased to $7.5 million in 2021 from $9.7 million in 2020 due to less interest expense caused by less average borrowings and lower 

average interest rates on existing borrowings. 

Provision for Income Taxes 

Provision for income taxes increased to $59.4 million in 2021 from $22.5 million in 2020 due primarily to an increase in income.

Our  effective  tax  rate  was  25.7%  in  2021  and  23.5%  in  2020.  See  Note  7,  Income  Taxes,  in  our  consolidated  financial  statements  for  a  detailed 
reconciliation of our effective tax rate. The increase to the tax rate in 2021 compared to 2020 is primarily related to two factors. In 2020, state law changes 
prompted us to amend certain state income tax returns that provided refunds and a significant benefit to the effective tax rate. That rate benefit did not 
repeat in 2021. Additionally, our federal and state tax incentives were smaller in 2021 than in 2020.

Net Income

Net income increased to $171.5 million in 2021 from $73.6 million in 2020 due primarily to increases in revenue and gross margin, partially offset by 

higher costs, operating expenses and income tax expense.

LIQUIDITY AND CAPITAL RESOURCES

Our financing and liquidity strategy is to fund operating cash payments 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, 2021, we had $159.8 million of cash and $24.3 million of restricted 
investments. We generally fund our purchases of transportation equipment through the issuance of secured, fixed rate Equipment Notes. 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. We have not historically used our Credit Facility to fund our operating or investing cash needs, though it is available to fund 
future cash requirements as needed. In the last three years we have funded our business acquisitions from cash on hand, though in the future we may elect 
to fund these activities through a combination of cash on hand, borrowings on our credit facility, or from issuance of secured or unsecured debt. Cash used 
in financing activities has generally been funded by cash from operations or cash on hand. 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.

25

 
 
Cash provided by operating activities for the year ended December 31, 2021 was approximately $252.8 million, which resulted primarily from income 

of $171.5 million plus non-cash charges of $127.5 million, partially offset by changes in operating assets and liabilities of $46.2 million. 

Cash provided by operating activities totaled $252.8 million in 2021 compared to $175.0 million in 2020. The $77.8 million increase in cash flow was 
primarily due to an increase in net income of $97.9 million and a sequential increase in accounts payable of $72.9 million. These increases were partially 
offset by a sequential increase in accounts receivable of $68.3 million and by additional gains on the sale of equipment of $20.1 million in 2021.

Net cash used in investing activities for the year ended December 31, 2021 was $210.1 million which resulted from capital expenditures of $133.0 
million and acquisition payments related to NSD and Choptank of $122.4 million partially offset by proceeds received of $45.2 million from the sale of 
equipment.  Capital  expenditures  of  $133.0  million  included  tractor  purchases  of  $51.9  million,  container  purchases  of  $50.8  million,  technology 
investments of $15.6 million, construction spend for our corporate headquarters of $11.1 million, other transportation equipment purchases of $3.2 million 
and the remainder for leasehold improvements.  

Capital  expenditures  increased  by  approximately  $17.6  million  in  2021  as  compared  to  2020.  The  2021  increase  was  due  to  increases  in  tractor 
purchases  of  $20.0  million,  container  purchases  of  $11.5  million  and  technology  investments  of  $2.2  million.  These  increases  were  partially  offset  by 
decreased  spend  on  our  corporate  headquarters  of  $8.8  million,  less  purchases  of  other  transportation  equipment  of  $6.7  million  and  less  spend  for 
leasehold improvements.

In 2022, we estimate capital expenditures will range from $240 million to $270 million. We expect transportation equipment purchases to range from 
$210 million to $230 million and building and technology investments will range from $30 million to $40 million. 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, 2021 was $7.4 million which includes repayments of long-term debt of $107.6 
million,  cash  for  stock  tendered  for  payments  of  withholding  taxes  of  $9.1  million  and  finance  lease  payments  of  $2.7  million  partially  offset  by  the 
proceeds from the issuance of debt $112.0 million. Debt incurred in 2021 was used to fund the purchase of transportation equipment. 

The $14.9 million decrease in cash used in financing activities for 2021 versus 2020 was primarily due to the decrease in repayments of long-term 
debt  of  $91.1  million  partially  offset  by  less  proceeds  from  the  issuance  of  debt  of  $75.5  million  and  an  increase  in  cash  for  stock  related  to  employee 
withholding taxes of $1.2 million. 

In 2021, cash paid for income taxes was $58.6 million, of which $55.6 million related to 2021 and $3.0 million related to 2020.  In 2022, we expect to 
pay  an  additional  $6.5  million  of  cash  for  taxes  related  to  2021.  The  2021  income  tax  expense  of  $59.4  million  is  less  than  the  amount  paid  for  2021 
income taxes of $55.6 million and the anticipated $6.5 million to be paid in 2022 that relates to 2021. This is due to net unfavorable book to tax differences 
causing 2021 taxable income to exceed 2021 financial statement income before taxes.  

See Note 10 of the consolidated financial statements for details related to interest rates and commitment fees.

We have standby letters of credit that expire in 2022. As of December 31, 2021, our letters of credit were $41.3 million. 

As of December 31, 2021, we had no borrowings under our credit facility and our unused and available borrowings were $308.7 million. Our unused 
and available borrowings were $312.3 million as of December 31, 2020. We believe our line of credit is adequate to meet our cash needs. Refer to Note 17 
"Subsequent Event" for information regarding the new credit agreement. We were in compliance with our debt covenants as of December 31, 2021. 

26

 
CONTRACTUAL OBLIGATIONS 

Aggregated  information  about  our  obligations  and  commitments  to  make  future  contractual  payments  such  as  debt  and  lease  obligations  as  of 

December 31, 2021 is presented in the following table (in thousands). 

Future Payments Due: 

Operating
Leases

Finance
Leases

Debt

Interest
on Debt

Year 1
Year 2
Year 3
Year 4
Year 5
Thereafter

$

$

12,253  
9,904  
8,133  
6,842  
5,320  
6,436  
48,888  

  $

  $

1,257  
-  
-  
-  
-  
-  
1,257  

  $

  $

97,273  
72,971  
48,031  
37,257  
19,220  
-  
274,752  

  $

  $

5,084  
2,687  
1,371  
630  
131  
-  
9,903  

  $

  $

Total

115,867  
85,562  
57,535  
44,729  
24,671  
6,436  
334,800  

As of February 15, 2022, Hub signed various operating and finance leases which had not commenced as of December 31, 2021. 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 $3.0 and $2.0 
million for operating and finance leases, respectively.

Deferred Compensation

Under our Nonqualified Deferred Compensation Plan (the “Plan”), participants can elect to defer certain compensation. Payments under the Plan are 

due as follows (in thousands): 

Future Payments Due: 

Year 1
Year 2
Year 3
Year 4
Year 5
Thereafter

$

$

4,923  
2,375  
1,747  
2,092  
1,276  
11,687  
24,100  

The above future payments are fully funded by our restricted investments comprised of mutual funds as noted in Note 14.

27

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
   
   
   
   
 
   
   
   
   
 
   
   
   
   
 
   
   
   
   
 
   
   
   
   
 
 
 
 
 
 
 
 
 
 
 
CRITICAL ACCOUNTING POLICIES 

The  preparation  of  financial  statements  in  conformity  with  United  States  generally  accepted  accounting  principles  requires  management  to  make 
estimates  and  assumptions.  In  certain  circumstances,  those  estimates  and  assumptions  can  affect  amounts  reported  in  the  accompanying  consolidated 
financial statements. We have made our best estimates and judgments of certain amounts included in the financial statements, giving due consideration to 
materiality. We do not believe there is a great likelihood that materially different amounts would be reported related to the accounting policies described 
below.  However,  application  of  these  accounting  policies  involves  the  exercise  of  judgment  and  use  of  assumptions  as  to  future  uncertainties  and,  as  a 
result, actual results could differ from these estimates. The following is a brief discussion of the more significant accounting policies and estimates. These 
critical  accounting  policies  are  further  discussed  in  Note  1  of  the  consolidated  financial  statements,  which  describes  these  and  our  other  significant 
accounting policies. 

Revenue Recognition 

In  accordance  with  the  Accounting  Standards  Codification  (ASC)  topic  606,  Revenue  from  Contracts  with  Customers,  our  significant  accounting 

policy for revenue is as follows:

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 Company 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. These factors, discretion in setting prices and discretion in selecting vendors, further support 
reporting revenue on a gross basis for most of our revenue.  

Allowance for Uncollectible Trade Accounts 

We extend credit to customers after a review of each customer’s credit profile and history. An allowance for uncollectible trade accounts has been 
established  through  an  analysis  of  the  accounts  receivable  aging,  an  assessment  of  collectability  based  on  historical  trends  and  an  evaluation  based  on 
current economic conditions. Annually we review, in hindsight, the percentage of receivables that are collected that aged over one year, those that are not 
one  year  old  and  the  accounts  that  went  into  bankruptcy.  We  reserve  for  accounts  less  than  one  year  old  based  on  specifically  identified  uncollectible 
balances and our historic collection percentage, including receivable adjustments charged through revenue for items such as billing disputes. In establishing 
a reserve for certain account balances specifically identified as uncollectible, we consider the aging of the customer receivables, the specific details as to 
why  the  receivable  has  not  been  paid,  the  customer’s  current  and  projected  financial  results,  the  customer’s  ability  to  meet  and  sustain  its  financial 
commitments, the positive or negative effects of the current and projected industry outlook and the general economic conditions. Our historical collection 
percentage has been over 98% for receivables that are less than one year old. Changes in our historical collection percentages of receivables that are less 
than one year old either positively or negatively, based on our collection history, would affect our calculated allowance for uncollectible trade accounts. 

Once a receivable ages over one year, our collection percentage is much lower, thus a separate allowance is calculated for open receivables that have 
aged over one year. We also review our collection percentage after a customer has gone into bankruptcy. Although these collection percentages may change 
both negatively and positively, since only a small portion of our receivables are aged over one year or are involved in a bankruptcy case, a large change in 
either of those collection percentages would not have a material impact on our financial statements. Our level of reserves for customer accounts receivable 
fluctuates depending upon all the factors mentioned above. Historically, our reserve for uncollectible accounts has approximated actual accounts written off 
and  we  do  not  expect  the  reserve  for  uncollectible  accounts  to  change  significantly  relative  to  our  accounts  receivable  balance.  The  allowance  for 
uncollectible  accounts  is  reported  on  the  balance  sheet  in  net  accounts  receivable.  Recoveries  of  receivables  previously  charged  off  are  recorded  when 
received.

28

 
Claims Accruals

We  purchase  insurance  coverage  for  a  portion  of  expenses  related  to  employee  injuries,  vehicular  collisions,  accidents,  and  cargo  damage.  Certain 
insurance arrangements include high SIR limits or deductibles applicable to each claim. We have umbrella policies to limit our exposure above these SIR 
limits and deductibles.

Our  claims  accrual  policy  for  all  self-insured  claims  is  to  recognize  a  liability  at  the  time  of  the  incident  based  on  our  analysis  of  the  nature  and 
severity of the claims and analyses provided by third-party claims administrators, as well as legal and regulatory factors. Our safety and claims personnel 
work directly with representatives from the insurance companies and third-party administrators to continually update the estimated cost of each claim. The 
ultimate  cost  of  a  claim  develops  over  time  as  additional  information  regarding  the  nature,  timing,  and  extent  of  damages  claimed  becomes  available. 
Accordingly, we use actuarial methods to develop current claim information to derive an estimate of our ultimate claim liability. This process involves the 
use of loss-development factors based on our historical claims experience. In doing so, the recorded liability considers future claims growth and provides 
an  allowance  for  incurred-but-not-reported  claims.  Changes  in  loss  development  factors  caused  by  differences  between  the  estimates  of  future  medical 
costs, future severity trend factors and future legal costs could materially change our recorded claim accrual liability. Our claim accrual liability is classified 
as either current or non-current in the consolidated balance sheet based on an estimate of when the claims are expected to be paid. We do not discount our 
estimated losses. In addition, we record receivables for amounts expected to be reimbursed for payments made in excess of self-insurance levels on covered 
claims.

OUTLOOK, RISKS AND UNCERTAINTIES 

Business Combinations/Divestitures 

We believe that any future acquisitions or divestitures that we may make could significantly impact financial results. Financial results most likely to 
be  impacted  include,  but  are  not  limited  to,  revenue,  gross  margin,  salaries  and  benefits,  general  and  administrative  expenses,  depreciation  and 
amortization, interest expense, net income and our debt level. 

Revenue 

We believe that the performance of our railroad vendors and a severe or prolonged slow-down of the economy are the most significant factors that 
could  negatively  influence  our  revenue  growth  rate.  Should  the  rail  industry  experience  a  prolonged  disruption  in  service,  we  believe  our  intermodal 
business would likely be negatively impacted. Other factors that could negatively influence our growth rate include, but are not limited to, the elimination 
of fuel surcharges, lower fuel prices, the entry of new competitors, aggressive pricing by new or existing competitors, poor customer retention, inadequate 
drayage and intermodal service and inadequate equipment supply and the ongoing coronavirus outbreak or other health concerns.  

Gross Margin 

We  expect  fluctuations  in  gross  margin  as  a  percentage  of  revenue  from  quarter-to-quarter  caused  by  various  factors  including,  but  not  limited  to, 
competitor pricing actions, changes in our business mix, start-up costs for new business, changes in logistics services between transactional business and 
management fee business, changes in truck brokerage services between transaction, committed and other types of service, insurance and claim costs, driver 
recruiting  costs,  driver  compensation  changes,  impact  of  regulations  on  drayage  costs,  trailer  and  container  capacity,  vendor  cost  increases,  fuel  costs, 
equipment  depreciation  and  operating  costs,  equipment  utilization,  transportation  industry  growth,  intermodal  industry  service  levels,  accessorials, 
competitive pricing and related changes in accounting estimates.    

Salaries and Benefits 

We  estimate  that  salaries  and  benefits  as  a  percentage  of  revenue  could  fluctuate  from  quarter-to-quarter  as  there  are  timing  differences  between 
volume increases and changes in levels of staffing. Factors that could cause the percentage not to stay in the recent historical range include, but are not 
limited to, revenue growth rates significantly higher or lower than forecasted, a management decision to invest in additional personnel to stimulate new or 
existing businesses, changes in customer requirements, changes in our operating structure, availability of labor supply at current rates, severance, employee 
insurance costs, how well we perform against our incentive-compensation and other bonus goals, and changes in railroad intermodal service levels which 
could result in a lower or higher cost of labor per move.   

29

 
General and Administrative 

We  believe  there  are  several  factors  that  could  cause  general  and  administrative  expenses  to  fluctuate  as  a  percentage  of  revenue.  As  customer 
expectations and the competitive environment require the development of new technology interfaces and the restructuring of our information systems and 
related platforms, we believe there could be significant expenses incurred. Other factors that could cause general and administrative expense to fluctuate 
include,  but  are  not  limited  to,  changes  in  insurance  premiums,  technology  expense  related  to  software  and  services,  claim  expense,  bad  debt  expense, 
professional  services  expense  and  costs  related  to  acquisitions  or  divestitures.  Additionally,  the  gains  or  losses  on  sales  of  used  assets  can  result  in 
fluctuating general and administrative expenses.

Depreciation and Amortization 

We operate tractors and utilize containers, trailers and chassis in connection with our business. This equipment may be purchased or leased as part of 
an operating or financing lease. In addition, we rent equipment from third parties under short term rental arrangements. Equipment which is purchased is 
depreciated on the straight-line method over the estimated useful life. We anticipate additional amortization expense due to recent and future acquisitions.

Impairment of Property and Equipment, Goodwill and Indefinite-Lived Intangibles 

On an ongoing basis, we assess the realizability of our assets. If, at any point during the year, we determine that an impairment exists, the carrying 
amount  of  the  asset  is  reduced  by  the  estimated  impairment  with  a  corresponding  charge  to  earnings  which  could  have  a  material  adverse  impact  on 
earnings. 

Other Expense 

We expect interest expense to increase in 2022 because we financed our 2021 tractor and container purchases with debt and we expect to incur debt 
for a significant portion of our 2022 capital expenditures. Factors that could cause a change in interest expense include, but are not limited to, change in 
interest rates, change in investments, funding working capital needs, funding capital expenditures, funding an acquisition and purchase of treasury stock. 

Provision for Income Taxes 

Based on current tax legislation, we estimate that our effective tax rate will be between 24% and 26% in 2022.

In the normal course of business, we are audited by federal, state, and foreign tax authorities, and are periodically challenged regarding the amount of 
taxes due. These challenges relate to the timing and amount of deductions and the allocation of income among various tax jurisdictions. We believe our tax 
positions comply with applicable tax law and we intend to defend our positions.  In evaluating the exposure associated with various tax filing positions, we 
record reserves for uncertain tax positions in accordance with U.S. GAAP based on the technical support for the positions, our past audit experience with 
similar  situations,  and  potential  interest  and  penalties  related  to  such  matters.  Our  financial  results  and  effective  tax  rate  in  any  given  period  could  be 
impacted  if,  upon  final  resolution  with  taxing  authorities,  we  prevail  on  positions  for  which  reserves  have  been  established,  or  we  are  required  to  pay 
amounts that exceed established reserves. 

Significant judgment is required in determining and assessing the impact of complex tax laws and certain tax-related contingencies on our provision 
for income taxes. As part of our calculation of the provision for income taxes, we assess whether the benefits of our tax positions are at least more likely 
than not to be sustained upon audit based on the technical merits of the tax position. For tax positions that are not more likely than not to be sustained upon 
audit, we accrue the largest amount of the benefit that is not more likely than not to be sustained in our financial statements. Such accruals require us to 
make estimates and judgments, whereby actual results could vary materially from these estimates. Further, years may elapse before a particular matter for 
which we have established an accrual is audited and resolved or its statute of limitations expires. See Note 7, Income Taxes, in our consolidated financial 
statements for a discussion of our current unrecognized tax benefits.

30

 
Realizability of Deferred Tax Assets

We account for income taxes under the asset and liability method of ASC 740. Our deferred tax assets and liabilities represent items that will result in 
tax deductions or taxable income in future years for which we have already recorded the related tax expense or benefit in our income statement. Deferred 
tax assets and liabilities are a result of timing differences between when items are recognized in our income tax returns and when they are recognized on 
our consolidated income statement.  

 Each quarter, we assess the likelihood that deferred tax assets will be recovered from the reversal of timing differences or from future taxable income. 
A valuation allowance is established if we feel that the recovery of the deferred tax asset does not meet the more-likely-than-not threshold. If a valuation 
allowance  is  established,  an  expense  is  recorded  as  part  of  our  income  tax  provision.    In  determining  whether  a  valuation  allowance  is  warranted,  we 
evaluate factors such as prior earnings history, expected future earnings, carryback and carryforward periods, expected future deductions and tax strategies 
that could potentially enhance the likelihood of realization of a deferred tax asset.  

Item 7A.  

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK 

We are exposed to market risk related to changes in interest rates on our bank line of credit which may adversely affect our results of operations and 

financial condition.  

The Company has both fixed and variable rate debt as described in Note 10 to the Consolidated Financial Statements. Any material increase in market 

interest rates would not have a material impact on the results of operations for the year ended December 31, 2021. 

Although  we  conduct  business  in  foreign  countries,  international  operations  are  not  material  to  our  consolidated  financial  position,  results  of 
operations,  or  cash  flows.  Additionally,  foreign  currency  transaction  gains  and  losses  were  not  material  to  our  results  of  operations  for  the  year  ended 
December  31,  2021.  Accordingly,  we  are  not  currently  subject  to  material  foreign  currency  exchange  rate  risks  from  the  effects  that  exchange  rate 
movements of foreign currencies would have on our future costs or on future cash flows we would receive from our foreign investment. To date, we have 
not entered into any foreign currency forward exchange contracts or other derivative financial instruments to hedge the effects of adverse fluctuations in 
foreign currency exchange rates. We do not use financial instruments for trading purposes. 

31

 
 
Item 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

INDEX TO FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULE 

Report of Independent Registered Public Accounting Firm (PCAOB ID:42)

Consolidated Balance Sheets - December 31, 2021 and December 31, 2020

Consolidated Statements of Income and Comprehensive Income – Years ended December 31, 2021, December 31, 2020 and December 31, 
2019

Consolidated Statements of Stockholders’ Equity – Years ended December 31, 2021, December 31, 2020 and December 31, 2019

Consolidated Statements of Cash Flows – Years ended December 31, 2021, December 31, 2020 and December 31, 2019

Notes to Consolidated Financial Statements

Schedule II – Valuation and Qualifying Accounts

33

34

35

36

37

38

S-1

32

 
 
  
 
 
 
 
 
 
  
 
 
 
  
 
 
 
  
 
 
 
  
 
 
 
  
 
 
 
 
To the Stockholders and the Board of Directors of Hub Group, Inc.  

Opinion on the Financial Statements 

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We have audited the accompanying consolidated balance sheets of Hub Group, Inc. (the Company) as of December 31, 2021 and 2020, the related consolidated statements 
of income and comprehensive income, stockholders' equity and cash flows for each of the three years in the period ended December 31, 2021, and the related notes and 
financial statement schedule listed in the Index at Item 15(b) (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial 
statements present fairly, in all material respects, the financial position of the Company at December 31, 2021 and 2020, and the results of its operations and its cash flows 
for each of the three years in the period ended December 31, 2021, in conformity with U.S. generally accepted accounting principles. 

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over 
financial reporting as of December 31, 2021, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations 
of the Treadway Commission (2013 framework), and our report dated February 26, 2022 expressed an unqualified opinion thereon.

Basis for Opinion 

These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company’s financial statements based on 
our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal 
securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. 

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about 
whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material 
misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test 
basis,  evidence  regarding  the  amounts  and  disclosures  in  the  financial  statements.  Our  audits  also  included  evaluating  the  accounting  principles  used  and  significant 
estimates  made  by  management,  as  well  as  evaluating  the  overall  presentation  of  the  financial  statements.  We  believe  that  our  audits  provide  a  reasonable  basis  for  our 
opinion. 

Critical Audit Matter

The  critical  audit  matter  communicated  below  is  a  matter  arising  from  the  current  period  audit  of  the  financial  statements  that  was  communicated  or  required  to  be 
communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, 
subjective, or complex judgments. The communication of the critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a 
whole, and we are not, by communicating the critical audit matter below providing a separate opinion on the critical audit matter or on the account or disclosure to which it 
relates.

     Claims Accruals

Description of the 
Matter

At December 31, 2021, the Company’s aggregate accrued liability related to auto and workers’ compensation claims, inclusive of amounts 
expected to be paid above its self-insured retention limits, was $30.8 million. As explained in Note 1 of the consolidated financial statements, 
the Company recognizes a liability at the time of an incident based upon the nature and severity of the claim and analyses provided by third-
party claims administrators. The Company utilizes actuarial methods to estimate this liability. 

Auditing  the  Company's  claims  accruals  is  complex  due  to  the  uncertainty  associated  with  the  claims,  the  application  of  significant 
management judgment, and the use of actuarial methods. In addition, the estimate of the accrual can fluctuate based on the assumptions used 
in the actuarial studies, including the frequency and severity of claims, the loss development factors for existing claims and the estimates of 
incurred but not reported claims. These assumptions have a significant effect on the claims accruals.

How We Addressed the 
Matter in Our Audit

We obtained an understanding, evaluated the design and tested the operating effectiveness of internal controls over the claims accrual process. 
For example, we tested the controls over management’s assessment of the assumptions and underlying data used in the determination of the 
measurement and valuation of the reserve.

To evaluate the claims accruals, our audit procedures included, among others, testing the completeness and accuracy of the underlying claims 
data. Furthermore, we involved our actuarial specialist to assist in our evaluation of the methodologies applied and significant assumptions 
used by the Company in determining the calculated liability. We then compared the Company’s recorded liability amount to a range which 
our actuarial specialist developed based on independently selected assumptions.

/s/ Ernst & Young LLP
We have served as the Company’s auditor since 2002.
Chicago, Illinois 
February 25, 2022

33

 
 
 
 
 
 
 
 
 
 
 
 
HUB GROUP, INC.
CONSOLIDATED BALANCE SHEETS
(in thousands, except share amounts)

ASSETS

CURRENT ASSETS:

Cash and cash equivalents
Accounts receivable trade, net
Other receivables
Prepaid taxes
Prepaid expenses and other current assets

TOTAL CURRENT ASSETS

Restricted investments
Property and equipment, net
Right-of-use assets - operating leases
Right-of-use assets - financing leases
Other intangibles, net
Goodwill, net
Other assets

TOTAL ASSETS

LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES:
Accounts payable trade
Accounts payable other
Accrued payroll
Accrued other
Lease liability - operating leases
Lease liability - financing leases
Current portion of long-term debt

TOTAL CURRENT LIABILITIES

Long-term debt
Non-current liabilities
Lease liability - operating leases
Lease liability - financing leases
Deferred taxes

STOCKHOLDERS' EQUITY:
Preferred stock, $.01 par value;  2,000,000 shares authorized;  no shares issued or outstanding in 2021 and 2020
Common stock

Class A:  $.01 par value;  97,337,700 shares authorized and 41,224,792 shares issued in 2021 and 2020; 33,907,734 shares outstanding in 
2021 and 33,549,708 shares outstanding in 2020
Class B:  $.01 par value; 662,300 shares authorized; 662,296 shares issued and outstanding in 2021 and 2020

Additional paid-in capital
Purchase price in excess of predecessor basis, net of tax benefit of $10,306
Retained earnings
Accumulated other comprehensive loss
Treasury stock; at cost, 7,317,058 shares in 2021 and 7,675,084 shares in 2020

TOTAL STOCKHOLDERS' EQUITY
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY

The accompanying notes to consolidated financial statements are an integral part of these statements.

34

December 31,

2021

2020

  $

  $

  $

159,784  
701,512  
3,022  
2,191  
27,779  
894,288  

24,256  
681,451  
44,036  
1,252  
196,672  
576,913  
18,426  
2,437,294  

424,923  
12,493  
56,938  
82,827  
11,364  
1,251  
97,273  
687,069  

177,479  
41,572  
34,916  
-  
155,944  

124,506  
518,975  
1,265  
1,336  
26,753  
672,835  

23,353  
671,101  
43,573  
3,557  
163,953  
508,555  
18,469  
2,105,396  

285,320  
12,680  
23,044  
102,613  
10,093  
1,793  
93,562  
529,105  

176,797  
42,910  
36,328  
8  
162,325  

-    

-  

412  
7  
189,256  
(15,458 )  

1,424,634  

(207 )  
(258,330 )  
1,340,314  
2,437,294  

  $

412  
7  
186,058  
(15,458 )
1,253,160  
(191 )
(266,065 )
1,157,923  
2,105,396  

$

$

$

$

 
 
 
 
   
 
 
   
   
 
   
   
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
   
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
   
 
 
 
   
   
 
   
   
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
   
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
   
 
 
 
   
   
 
   
   
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
HUB GROUP, INC.
CONSOLIDATED STATEMENTS OF INCOME
AND COMPREHENSIVE INCOME
(in thousands, except per share amounts)

$

$

$

$
$

2021

Years Ended December 31,
2020

2019

  $

4,232,383  
3,632,743  
599,640  

  $

3,495,644  
3,070,207  
425,437  

3,668,117  
3,147,047  
521,070  

247,240  
76,476  
37,467  
361,183  

238,457  

(7,307 )
5  
(245 )
(7,547 )

230,910  

59,436  

188,777  
99,597  
31,237  
319,611  

105,826  

(9,746 )
403  
(383 )
(9,726 )

96,100  

22,541  

171,474  

  $

73,559  

  $

(16 )

(5 )

171,458  

  $

73,554  

  $

5.13  
5.06  

  $
  $

33,434  
33,892  

2.22  
2.19  

  $
  $

33,180  
33,543  

235,963  
104,206  
28,481  
368,650  

152,420  

(10,994 )
2,103  
341  
(8,550 )

143,870  

36,699  

107,171  

(4 )

107,167  

3.22  
3.20  

33,284  
33,480  

Revenue
Transportation costs
Gross margin

Costs and expenses:

Salaries and benefits
General and administrative
Depreciation and amortization

Total costs and expenses

Operating income

Other income (expense):

Interest expense
Interest income
Other, net

Total other income (expense)

Income from continuing operations before income taxes

Income tax expense

Net income

Other comprehensive (loss) income:

Foreign currency translation adjustments

Total comprehensive income

Earnings per share net income

Basic
Diluted

Basic weighted average number of shares outstanding
Diluted weighted average number of shares outstanding

The accompanying notes to consolidated financial statements are an integral part of these statements.

35

 
 
 
 
 
 
 
 
 
 
   
 
   
 
   
 
   
   
 
   
   
 
   
 
   
 
   
   
 
   
 
   
 
   
   
 
   
   
 
   
   
 
   
   
 
   
 
   
 
   
 
   
   
 
   
 
   
 
   
   
 
   
 
   
 
   
   
 
   
   
 
   
   
 
   
   
 
   
 
   
 
   
 
   
   
 
   
 
   
 
   
 
   
   
 
   
 
   
 
   
 
   
 
   
 
   
   
 
   
 
   
 
   
   
 
   
 
   
 
   
 
   
 
   
 
   
 
   
 
   
 
   
   
 
   
 
   
 
   
 
   
 
   
 
   
   
 
   
   
HUB GROUP, INC 
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY 
(in thousands, except shares) 

Purchase 
Price
    of Excess of     
   Additional     Predecessor     
   Paid-in
   Amount    Capital
419   $
-    

172,220    $
-     

    Basis, Net

of Tax

-     

Class A & B
Common Stock

Shares
Issued

  41,887,088   $
-    

    Accumulated     
Other

    Retained     Comprehensive    
    Earnings

Income

Treasury
Stock

(15,458 )  $ 1,072,456    $
-     

    Shares

    Amount

    Total

(182 )   (7,431,083 ) $ (248,621 ) $
(24,998 )  

(626,320 )  

-     

980,834  
(24,998 )

-    

-    
-    
-    
-    

-    

-    
-    
-    
-    

-     

(8,869 )   
16,286     
-     
-     

-     

-     
-     
-     
-     

-     

-     
-     
107,171     
(26 )  

-     

-     
-     
-     
-     

(98,260 )  

(3,984 )  

(3,984 )

284,775     
-     
-     
-     

8,869     
-     
-     
-     

-  
16,286  
107,171  
(26 )

-    
  41,887,088   $

-    
419   $

-     
179,637    $

-     

-     
(15,458 )  $ 1,179,601    $

(4 )  

(4 )
(186 )   (7,870,888 ) $ (268,734 ) $ 1,075,279  

-     

-     

-    

-    
-    
-    

-    

-    
-    
-    

-     

(10,632 )   
17,053     
-     

-     

-     
-     
-     

-     

-     
-     
73,559     

-     

(148,242 )  

(7,963 )  

(7,963 )

-     
-     
-     

344,046     
-     
-     

10,632     
-     
-     

-  
17,053  
73,559  

-    
  41,887,088   $

-    
419   $

-     
186,058    $

-     

-     
(15,458 )  $ 1,253,160    $

(5 )  

(5 )
(191 )   (7,675,084 ) $ (266,065 ) $ 1,157,923  

-     

-     

-    

-    
-    
-    

-    

-    
-    
-    

-     

(16,858 )   
20,056     
-     

-     

-     
-     
-     

-     

-     

(134,329 )  

(9,123 )  

(9,123 )

-     
-     
171,474     

-     
-     
-     

492,355     
-     
-     

16,858     
-     
-     

-  
20,056  
171,474  

-    
  41,887,088   $

-    
419   $

-     
189,256    $

-     

-     
(15,458 )  $ 1,424,634    $

(16 )  
(16 )
(207 )   (7,317,058 ) $ (258,330 ) $ 1,340,314  

-     

-     

Balance December 31, 2018
Purchase of treasury shares
Stock tendered for payments of  
withholding taxes
Issuance of restricted stock awards, 
net of forfeitures
Share-based compensation expense  
Net income
Adoption of ASC 842
Foreign currency translation 
adjustment
Balance December 31, 2019

Stock tendered for payments of  
withholding taxes
Issuance of restricted stock awards, 
net of forfeitures
Share-based compensation expense  
Net income
Foreign currency translation 
adjustment
Balance December 31, 2020

Stock tendered for payments of  
withholding taxes
Issuance of restricted stock awards, 
net of forfeitures
Share-based compensation expense  
Net income
Foreign currency translation 
adjustment
Balance December 31, 2021

The accompanying notes to consolidated financial statements are an integral part of these statements. 

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HUB GROUP, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)

Cash flows from operating activities:
Net Income
Adjustments to reconcile net income to net cash provided by operating activities:

Depreciation and amortization
Deferred taxes
Compensation expense related to share-based compensation plans
(Gain) loss on sale of assets
Other operating activities

Changes in operating assets and liabilities, net of acquisitions:

Restricted investments
Accounts receivable, net
Prepaid taxes
Prepaid expenses and other current assets
Other assets
Accounts payable
Accrued expenses
Non-current liabilities

Net cash provided by operating activities

Cash flows from investing activities:
Proceeds from sale of equipment
Purchases of property and equipment
Acquisitions, net of cash acquired
Proceeds from the disposition of discontinued operations
Net cash used in investing activities

Cash flows from financing activities:
Proceeds from issuance of debt
Repayments of long-term debt
Stock tendered for payments of withholding taxes
Purchase of treasury stock
Finance lease payments
Net cash used in financing activities

2021

Years Ended December 31,
2020

2019

$

171,474    

$

73,559    

$

107,171  

130,629    
(3,992 )  
20,056    
(19,173 )  
-    

(903 )  
(115,568 )  
(856 )  
(647 )  
(2,883 )
78,448    
9,686    
(13,436 )  
252,835    

45,177    
(132,952 )  
(122,360 )  
-    
(210,135 )  

112,001    
(107,608 )  
(9,123 )  
-    
(2,682 )  
(7,412 )  

123,679    
7,463    
17,053    
907    
6,385    

(752 )  
(47,219 )  
(707 )  
(2,508 )  
(2,177 )
5,594    
(4,408 )  
(1,915 )  
174,954    

3,289    
(115,306 )  
(84,845 )  
-    
(196,862 )  

187,475    
(198,741 )  
(7,963 )  
-    
(3,066 )  
(22,295 )  

116,887  
1,821  
16,286  
(745 )
-  

(3,365 )
32,732  
(14 )
3,447  
(3,786 )
(14,933 )
(122 )
(870 )
254,509  

10,025  
(94,847 )
(734 )
19,439  
(66,117 )

56,494  
(105,653 )
(3,984 )
(24,998 )
(2,954 )
(81,095 )

Effect of exchange rate changes on cash and cash equivalents

(10 )  

(20 )  

(3 )

Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents beginning of the year
Cash and cash equivalents end of the year

Supplemental disclosures of cash paid for:
Interest
Income taxes

35,278    
124,506    
159,784    

7,602    
58,593    

$

$
$

(44,223 )  
168,729    
124,506    

9,458    
18,388    

$

$
$

107,294  
61,435  
168,729  

11,262  
40,289  

$

$
$

The accompanying notes to consolidated financial statements are an integral part of these statements. 

37

 
  
 
 
 
 
 
 
 
 
 
   
 
   
 
 
 
   
 
   
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
   
 
   
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
   
   
 
 
 
 
 
 
 
 
 
 
 
 
 
 
   
 
   
 
 
 
   
 
   
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
   
 
   
 
 
 
   
 
   
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
     
     
   
 
 
   
 
   
 
 
 
 
 
 
     
     
   
 
 
 
 
 
 
 
 
   
 
   
 
 
 
   
 
   
 
 
 
 
HUB GROUP, INC. 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 

NOTE 1. Description of Business and Summary of Significant Accounting Policies 

Business:  Hub  Group,  Inc.  (“Hub”,  “we”,  “us”  or  “our”)  is  a  leading  supply  chain  solutions  provider  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  by  assets  we  own  and  operate,  and  some  of  which  are  provided  by  third  parties  with 
whom we contract. Our transportation services include intermodal, truckload, less-than-truckload, flatbed, temperature-controlled, dedicated and regional 
trucking.  Our  logistics  services  include  full  outsource  logistics  solutions,  transportation  management  services,  freight  consolidation,  warehousing  and 
fulfillment, final mile delivery, parcel and international services.

On October 19, 2021, we acquired Choptank Transport, LLC ("Choptank") and on December 9, 2020, we acquired NonstopDelivery, LLC (“NSD”).  

Refer to Note 4 ”Aquisitions“ for additional information. 

Principles of Consolidation: The consolidated financial statements include our accounts and all entities in which we have more than a 50% equity 

ownership or otherwise exercise unilateral control. All significant intercompany balances and transactions have been eliminated. 

Cash and Cash Equivalents: We consider as cash equivalents all highly liquid instruments with an original maturity of three months or less. As of 
December 31, 2021 and 2020, our cash and temporary investments were with high quality financial institutions in demand deposit accounts (“DDAs”), 
savings accounts and an interest-bearing checking account. 

Accounts Receivable and Allowance for Uncollectible Accounts: On January 1, 2020, we adopted ASU 2016-13 Financial Instruments – Credit Losses 
(Topic  326):  Measurement  of  Credit  Losses  on  Financial  Instruments  (ASC  326),  which  replaces  the  incurred  loss  methodology  with  an  expected  loss 
methodology that is referred to as the Current Expected Credit Loss (“CECL”). The measurement of expected credit losses under the CECL methodology is 
applicable to financial assets measured at amortized cost, including trade receivables. The impact of adopting the standard was immaterial.  In accordance 
with the standard, trade receivables are reported at amortized cost net of the allowance for credit losses. 

The  allowance  for  credit  losses  is  a  valuation  account  that  is  deducted  from  the  trade  receivables’  amortized  cost  basis  to  present  the  net  amount 
expected to be collected on the receivables. Trade receivables are charged off against the allowance when we believe the uncollectibility of a receivable 
balance  is  confirmed,  and  the  expected  recoveries  do  not  exceed  the  aggregate  of  amounts  previously  charged-off  and  expected  to  be  charged-off. 
Management  continuously  reviews  and  assesses  the  environment,  especially  with  the  COVID-19  pandemic,  and  its  potential  impact  on  the  credit 
worthiness  and  collectability  of  our  accounts  receivable  with  customers  most  affected  by  the  COVID-19  pandemic.  Our  allowance  for  credit  losses  is 
presented  in  the  allowance  for  uncollectible  trade  accounts  and  is  immaterial  at  December  31,  2021  and  2020.  The  allowance  for  uncollectible  trade 
accounts also includes estimated adjustments to revenue for items such as billing disputes. Our reserve for uncollectible accounts was approximately $20.1 
million  and  $8.3  million  as  of  December  31,  2021  and  2020,  respectively.  Receivables  are  written  off  once  collection  efforts  have  been  exhausted. 
Recoveries of receivables previously charged off are recorded when received.

Property  and  Equipment:  Property  and  equipment  are  stated  at  cost.  Depreciation  of  property  and  equipment  is  computed  using  the  straight-line 
method  at  rates  adequate  to  depreciate  the  cost  of  the  applicable  assets  over  their  expected  useful  lives:  building  and  improvements,  up  to  40  years; 
leasehold improvements, the shorter of useful life or lease term; computer equipment and software, up to 10 years; furniture and equipment, up to 10 years; 
and transportation equipment up to 16 years. Direct costs related to internally developed software projects are capitalized and amortized over their expected 
useful life on a straight-line basis not to exceed 10 years. Interest is capitalized on qualifying assets under development for internal use. Maintenance and 
repairs  are  charged  to  operations  as  incurred  and  major  improvements  are  capitalized.  The  cost  of  assets  retired  or  otherwise  disposed  of  and  the 
accumulated depreciation thereon are removed from the accounts with any gain or loss realized upon sale or disposal charged or credited to operations. We 
review long-lived assets for impairment when events or changes in circumstances indicate the carrying amount of an asset may not be recoverable. In the 
event that the undiscounted future cash flows resulting from the use of the asset is less than the carrying amount, an impairment loss equal to the excess of 
the assets carrying amount over its fair value, less cost to dispose, is recorded. 

38

 
 
 
Capitalized  Internal  Use  Software  and  Cloud  Computing  Costs:  We  capitalize  internal  and  external  costs,  which  include  costs  related  to  the 
development of our cloud computing or hosting arrangements, incurred to develop internal use software per ASC Subtopic 350-40. Internal use software 
has  both  the  of  the  following  characteristics:  the  software  is  acquired,  internally  developed,  or  modified  solely  to  meet  our  needs  and  during  the 
development or modification, no substantive plan exists or is being developed to market the software externally. Only costs incurred during the application 
development stage and costs to develop or obtain software that allows for access to or conversion of old data by new systems are capitalized. Capitalization 
of costs begins when the preliminary project stage is complete, management has committed to funding the project and it is probable the project will be 
completed, and the software will be used to perform its intended function. The measurement of the costs to capitalize include fees paid to third parties, 
costs  incurred  to  obtain  software  from  third  parties,  travel  expenses  incurred  by  employees  in  their  duties  associated  with  developing  software,  payroll 
related costs for employees who spend time directly on the project and interest costs incurred while developing internal-use software or implementing a 
hosting  arrangement.  Capitalization  ceases  no  later  than  when  the  project  is  substantially  complete  and  ready  for  its  intended  use,  after  all  substantial 
testing is complete. 

Goodwill and Other Intangibles: Goodwill represents the excess of purchase price over the fair market value of net assets acquired in connection with 

our business combinations. Goodwill and intangible assets that have indefinite useful lives are not amortized but are subject to annual impairment tests. 

We test goodwill for impairment annually in the fourth quarter or when events or changes in circumstances indicate the carrying value of this asset 
might exceed the current fair value. We test goodwill for impairment at the reporting unit level. We only have one reporting unit. We assess qualitative 
factors such as current company performance and overall economic factors to determine if it is more-likely-than-not that the fair value of our reporting unit 
was  less  than  its  carrying  value  and  whether  it  is  necessary  to  perform  the  quantitative  goodwill  impairment  test.  In  the  quantitative  goodwill  test,  a 
company compares the carrying value of a reporting unit to its fair value. If the fair value of the reporting unit is less than the carrying amount, then a 
goodwill  impairment  charge  will  be  recognized  in  the  amount  by  which  carrying  amount  exceeds  fair  value,  limited  to  the  total  amount  of  goodwill 
allocated to that reporting unit. We performed our annual assessment in the fourth quarter of 2021 and 2020 as required and determined it was not more-
likely-than-not that the fair value of our reporting unit was less than its carrying value. 

We evaluate the potential impairment of finite-lived acquired intangible assets when impairment indicators exist. If the carrying value is no longer 
recoverable based upon the undiscounted future cash flows of the asset, the amount of the impairment is the difference between the carrying amount and 
the fair value of the asset. 

Claims Accruals: We purchase insurance coverage for a portion of expenses related to employee injuries, vehicular collisions, accidents, and cargo 
damage. Certain insurance arrangements include high self-insurance retention limits or deductibles applicable to each claim. We have umbrella policies to 
limit our exposure to large claim costs.

Our  claims  accrual  policy  for  all  self-insured  claims  is  to  recognize  a  liability  at  the  time  of  the  incident  based  on  our  analysis  of  the  nature  and 
severity of the claims and analyses provided by third-party claims administrators, as well as legal and regulatory factors. Our safety and claims personnel 
work  directly  with  representatives  from  the  insurance  companies  to  continually  update  the  estimated  cost  of  each  claim.  The  ultimate  cost  of  a  claim 
develops  over  time  as  additional  information  regarding  the  nature,  timing,  and  extent  of  damages  claimed  becomes  available.  Accordingly,  we  use  an 
actuarial  method  to  develop  current  claim  information  to  derive  an  estimate  of  our  ultimate  claim  liability.  This  process  involves  the  use  of  loss-
development factors based on our historical claims experience. In doing so, the recorded liability factors in future growth of claims and an allowance for 
incurred-but-not-reported claims. We do not discount our estimated losses. In addition, we record receivables for amounts expected to be reimbursed for 
payments made in excess of self-insurance levels on covered claims related to auto liability and workers’ compensation. At December 31, 2021 and 2020, 
we had an accrual of approximately $30.8 million and $32.1  million,  respectively  for  estimated  claims.  We  had  no  significant  receivables  recorded  for 
payments in excess of our self-insured  levels.  Our  claims  accruals  are  classified  in  accrued  other  and  non-current  liabilities  in  the  consolidated  balance 
sheets, based on when the claim is estimated to be paid.

Concentration of Credit Risk: Our financial instruments that are exposed to concentrations of credit risk consist primarily of cash and cash equivalents 
and accounts receivable. We place our cash and temporary investments with high quality financial institutions in DDAs, savings accounts and an interest-
bearing checking account. We primarily serve customers located throughout the United States with no significant concentration in any one region. In each 
of the years ended December 31, 2021 and 2020, one customer accounted for more than 10% of our annual revenue. No one customer accounted for more 
than 10% of our annual revenue for the year ended December 31, 2019. We review  a  customer’s  credit  history  before  extending  credit.  In  addition,  we 
routinely assess the financial strength of our customers and, as a consequence, believe that our trade accounts receivable risk is limited. 

39

 
Revenue  Recognition:  In  accordance  with  the  Accounting  Standards  Codification  (ASC)  topic  606,  Revenue  from  Contracts  with  Customers  our 

significant accounting policy for revenue is as follows:

Revenue is recognized when we transfer services to our customer 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 Company 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 up appointments for pick-up and delivery and tracing shipments in transit. We 
have discretion in setting prices to our customers 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. These factors, discretion in setting prices and discretion in selecting vendors, further support 
reporting revenue on a gross basis for most of our revenue.  

Provision for Income Taxes: Significant  judgment  is  required  in  determining  and  assessing  the  impact  of  complex  tax  laws  and  certain  tax-related 
contingencies on our provision for income taxes. As part of our calculation of the provision for income taxes, we assess whether the benefits of our tax 
positions are at least more likely than not to be sustained upon audit based on the technical merits of the tax position. For tax positions that are not more 
likely  than  not  to  be  sustained  upon  audit,  we  accrue  the  largest  amount  of  the  benefit  that  is  not  more  likely  than  not  to  be  sustained  in  our  financial 
statements.  Such accruals require us to make estimates and judgments, whereby actual results could vary materially from these estimates. Further, years 
may elapse before a particular matter for which we have established an accrual is audited and resolved or its statute of limitations expires. We recognize 
interest expense and penalties related to income tax liabilities in our provision for income taxes. 

 Deferred income taxes are recognized for the future tax effects of temporary differences between financial statement and income tax reporting using 
tax rates in effect for the years in which the differences are expected to reverse. We believe that it is more likely than not that our deferred tax assets will be 
realized based on future taxable income projections, with one exception. We have established a valuation allowance of $5.0 million related to federal and 
state tax credit carryforwards. In the event the probability of realizing the remaining deferred tax assets does not meet the more likely than not threshold in 
the future, a valuation allowance would be established for the deferred tax assets deemed unrecoverable.

Earnings Per Common Share: Basic earnings per common share are based on the average quarterly weighted average number of Class A and Class B 

shares of common stock outstanding. Diluted earnings per common share are adjusted for restricted stock using the treasury stock method. 

Stock  Based  Compensation:  Share-based  compensation  includes  the  restricted  stock  awards  expected  to  vest  based  on  the  grant  date  fair  value. 

Compensation expense is amortized straight-line over the vesting period and is included in salaries and benefits.  

New Pronouncements: In December 2019, the FASB issued ASU No. 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income 
Taxes.  This  ASU  clarifies  and  simplifies  accounting  for  income  taxes  by  eliminating  certain  exceptions  for  intraperiod  tax  allocation  principles,  the 
methodology for calculating income tax rates in an interim period, and recognition of deferred taxes for outside basis difference in an investment, among 
other updates.  The effective date of this ASU is for fiscal years and interim periods beginning after December 15, 2020.  We adopted the standard as of 
January 1, 2021, but it did not have an impact on our financial statement.

Use of Estimates:  The  preparation  of  financial  statements  in  conformity  with  United  States  generally  accepted  accounting  principles  requires  us  to 
make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the 
financial  statements  and  the  reported  amounts  of  revenue  and  expense  during  the  reporting  period.  Significant  estimates  include  the  allowance  for 
uncollectible trade accounts, exposure for self-insured claims under our insurance policies and useful lives of assets. Actual results could differ from these 
estimates.

Reclassifications:  Certain prior year immaterial amounts have been reclassified in Note 5, Revenue from Contracts with Customers, to conform with 

the current year presentation. 

40

 
 
 
NOTE 2. Capital Structure 

We have authorized common stock comprised of Class A Common Stock and Class B Common Stock. The rights of holders of Class A Common 
Stock and Class B Common Stock are identical, except each share of Class B Common Stock entitles its holder to approximately 84 votes, while each share 
of Class A Common Stock entitles its holder to one vote. We have authorized 2,000,000 shares of preferred stock. 

NOTE 3. Earnings Per Share 

The following is a reconciliation of our earnings per share (in thousands, except for per share data): 

Net income

Weighted average shares outstanding - basic

Dilutive effect of restricted stock

Weighted average shares outstanding - diluted

Earnings per share net income

Basic
Diluted

NOTE 4. Acquisitions  

Choptank Transport, LLC Acquisition

2021

Years Ended December 31,
2020

2019

$

171,474  

  $

73,559  

  $

107,171  

33,434  

458  

33,892  

33,180  

363  

33,543  

$
$

5.13  
5.06  

  $
  $

2.22  
2.19  

  $
  $

33,284  

196  

33,480  

3.22  
3.20  

On October 19, 2021, we acquired 100% of the equity interests of Choptank. Total consideration for the transaction was $127.6 million in cash and 
the  settlement  of  accounts  receivable  due  from  Choptank  of  $0.3  million.  In  connection  with  the  acquisition,  we  granted  approximately  $22  million  of 
restricted stock to Choptank's owners and senior management team, which is subject to certain vesting conditions. The grants of restricted stock were made 
pursuant to award agreements and issued under our 2017 Long Term Incentive Plan.

The acquisition of Choptank enhanced our refrigerated trucking transportation solutions offering and complemented our growing fleet of refrigerated 
intermodal containers. Choptank has developed a best-in-class proprietary technology platform that we will leverage to enhance our truck brokerage service 
line.

The initial accounting for the acquisition of Choptank is incomplete as we, with the support of our valuation specialist, are in the process of finalizing 
the fair market value calculations of the acquired net assets. In addition, we are preparing a review of the applicable future cash flows used in determining 
the purchase accounting. Finally, certain post-closing activities outlined in the acquisition agreement remain incomplete. As a result, the amounts recorded 
in the consolidated financial statements related to the Choptank acquisition are preliminary and subject to change. 

41

 
 
 
 
 
 
 
 
 
 
 
 
 
   
 
   
 
   
 
 
   
 
  
 
 
 
   
   
 
   
 
   
 
   
 
   
   
 
   
 
   
 
   
 
   
   
 
 
   
 
  
 
 
 
   
 
  
 
 
  
 
The following table summarizes the preliminary allocation of the total consideration to the assets acquired and liabilities assumed as of the date of the 

acquisition (in thousands):

Cash and cash equivalents
Accounts receivable trade
Prepaid expenses and other current assets
Property and equipment
Right of use assets - operating leases
Goodwill, net
Other intangibles
Total assets acquired

Accounts payable trade
Accrued payroll
Accrued other
Lease liability - operating leases short-term
Lease liability - operating leases long-term
Total liabilities assumed

Total consideration

Cash paid, net

$

$

$

$

$

$

October 19, 2021

5,596  
71,576  
419  
169  
872  
54,553  
60,500  
193,685  

60,970  
3,458  
519  
311  
561  
65,819  

127,866  

122,270  

The  Choptank  acquisition  was  accounted  for  as  a  purchase  business  combination  in  accordance  with  ASC  805  “Business  Combinations.”  Assets 
acquired and liabilities assumed were recorded in the accompanying consolidated balance sheet at their estimated fair values as of October 19, 2021 with 
the remaining unallocated purchase price recorded as goodwill. The goodwill recognized in the Choptank acquisition was primarily attributable to potential 
expansion and future development of the acquired business.

Tax history and attributes are not inherited in an equity purchase of this kind, however, the goodwill and other intangibles recognized in this purchase 

will be fully tax deductible over a period of 15 years.

We incurred approximately $1.1 million of transaction costs associated with this transaction prior to the closing date that are reflected in general and 

administrative expense in the accompanying Consolidated Statements of Income for the year ended December 31, 2021.

The components of “Other intangibles” listed in the above table as of the acquisition date are preliminarily estimated as follows (in thousands):
Accumulated
Amortization

Balance at
December 31, 2021

Amount

Customer relationships
Carrier network
Developed technology
Trade name

$
$
$
$

36,300  
14,400  
6,500  
3,300  

  $
  $
  $
  $

605   
900   
232  
550   

$
$
  $
$

35,695  
13,500  
6,268  
2,750  

Estimated Useful
Life
15 years
4 years
7 years
18 months

The  above  intangible  assets  are  amortized  using  the  straight-line  method.  Amortization  expense  related  to  this  acquisition  for  the  year  ended 
December 31, 2021 was $2.3 million. The intangible assets have a weighted average useful life of approximately 10.7 years. Amortization expense related 
to Choptank for the next five years is as follows (in thousands):

Total

$

Year 1  
Year 2  
Year 3  
Year 4  
Year 5  

9,149  
7,499  
6,949  
6,049  
3,349  

From the date of the acquisition through December 31, 2021, Choptank’s revenue was $112.2 million and operating income was $0.3 million.

42

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
   
  
  
 
   
  
  
 
 
 
 
 
 
 
 
 
 
 
 
 
NonstopDelivery, LLC Acquisition

On December 9, 2020, we acquired 100% of the equity interests of NSD. Total consideration for the transaction was $105.9 million which consisted 
of cash paid of $89.8 million, of which $0.1 million was paid in the second quarter of 2021 as part of the post-closing true-up, and the settlement of Hub’s 
accounts receivable due from NSD of $16.1 million.  

The acquisition of NSD expanded our logistics service offering to include final mile logistics. NSD provides residential final mile delivery services 
through a non-asset business model, working with a network of nearly 200 carriers throughout the country. The financial results, since the acquisition date, 
of NSD are included in our logistics line of business.

The following table summarizes the allocation of the total consideration to the assets acquired and liabilities assumed as of the date of the acquisition 

(in thousands):

December 9, 2020

Cash and cash equivalents
Accounts receivable trade
Prepaid expenses and other current assets
Property and equipment
Right of use assets - operating leases
Goodwill, net
Other intangibles
Other assets
Total assets acquired

Accounts payable trade
Accrued payroll
Accrued other
Lease liability - operating leases short-term
Lease liability - operating leases long-term
Total liabilities assumed

Total consideration

Cash paid, net

$

$

$

$

$

$

4,775  
25,927  
207  
1,018  
1,295  
38,156  
47,700  
14  
119,092  

9,972  
1,324  
578  
373  
922  
13,169  

105,923  

84,989  

The NSD acquisition was accounted for as a purchase business combination in accordance with ASC 805 “Business Combinations.” Assets acquired 
and  liabilities  assumed  were  recorded  in  the  accompanying  consolidated  balance  sheet  at  their  estimated  fair  values  as  of  December  9,  2020  with  the 
remaining  unallocated  purchase  price  recorded  as  goodwill.  The  goodwill  recognized  in  the  NSD  acquisition  was  primarily  attributable  to  potential 
expansion and future development of the acquired business.

Tax history and attributes are not inherited in an equity purchase of this kind, however, the goodwill and other intangibles recognized in this purchase 

will be fully tax deductible over a period of 15 years.

We incurred approximately $1.0 million of transaction costs associated with this transaction prior to the closing date that are reflected in general and 

administrative expense in the accompanying Consolidated Statements of Income for the year ended December 31, 2020.

The components of “Other intangibles” listed in the above table as of the acquisition date are estimated as follows (in thousands):

Customer relationships
Trade name
Agent relationships

Amount

$
$
$

46,200  
900  
600  

  $
  $
  $

Accumulated
Amortization

Balance at
December 31, 2021

3,337    
650    
163    

$
$
$

Estimated Useful
Life
15 years
18 months
4 years

42,863  
250  
437  

The  above  intangible  assets  are  amortized  using  the  straight-line  method.  Amortization  expense  related  to  this  acquisition  for  the  year  ended 

December 31, 2021 was $3.7 million. The intangible assets have a weighted average useful life of approximately 13.73 years.  

43

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
   
   
   
 
   
   
   
 
 
 
 
 
   
 
   
 
   
 
From the date of the acquisition through December 31, 2020, NSD’s revenue was $10.2 million and operating income was $0.9 million. 

The following unaudited pro forma consolidated results of operations presents the effects of Choptank as though it had been acquired as of January 1, 

2020 and NSD as though it had been acquired as of January 1, 2019 (in thousands, except for per share amounts):
Years Ended
December 31, 2020

December 31, 2021

Revenue
Net income
Earnings per share

Basic
Diluted

$
$

$
$

4,624,385    
173,254    

5.18    
5.11    

$
$

$
$

3,887,189   
79,578   

2.40   
2.37   

$
$

$
$

December 31, 2019

3,733,507  
107,998  

3.24  
3.23  

The unaudited pro forma consolidated results for the annual periods were prepared using the acquisition method of accounting and are based on the 
historical  financial  information  of  Hub,  NSD  and  Choptank.  The  historical  financial  information  has  been  adjusted  to  give  effect  to  the  pro  forma 
adjustments that are: (i) directly attributable to the acquisition, (ii) factually supportable and (iii) expected to have a continuing impact on the combined 
results. The unaudited pro forma consolidated results are not necessarily indicative of what our consolidated results of operations actually would have been 
had we completed the Choptank acquisition as of January 1, 2020 and the NSD acquisition on January 1, 2019.

NOTE 5. Revenue from Contracts with Customers  

See Note 1 – Description of Business and Summary of Significant Accounting Policies for significant accounting policy for revenue.

Hub offers comprehensive multimodal solutions including intermodal, logistics, truck brokerage and dedicated services throughout the United States, 

Canada and Mexico.

Intermodal.  We  offer  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.  Our  service  offering  is  well  positioned  to  assist  our  customers  in 
reducing  their  transportation  spend  and  achieving  their  carbon  emissions  objectives.  As  an  intermodal  provider,  we  arrange  for  the  movement  of  our 
customers’ freight in containers, typically over long distances of 750 miles or more. We contract with railroads to provide transportation for the long-haul 
portion  of  the  shipment  between  rail  terminals.  Local  pickup  and  delivery  services  between  origin  or  destination  and  rail  terminals  (referred  to  as 
“drayage”) are provided by our Hub Group Trucking, Inc. (“HGT”) subsidiary and third-party local trucking companies.  

Logistics. Our logistics business offers a wide range of transportation management services and technology solutions including shipment optimization, 
load consolidation, mode selection, carrier management, load planning and execution, and shipment visibility. We offer multi-modal transportation services 
including full truckload, LTL, intermodal, final mile, railcar, small parcel and international transportation. 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 intermodal and truck brokerage service lines.

Our logistics offering also includes warehousing, cross-docking and consolidation services. Many of the customers for these solutions are consumer 
goods  companies  who  sell  into  the  retail  channel.  We  do  not  own  or  operate  any  warehouses  or  cross-docks.    We  contract  with  third-party  warehouse 
providers  in  seven  markets  across  North  America  to  which  our  customers  ship  their  goods  to  be  stored  and  consolidated,  along  with  goods  from  other 
customers, into full truckload shipments destined to major retailers. These services offer our customers shipment visibility, transportation cost savings, high 
service and compliance with retailers’ increasingly stringent supply chain requirements.

In  December  2020,  we  acquired  NSD  which  added  residential  final  mile  transportation  services  to  our  logistics  offering.  Our  final  mile  services 
include  warehousing,  product  assembly,  inbound  transportation  to  warehouses,  delivery  of  goods  to  residential  locations,  and  reverse  logistics  services. 
Customers for our final mile services include retailers and consumer goods companies. We contract with nearly 200 agents across the United States who 
provide warehousing and transportation to support our final mile offering.

Truck Brokerage. We operate one of the largest truck brokerage operations in the United States, providing customers with a trucking option for their 
transportation needs. Our brokerage does not operate any trucks; instead we match customers’ needs with trucking carriers’ capacity to provide the most 
effective combination of service and price. We have contracts with a substantial base of carriers allowing us to meet the varied needs of our customers. 
Approximately half of our truck brokerage volume is generated from transactions in which we offer lane-based pricing at a fixed rate for periods of up to 
one year. The remaining portion of our volume is generated based on shorter term transactional lane-based rates which expire in a short time.

44

 
 
 
   
  
 
 
 
   
  
 
 
   
 
  
 
 
 
 
 
We offer a full range of trucking transportation services, including dry van, expedited, less-than-truckload, refrigerated and flatbed. We substantially 
increased the size of our brokerage service line and increased our refrigerated transportation capabilities through the acquisition of Choptank in October 
2021. 

Dedicated. Our  dedicated  trucking  operation  contracts  with  customers  who  require  high  service  transportation  using  equipment  dedicated  to  their 
needs.  We  offer  a  dedicated  fleet  of  equipment  and  drivers  to  each  customer,  as  well  as  the  management  and  infrastructure  to  operate  according  to  the 
customer’s  high  service  expectations.  Contracts  with  customers  generally  include  fixed  and  variable  pricing  arrangements  and  may  include  charges  for 
early termination which serves to reduce the financial risk we bear with respect to the utilization of our equipment. As of December 31, 2021, dedicated 
employed approximately 1,100 drivers. 

The following table summarizes our disaggregated revenue by business line (in thousands) for the years ended December 31:

Intermodal
Logistics
Truck brokerage
Dedicated

Total revenue

$

$

2021

2020

2019

2,391,494  
887,388  
688,867  
264,634  
4,232,383  

  $

  $

2,029,186    
767,279    
431,127    
268,052    
3,495,644    

$

$

2,083,464  
852,113  
433,793  
298,747  
3,668,117  

NOTE 6. Goodwill and Other Intangible Assets 

In  accordance  with  the  FASB  issued  guidance  in  the  Intangibles-Goodwill  and  Other  Topic  of  the  Codification,  we  completed  the  required  annual 
impairment test. We performed a qualitative and quantitative assessment on goodwill and determined it was not, more-likely-than-not, that the fair value of 
our reporting unit was less than its carrying value. There were no accumulated impairment losses of goodwill at the beginning of the period. 

The following table presents the carrying amount of goodwill (in thousands): 

Balance at December 31, 2019
Acquisition
Other
Balance at December 31, 2020
Acquisitions
Other
Balance at December 31, 2021

$
$

$

$

Goodwill

484,459  
24,315  
(219 )
508,555  
68,395  
(37 )
576,913  

The changes noted as “other” in the table above for both 2021 and 2020 refer to the amortization of the income tax benefit of tax goodwill in excess of 

financial statement goodwill. 

The components of the “Other intangible assets” are as follows (in thousands):

As of December 31, 2021:
Customer relationships

Carrier network and agent relationships

Developed technology

Trade name

Total

Gross
Amount

Accumulated
Amortization

Net
Carrying
Value

Life

226,623   $

(53,156 ) $

173,467  

5-15 years

15,000   $

6,500   $

5,500   $

(1,063 ) $

(232 ) $

(2,500 ) $

13,937  

4 years

6,268  

7 years

3,000  

18 months

253,623   $

(56,951 ) $

196,672  

$

$

$

$

$

45

 
 
 
 
 
   
 
   
 
 
 
   
   
 
 
   
 
 
   
 
 
   
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
   
   
 
 
 
 
   
   
 
 
 
   
 
 
   
 
 
   
 
 
   
 
 
 
As of December 31, 2020:
Customer relationships

Carrier network and agent relationships

Trade name

Total

Gross
Amount

Accumulated
Amortization

Net
Carrying
Value

Life

$

$

$

$

196,806   $

(36,765 ) $

160,041  

5-15 years

2,432   $

2,921   $

(51 ) $

(1,390 ) $

2,381  

4 years

1,531  

18 months

202,159   $

(38,206 ) $

163,953  

The above intangible assets are amortized using the straight-line method. Amortization expense was $18.7 million and $13.8 million for each of the 
years ended December 31, 2021 and 2020, respectively. The remaining weighted average life of all definite lived intangible assets was 10.30  years  and 
10.98 years for the years ended December 31, 2021 and 2020, respectively. Amortization expense for the next five years is as follows (in thousands): 

Year 1
Year 2
Year 3
Year 4
Year 5

Total

$

NOTE 7. Income Taxes 

The following is a reconciliation of our effective tax rate to the federal statutory tax rate: 

U.S. federal statutory rate
State taxes, net of federal benefit
Federal and state incentives
State law changes
Permanent differences
Net effective rate

2021

Years Ended December 31,
2020

2019

21.0   %
3.5    
(0.5 )  
1.1    
0.6    
25.7   %

21.0   %
3.6    
(1.1 )  
(0.2 )  
0.2    
23.5   %

The following is a summary of our provision for income taxes (in thousands): 

25,329  
23,284  
21,126  
20,089  
17,389  

21.0   %
3.5    
(0.9 )  
0.7    
1.2    
25.5   %

Current
Federal
State and local
Foreign

Deferred
Federal
State and local
Foreign

Total provision

2021

$

Years Ended December 31,
2020

  $

51,918  
13,876  
38  
65,832  

(5,125 )
(1,254 )

(17 )  

(6,396 )

11,913  
3,597  
11  
15,521  

6,548  
465  

7    

7,020  

2019

  $

$

59,436  

  $

22,541  

  $

46

31,209  
3,979  
84  
35,272  

(344 )
1,788  
(17 )
1,427  

36,699  

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
   
   
 
 
 
 
   
   
 
 
 
   
 
 
   
 
 
 
 
 
 
 
 
 
 
 
  
 
   
 
 
 
 
 
   
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
   
   
 
   
   
 
 
   
   
 
 
 
 
   
 
   
 
 
 
   
 
   
 
   
   
 
   
   
 
 
 
 
 
   
   
 
 
 
 
   
 
   
 
The following is a summary of our deferred tax assets and liabilities (in thousands):    

Accrued compensation
Other reserves
Tax credit carryforwards
Operating loss carryforwards
Lease accounting liability

Total gross deferred income taxes

Valuation allowances
Total deferred tax assets

Prepaids
Property and equipment
Intangibles
Lease right-of-use asset
Total deferred tax liabilities

Total deferred taxes

December 31,

2021

2020

19,226  
17,896  
8,286  
881  
11,956  
58,245  
(5,023 )
53,222  

(6,607 )
(135,768 )
(55,466 )
(11,325 )
(209,166 )

$

(155,944 )

  $

12,467  
14,154  
8,715  
2,845  
11,669  
49,850  
(6,518 )
43,332  

(6,404 )
(132,669 )
(55,166 )
(11,418 )
(205,657 )

(162,325 )

We are subject to income taxation in the United States, numerous state jurisdictions, Mexico and Canada. Because income tax return formats vary 
among the states, we file both unitary and separate company state income tax returns. We do not permanently reinvest our foreign earnings, all amounts are 
accrued and accounted for, though not material. 

We acquired a federal net operating loss carryforward of $4.1 million through the acquisition by way of merger with CaseStack, LLC in December 
2018.  The  Internal  Revenue  Service  ("IRS")  loss  limitation  rules  allowed  us  to  utilize  $1.3  million  in  each  of  the  2021,  2020  and  2019  tax  years.  The 
remaining net operating loss of $0.2 million is expected to be fully utilized in 2022. Our state tax net operating losses total $0.6 million.  Some of those 
state losses have no expiration date while others will expire between December 31, 2022, and December 31, 2040. Management believes it is more likely 
than not that the loss carryforward deferred tax assets will be realized. 

Our federal incentive tax credit carryforward of $0.1 million expires between December 31, 2025, and December 31, 2028.  Our  state  incentive  tax 
credit carryforwards of $8.2  million  expire  between  December  31,  2022,  and  December  31,  2026.  Management  believes  it  is  more  likely  than  not  that 
approximately $3.4 million of the incentive carryforward deferred tax assets will be realized and a valuation allowance of $5.0 million has been established 
for the remainder which are not expected to be realized.

As  of  December  31,  2021  and  December  31,  2020,  the  amount  of  unrecognized  tax  benefits  was  $6.6  million  and  $4.3  million,  respectively.  If 
recognized, these benefits would decrease our income tax provision by $5.4 million and $3.7 million, respectively. A reconciliation of the beginning and 
ending amount of unrecognized tax benefits is as follows (in thousands): 

Gross unrecognized tax benefits - beginning of the year

Gross increases (decreases) related to prior year tax positions
Gross increases related to current year tax positions
Lapse of applicable statute of limitations
Gross unrecognized tax benefits - end of year

$

$

2021

2020

4,292    
997    
1,794    
(436 )  
6,647    

$

$

4,069  
(52 )
1,484  
(1,209 )
4,292  

We  recognize  interest  and  penalties  related  to  income  tax  liabilities  in  our  provision  for  income  taxes.  In  2021,  we  included  $0.1  million  in  our 

provision for income taxes. 

47

 
 
  
 
 
 
 
 
 
 
   
 
   
 
   
 
   
 
   
 
   
 
   
 
   
 
 
 
   
 
 
   
 
   
 
   
 
   
 
   
 
 
 
   
 
 
  
 
 
 
 
 
 
 
 
 
 
  
On  March  27,  2020,  the  Coronavirus  Aid,  Relief  and  Economic  Security  Act  (the  "CARES  Act")  was  enacted  in  response  to  the  COVID-19 
pandemic. Among other things, the CARES Act includes provisions related to refundable payroll tax credits, deferment of the employer portion of social 
security payments, net operating loss carryback periods, modifications to the net interest deduction limitations, and technical corrections to tax depreciation 
methods  for  qualified  improvement  property.  Though  some  provisions  of  the  CARES  Act  do  impact  the  Company,  there  was  no  material  effect  on  the 
Company’s  consolidated  financial  condition  or  results  of  operations  for  the  year  ended  December  31,  2020.  On  December  27,  2020,  the  Consolidated 
Appropriations  Act  (“CAA”)  was  enacted  in  further  response  to  the  COVID-19  pandemic,  in  combination  with  omnibus  spending  for  the  2021  federal 
fiscal year. The CAA extended many of the provisions enacted by the CARES Act, the extension of which likewise did not have a material impact on the 
Company’s consolidated financial statements for the year ended December 31, 2021.

NOTE 8. Fair Value Measurement

The carrying value of cash and cash equivalents, accounts receivable and accounts payable materially approximated fair value as of December 31, 
2021 and 2020. As of December 31, 2021, the $274.8 million carrying value of the Company's fixed-rate borrowings approximated the fair value. As of 
December 31, 2020, the fair value of the Company’s fixed-rate borrowings was $6.1 million more than the historical carrying value of $270.4 million. The 
fair value of the fixed-rate borrowings was estimated using an income approach based on current interest rates available to the Company for borrowings on 
similar terms and maturities. 

We consider as cash equivalents all highly liquid instruments with an original maturity of three months or less. As of December 31, 2021 and 2020, 
our cash and temporary investments were with high quality financial institutions in Demand Deposit Accounts, savings accounts and an interest-bearing 
checking account. 

Restricted investments included $24.3 million and $23.4 million as of December 31, 2021 and 2020, respectively, of mutual funds  which are reported 

at fair value. These investments relate to the nonqualified deferred compensation plan that is described in Note 14 and insurance deposits.

Our assets and liabilities measured at fair value are based on valuation techniques which consider prices and other relevant information generated by 
market transactions involving identical or comparable assets and liabilities. These valuation methods are based on either quoted market prices (Level 1) or 
inputs, other than quoted prices in active markets, that are observable either directly or indirectly (Level 2), or unobservable inputs (Level 3). Cash and cash 
equivalents,  accounts  receivable,  accounts  payable  and  mutual  funds  and  related  liabilities  are  defined  as  “Level  1,”  while  long-term  debt  is  defined  as 
“Level 2” of the fair value hierarchy in the Fair Value Measurements and Disclosures Topic of the Codification.  

NOTE 9. Property and Equipment 

Property and equipment consist of the following (in thousands):  

Land
Building and improvements
Leasehold improvements
Computer equipment and software
Furniture and equipment
Transportation equipment
Construction in process

Less:  Accumulated depreciation
Property and Equipment, net

December 31,

2021

2020

24,724  
36,617  
7,955  
156,169  
14,775  
863,956  
45,248  
1,149,444  
(467,993 )
681,451  

  $

  $

24,708  
36,649  
7,686  
145,139  
14,732  
862,247  
33,467  
1,124,628  
(453,527 )
671,101  

$

$

Depreciation expense related to property and equipment was $95.5 million, $95.3 million and $89.5 million for the years ended December 31, 2021, 

2020 and 2019, respectively. 

48

 
 
 
 
 
 
 
 
 
 
 
   
 
   
 
   
 
   
 
   
 
   
   
   
 
   
 
 
NOTE 10. Long-Term Debt and Financing Arrangements  

On  July  1,  2017,  we  entered  into  a  five-year,  $350  million  unsecured  credit  agreement  (the  "Credit  Agreement").  Borrowings  under  the  Credit 
Agreement generally bear interest at a variable rate equal to (i) LIBOR plus a specified margin based upon Hub’s total net leverage ratio (as defined in the 
Credit Agreement) (the "Total Net Leverage Ratio"), or (ii) the base rate (which is the highest of (a) the administrative agent's prime rate, (b) the federal 
funds rate plus 0.50%  or  (c)  the  sum  of  1%  plus  one-month LIBOR)  plus  a  specified  margin  based  upon  the  Total  Net  Leverage  Ratio.  The  specified 
margin for Eurodollar loans varies from 100.0 to 200.0 basis points per annum. The specified margin for base rate loans varies from 0.0 to 100.0 basis 
points per annum. Hub must also pay (1) a commitment fee ranging from 10.0 to 25.0 basis points per annum (based upon the Total Net Leverage Ratio) on 
the aggregate unused commitments and (2) a letter of credit fee ranging from 100.0 to 200.0 basis points per annum (based upon the Total Net Leverage 
Ratio) on the undrawn amount of letters of credit. Refer to Note 17 "Subsequent Event" for information regarding the new credit agreement. 

We have standby letters of credit that expire in 2022. As of December 31, 2021, our letters of credit were $41.3 million. 

As of December 31, 2021, we had no borrowings under the Credit Agreement and our unused and available borrowings were $308.7 million. We were 

in compliance with our debt covenants as of December 31, 2021. 

We have entered into various Equipment Notes (“Notes”) for the purchase of tractors, trailers, containers and refrigeration units. The Notes are secured 

by the underlying equipment financed in the agreements.    

Our outstanding Notes are as follows (in thousands):

December 31,
2021

December 31,
2020

Interim funding for equipment received and expected to be converted to an equipment note in subsequent 
year; interest paid at a variable rate

$

17,186    

$

8,902  

Secured Equipment Notes due on various dates in 2026 commencing on various dates in 2021; interest is 
paid monthly at a fixed annual rate between 1.48% and 2.41%

Secured Equipment Notes due on various dates in 2025 commencing on various dates in 2020 and 2021; 
interest is paid monthly at a fixed annual rate between 1.51% and 1.80%

Secured Equipment Notes due on various dates in 2024 commencing on various dates in 2017, 2019 and 
2020; interest is paid monthly at a fixed annual rate between 2.50% and 3.59%

Secured Equipment Notes due on various dates in 2023 commencing on various dates from 2016 to 2019; 
interest is paid monthly at a fixed annual rate between 2.20% and 4.20%

Secured Equipment Notes due on various dates in 2022 commencing on various dates from 2015 to 2017; 
interest is paid monthly at a fixed annual rate of between 2.20% and 2.96%

Secured Equipment Notes due on various dates in 2021 commencing on various dates from 2014 and 2016; 
interest is paid monthly at a fixed annual rate between 2.02% and 2.96%

Less current portion
Total long-term debt

Aggregate principal payments, in thousands, due subsequent to December 31, 2021, are as follows:

Year 1
Year 2
Year 3
Year 4
Year 5

$

$

49

94,766    

63,308    

34,432    

-  

74,494  

49,920  

61,824    

112,668  

3,236    

8,943  

15,432  

270,359  

(93,562 )
176,797  

97,273  
72,971  
48,031  
37,257  
19,220  
274,752  

-    

274,752    

(97,273 )  
177,479    

$

$

 
 
 
   
 
 
 
   
 
 
   
 
 
 
   
 
 
 
                                               
   
 
 
 
 
 
 
   
 
 
 
 
 
                                               
   
 
 
 
 
 
                                               
   
 
 
 
 
 
 
   
 
 
 
 
 
 
   
 
 
 
 
 
 
   
 
 
 
 
 
 
 
   
 
 
 
 
 
 
 
 
 
 
 
 
NOTE 11. Leases

The  FASB  issued  ASC  842,  Leases,  (“ASC  842”)  which  requires  lessees  to  recognize  a  right-of-use  asset  (“ROU”)  and  a  lease  obligation  for  all 
leases.  We  elected  this  option  when  we  adopted  the  new  standard  using  a  modified  retrospective  transition  method  and  recognized  a  cumulative-effect 
adjustment to the opening balance of retained earnings in the period of adoption rather than in the earliest period presented. In addition, we elected to apply 
a package of practical expedients and as such did not reassess at the date of initial adoption (1) whether any expired or existing contracts are or contain 
leases,  (2)  the  lease  classification  for  any  expired  or  existing  leases,  or  (3)  initial  direct  costs  for  existing  leases.  Lessees  can  also  make  an  accounting 
policy election to not recognize an asset and liability for leases with a term of twelve months or less which we elected. 

As of December 31, 2021, we recorded $45.3 million of ROU assets and $47.5 million of lease liabilities on our consolidated balance sheet. As of 
December 31, 2020, we recorded $47.1 million of ROU assets and $48.2 million of Lease liabilities on our consolidated balance sheet. The lease liabilities 
recognized are measured based upon the present value of minimum future payments. The ROU assets are equal to lease liabilities upon initial recording, 
adjusted for prepaid and accrued rent balances which are recorded in the Consolidated Balance Sheets.

Hub currently does not have any variable lease payments that depend on an index or a rate (such as the Consumer Price Index or a market interest 
rate). Some leases have options to extend or terminate the agreement, which management assesses in determining the estimated lease term. If any of the 
options to extend a lease are exercised, this change will be reflected as a remeasurement of the ROU asset and lease liability accordingly. As of December 
31,  2021,  the  ROU  asset  and  lease  liabilities  do  not  reflect  any  options  to  extend  or  terminate  a  lease  as  management  is  not  reasonably  certain  it  will 
exercise any of these options. Also, current leases do not contain any restrictions or covenants imposed by the leases or residual value guarantees.

As of December 31, 2021, Hub signed new property lease contracts which had not commenced. Based on the present value of the lease payments, the 

estimated ROU assets and lease liabilities related to these contracts will total approximately $1.6 million.

Discount rates are not specified on the individual lease contracts at the commencement date. To determine the present value of the lease payments, 
Hub used its incremental borrowing rate which was determined based on Hub’s credit standing and factoring in the current 12-month LIBOR rate published 
at  the  time  of  the  lease  commencement.  This  incremental  borrowing  rate  represents  the  rate  of  interest  that  Hub  would  have  to  pay  to  borrow  on  a 
collateralized basis over a similar term and amounts equal to the lease payments in a similar economic environment.

The following table summarizes the lease costs (in thousands), which are included in transportation costs and general and administrative costs in the 

accompanying consolidated statement of income:

2021

Years Ended December 31,
2020

2019

Amortization of finance right-of-use assets
Interest on finance lease liabilities
Finance lease cost

Operating lease cost
Short-term lease cost
Sublease income
Total lease cost

$

$

  $

2,304  
29  
2,333  

12,343  
171  
(327 )
14,520  

  $

50

  $

2,309  
135  
2,444  

10,946  
238  
(469 )    
  $

13,159  

2,326  
252  
2,578  

10,861  
289  
(507 )
13,221  

 
 
      
 
 
 
 
   
   
 
 
 
   
 
   
 
 
 
   
   
 
   
   
 
 
   
 
   
 
 
 
   
   
 
   
   
 
   
 
 
The following table represents the maturity of operating and finance lease liabilities (in thousands): 

Operating Leases

December 31, 2021
Finance Leases

Total

Year 1
Year 2
Year 3
Year 4
Year 5
Thereafter
Total
Imputed interest
Present value of lease payments
Less: current lease liabilities
Long-term lease liabilities

Year 1
Year 2
Year 3
Year 4
Year 5
Thereafter
Total
Imputed interest
Present value of lease payments
Less: current lease liabilities
Long-term lease liabilities

$

$

$

$

12,253     $
9,904    
8,133    
6,842    
5,320    
6,436    
48,888    
2,608    
46,280    
11,364    
34,916     $

1,257    $
-   
-   
-   
-   
-   
1,257   
6   
1,251   
1,251   

-    $

Operating Leases

December 31, 2020
Finance Leases

Total

11,082     $
9,714    
7,607    
6,369    
6,312    
8,803    
49,887    
3,466    
46,421    
10,093    
36,328     $

1,817    $
8   
-   
-   
-   
-   
1,825   
24   
1,801   
1,793   

8    $

The following table presents supplemental cash flow and noncash information related to leases:

Operating cash flows from operating leases
Financing cash flows from finance leases
Operating cash flows from finance leases
Cash paid for lease liabilities

Right-of-use assets obtained in exchange for new
financing lease liabilities (net of disposals)
Rights-of-use assets obtained in exchange for new
operating lease liabilities (net of disposals)

$

$

$

$

2021

Years Ended December 31,
2020

2019

11,523     $
2,682    
29    
14,234     $

(72 )   $

11,684     $

9,419     $
3,066    
135    
12,620     $

(71 )   $

17,875     $

13,510   
9,904    
8,133    
6,842    
5,320    
6,436    
50,145    
2,614   
47,531   
12,615   
34,916   

12,899   
9,722    
7,607    
6,369    
6,312    
8,803    
51,712    
3,490   
48,222   
11,886   
36,336   

9,702  
2,954  
252  
12,908  

6  

13,242  

The weighted average remaining lease term and discount rates as of December 31, are as follows (in thousands):

Weighted average remaining lease term — finance leases
Weighted average remaining lease term — operating leases

Weighted average discount rate — finance leases
Weighted average discount rate — operating leases

December 31, 2021

December 31, 2020

0.6 years
5.11 years

1.56 %  
2.14 %  

0.6 years
5.61 years

3.88 %  
2.64 %  

51

 
 
 
 
   
   
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
   
   
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
   
   
 
 
 
 
 
 
 
 
 
   
 
   
 
 
 
   
 
   
 
 
 
   
 
   
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
   
 
 
 
 
 
 
 
 
 
NOTE 12. Internal-Use Software

We capitalize internal and external costs, which include costs related to the development of our cloud computing or hosting arrangements, incurred to 
develop internal use software per ASC Subtopic 350-40. Refer to Note 1 "Description of Business and Summary of Significant Accounting Policies" for 
information regarding accounting policy. 

We had total capitalized internal use software costs, which include costs related to the development of our cloud computing or hosting arrangements, 
net  of  accumulated  amortization,  of  $58.7  million  and  $64.1  million  as  of  December  31,  2021  and  2020,  respectively.  The  2021  balance  consists  of 
capitalized implementation costs of $12.4 million, net of accumulated amortization, related to our cloud hosting arrangements, which are classified in other 
assets in our consolidated balance sheet and capitalized internal-use software costs of $46.3 million, net of accumulated amortization, which are classified 
in  property  and  equipment  in  our  consolidated  balance  sheet.  The  2020  balance  consists  of  capitalized  implementation  costs  of  $13.9  million,  net  of 
accumulated amortization, related our cloud hosting arrangements, which are classified in other assets in our consolidated balance sheet and capitalized 
internal-use software costs of $50.2 million, net of accumulated amortization, which are classified in property and equipment in our consolidated balance 
sheet. 

We  capitalized  total  implementation  and  internal-use  software  costs  of  $13.7  million  and  $12.7  million  in  2021  and  2020,  respectively. 
Implementation  and  internal-use  software  costs  are  amortized,  once  ready  for  intended  use,  over  its  expected  useful  life  or  the  term  of  the  associated 
hosting arrangements of generally up to 10 years. 

NOTE 13. Stock-Based Compensation Plans

The  2017  Long-Term  Incentive  Plan  (the  “2017  Incentive  Plan”)  was  approved  by  the  Board  of  Directors  and  subsequently  approved  by  the 
Company’s  stockholders  at  the  2017  annual  meeting.  The  2017  Incentive  Plan  authorizes  a  broad  range  of  awards  including  stock  options,  stock 
appreciation  rights,  restricted  stock  and  restricted  stock  units,  performance  shares  or  units,  other  stock-based  awards,  and  cash  incentive  awards  to  all 
employees (including the Company’s executive officers), directors, consultants, independent contractors or agents of us or a related company. The 2017 
Incentive Plan is effective as of March 15, 2017.

As of December 31, 2021, 401,451 shares were available for future grant under the 2017 Incentive Plan.

We  have  awarded  time-based  restricted  stock  to  our  employees  and  the  Company’s  non-employee  directors  (“Outside  Directors”).  This  restricted 
stock generally vests ratably (once per year) over a three to five-year period for recipients other than Outside Directors. Outside Directors’ restricted stock 
vests over a one-year period. In 2021, 2020 and 2019 we also granted performance-based restricted stock to our executive officers. The performance-based 
restricted stock vests upon the third anniversary of its issuance if certain financial targets are achieved.

Share-based compensation expense for 2021, 2020 and 2019 was $20.1 million, $17.1 million and $16.3 million or $14.9 million, $13.1 million and 
$12.1 million, net of taxes, respectively. Included in the 2021, 2020 and 2019 share-based compensation expense was $5.8 million, $4.5 million and $3.4 
million of performance-based share expenses or $4.3 million, $3.5 million and $2.6 million, net of taxes, respectively.

52

 
 
 
 
 
The fair value of non-vested restricted stock is equal to the market price of our stock at the date of grant.

The following table summarizes the non-vested restricted stock activity for the year ended December 31, 2021: 

Time-Based
Restricted Stock
Shares

Time-Based
Restricted Stock
Weighted
Average
Grant Date
Fair Value

Performance-Based
Restricted Stock
Shares

Performance-Based
Restricted Stock
Weighted
Average
Grant Date
Fair Value

Non-vested January 1, 2021
Granted
Vested
Forfeited
Non-vested at December 31, 2021

792,483  
534,580  
(303,995 )  
(117,701 )  
905,367  

$
$
$
$
$

46.01    
66.02    
44.08    
48.48    
59.00    

129,478    
117,608    
(76,000 )  
(42,132 )  
128,954    

$
$
$
$
$

The following table summarizes the restricted stock granted during the respective years:

Time-based restricted stock grants

2021

2020

2019

Employees
Outside directors

Total

510,017  
24,563  
534,580  

312,855    
26,341    
339,196    

Weighted average grant date fair value

$

66.02  

$

52.07    

$

Vesting period

1-5 years    

1-5 years    

45.64  
50.60  
37.20  
47.77  
54.45  

355,579  
32,262  
387,841  

38.02  

1-5 years  

The performance-based restricted stock granted in 2019 earned a 200% award therefore an additional 38,000 shares were issued to settle the award on 
the vesting date of December 21, 2021. The 2021 grant of performance-based restricted stock resulted in the issuance of 79,608 shares. The performance-
based restricted stock grants were 75,288 in 2020 and 76,500 in 2019. The  weighted  average  grant  date  fair  value  of  these  shares  was  $57.00  in  2021, 
$51.07 in 2020, and $37.20 in 2019.

The total fair value of restricted shares vested during the years ended December 31, 2021, 2020 and 2019 was $25.4 million, $17.8 million and $14.7 

million, respectively. 

As of December 31, 2021, 2020, and 2019, there was $45.5 million, $27.5 million and $27.4 million of unrecognized compensation cost related to 
non-vested  time-based  compensation,  respectively,  that  is  expected  to  be  recognized  over  a  weighted  average  period  for  2021,  2020,  and  2019  of  3.11 
years, 2.47 years and 2.91 years, respectively. Additionally, as of December 31, 2021, 2020, and 2019 there was $6.5 million, $4.0 million and $3.7 million 
of  unrecognized  compensation  cost,  respectively,  related  to  the  non-vested  performance-based  restricted  stock  compensation  that  is  expected  to  be 
recognized over a weighted average period of 1.5 years for 2021, 2020 and 2019.  

During January 2022, we granted 198,051 shares of restricted stock, which includes 51,794 performance-based shares and 129,632 time-based shares, 
to certain employees and 16,625 shares of restricted stock to our Outside Directors with a weighted average grant date fair value of $84.24. These time-
based grants generally vest ratably (once per year) over a three to five-year period for employees and a one-year period for Outside Directors. Performance-
based grants vest after three years.

53

 
  
 
 
 
 
   
 
   
 
 
 
 
 
   
 
   
 
 
 
   
   
 
   
 
 
   
   
   
 
 
   
   
   
 
 
   
   
   
 
 
 
 
 
 
   
 
   
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
   
   
 
 
 
 
 
 
   
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
   
 
 
 
 
 
   
 
   
 
 
 
 
NOTE 14. Employee Benefit Plans 

We have a profit-sharing plan under section 401(k) of the Internal Revenue Code. At our discretion, we partially match qualified contributions made 

by employees to the plan. We incurred expense of $3.1 million related to this plan in 2021 and $3.3 million in each of 2020 and 2019. 

In  January  2005,  we  established  the  Hub  Group,  Inc.  Nonqualified  Deferred  Compensation  Plan  (the  “Plan”)  to  provide  added  incentive  for  the 
retention of certain key employees. Under the Plan, which was amended in 2008, participants can elect to defer certain compensation. Accounts grow on a 
tax-deferred basis to the participant. Restricted investments included in the Consolidated Balance Sheets represent the fair value of the mutual funds and 
other security investments related to the Plan as of December 31, 2021 and 2020. Both realized and unrealized gains and losses are included in income and 
expense and offset the change in the deferred compensation liability. We provide a 50% match on the first 6% of employee compensation deferred under 
the Plan which vests over three years with a maximum match equivalent to 3% of base salary. 

We incurred expense of $0.3 million per year related to the employer match for these plans in 2021, 2020 and 2019. The liabilities related to these 

plans as of December 31, 2021 and 2020 were $24.1 million and $23.4 million, respectively. 

NOTE 15. Legal Matters

Robles and Adame

On January 25, 2013, a complaint was filed in the United States District Court for the Eastern District of California by Salvador Robles against our 
subsidiary HGT. The action was brought on behalf of a putative class comprised of present and former California-based truck drivers who, from January 
2009  to  September  2014,  were  classified  as  independent  contractors.  The  complaint  included  allegations  that  HGT  misclassified  these  drivers  as 
independent contractors, as well as various violations of the California Labor Code and that HGT engaged in unfair competition practices. In 2014, most of 
the subject drivers accepted settlements that were expensed in 2014 and paid. In 2015, the lawsuit was transferred to the United States District Court for the 
Western District of Tennessee. The complaint sought, among other things, declaratory and injunctive relief, monetary damages and attorney’s fees. In May 
2013, the complaint was amended to add similar claims based on Mr. Robles’ status as an employed company driver. These additional claims were only on 
behalf of Mr. Robles and not a putative class.

On  August  5,  2015,  a  suit  was  filed  in  state  court  in  San  Bernardino  County,  California  on  behalf  of  63  named  plaintiffs  against  HGT  and  five 
Company  employees.  Plaintiffs  in  the  Adame  litigation  are  represented  by  the  same  counsel  as  represents  the  plaintiffs  in  Robles.  The  Adame  lawsuit 
alleges claims similar to those asserted in the Robles litigation and seeks monetary penalties under the California Private Attorneys General Act.  

In September 2019, the Company and the plaintiffs in the Robles and Adame matters agreed in principle to settle all claims in both lawsuits for $4.8 
million, which the Company recorded in the third quarter of 2019 and is included in "Accrued other" current liabilities on the accompanying Consolidated 
Balance Sheet. The parties are finalizing the settlement agreements, which are subject to final court approval.

The Company is involved in certain other claims and pending litigation arising from the normal conduct of business, including putative class-action 
lawsuits  in  which  the  plaintiffs  are  current  and  former  California-based  drivers  who  allege  claims  for  unpaid  wages,  failure  to  provide  meal  and  rest 
periods, failure to reimburse incurred business expenses and other items. Based on management's present knowledge, management does not believe that 
loss contingencies arising from these pending matters are likely to have a material adverse effect on the Company's overall financial position, operating 
results,  or  cash  flows  after  taking  into  account  any  existing  accruals.  However,  actual  outcomes  could  be  material  to  the  Company's  financial  position, 
operating results, or cash flows for any particular period.

NOTE 16. Stock Repurchase Plans 

On May 23, 2019, our Board of Directors authorized the purchase of up to $100 million of our Class A Common Stock. Under the program, the shares 
may be repurchased in the open market or in privately negotiated transactions, from time to time subject to market and other conditions. Other than from 
employee withholdings as described below, we did not purchase any stock under this authorization during the year ended December 31, 2021 and 2020. We 
purchased 626,320 shares for $25.0 million under this authorization from shareholders on the open market during the year ended December 31, 2019. The 
approved share repurchase program does not obligate us to repurchase any dollar amount or number of shares and the program may be extended, modified, 
suspended, or discontinued at any time.    

54

 
 
 
 
We purchased 134,329 shares for $9.1 million during 2021, 148,242 shares for $8.0 million during 2020 and 98,260 shares for $4.0 million in 2019 
related to employee withholding upon vesting of restricted stock. The table below summarizes the number of shares delivered to us by employees to satisfy 
the mandatory tax withholding requirement upon vesting of restricted stock during 2021:

Total
Number of
Shares
Purchased

Average
Price Paid
Per Share

Total Number of
Shares Purchased as
Part of Publicly
Announced Plan

Maximum Value of
Shares that May Yet
Be Purchased Under
the Plan
(in 000’s)

1/1/2021 - 1/31/2021
2/1/2021 - 2/28/2021
3/1/2021 - 3/31/2021
4/1/2021 - 4/30/2021
5/1/2021 - 5/31/2021
6/1/2021 - 6/30/2021
7/1/2021 - 7/31/2021
8/1/2021 - 8/31/2021
9/1/2021 - 9/30/2021
10/1/2021 - 10/31/2021
11/1/2021 - 11/30/2021
12/1/2021 - 12/31/2021
Total

NOTE 17. Subsequent Event

63,349  
2,630  
-  
968  
1,144  
1,117  
703  
53  
212  
409  
1,700  
62,044  
134,329  

  $
  $
  $
  $
  $
  $
  $
  $
  $
  $
  $
  $
  $

57.00  
56.29  
-  
66.89  
66.50  
65.24  
65.48  
67.38  
69.85  
77.76  
82.28  
79.18  
67.91  

-  
-  
-  
-  
-  
-  
-  
-  
-  
-  
-  
-  
-  

  $
  $
  $
  $
  $
  $
  $
  $
  $
  $
  $
  $
  $

-  
-  
-  
-  
-  
-  
-  
-  
-  
-  
-  
-  
75,002  

In  February  2022,  we  entered  into  a  five  year,  $350  million  unsecured  credit  agreement  (the  "Credit  Agreement").  Borrowings  under  the  Credit 
Agreement generally bear interest at a variable rate equal to (i) the secured overnight financing rate (published by the Federal Reserve Bank of New York, 
“SOFR”), plus a specified margin based on the term of such borrowing, plus a specified margin based upon Hub’s total net leverage ratio (as defined in the 
Credit Agreement) (the "Total Net Leverage Ratio"), or (ii) the base rate (which is the highest of (a) the administrative agent's prime rate, (b) the federal 
funds rate plus 0.50% or (c) the sum of 1% and one-month SOFR) plus a specified margin based upon the Total Net Leverage Ratio. The specified margin 
for SOFR loans varies from 100.0 to 175.0 basis points per annum. The specified margin for base rate loans varies from 0.0 to 75.0 basis points per annum. 
Hub must also pay (1) a commitment fee ranging from 10.0 to 25.0 basis points per annum (based upon the Total Net Leverage Ratio) on the aggregate 
unused commitments and (2) a letter of credit fee ranging from 100.0 to 175.0 basis points per annum (based upon the Total Net Leverage Ratio) on the 
undrawn amount of letters of credit. 

55

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
   
 
   
 
   
 
   
 
   
 
   
 
   
 
   
 
   
 
   
 
   
 
   
 
   
 
 
 
 
 
 
 
Item 9.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE 

None. 

Item 9A. CONTROLS AND PROCEDURES 

MANAGEMENT’S REPORT ON DISCLOSURE CONTROLS AND PROCEDURES 

As  of  December  31,  2021,  an  evaluation  was  carried  out  under  the  supervision  and  with  the  participation  of  our  management,  including  our  Chief 
Executive Officer and Chief Financial Officer, of the effectiveness of our disclosure controls and procedures (as such term is defined in Exchange Act Rule 
13a-15(e)).  Based  upon  this  evaluation,  our  Chief  Executive  Officer  and  Chief  Financial  Officer  concluded  that  our  disclosure  controls  and  procedures 
were effective as of December 31, 2021. 

No  significant  changes  were  made  in  our  internal  control  over  financial  reporting  during  the  fourth  quarter  of  2021  that  has  materially  affected,  or  is 
reasonably likely to materially affect, our internal control over financial reporting.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of 
effectiveness  to  future  periods  are  subject  to  the  risk  that  controls  may  become  inadequate  because  of  changes  in  conditions,  or  that  the  degree  of 
compliance with the policies or procedures may deteriorate. 

MANAGEMENT’S ANNUAL REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING 

Our management is responsible for establishing and maintaining adequate controls over financial reporting as defined in Rule 13a-15(f) of the Exchange 
Act.  Under  the  supervision  and  with  the  participation  of  our  management,  including  our  Chief  Executive  Officer  and  our  Chief  Financial  Officer,  we 
conducted  an  evaluation  of  the  effectiveness  of  our  internal  control  over  financial  reporting  as  of  December  31,  2021.  Based  on  criteria  established  in 
Internal  Control—Integrated  Framework  issued  by  the  Committee  of  Sponsoring  Organizations  of  the  Treadway  Commission  (2013  framework)  (the 
COSO criteria), management concluded that our internal control over financial reporting was effective as of December 31, 2021. 

On  October  19,  2021,  we  completed  the  acquisition  of  Choptank.  We  are  currently  integrating  processes,  employees,  technologies  and  operations.  As 
permitted by the rules and regulations of the Securities and Exchange Commission (“SEC”), we excluded Choptank from our assessment of our internal 
control  over  financial  reporting  as  of  December  31,  2021.  Management  will  continue  to  evaluate  our  internal  controls  over  financial  reporting  as  we 
complete our integration. As of December 31, 2021, Choptank represented 7.8% of total assets and 9.6% of net assets. For the year ended December 31, 
2021, Choptank represented 2.7% of revenues and 0.2% of net income.

Management believes, however, that a control system, no matter how well designed and operated, cannot provide absolute assurance that the objectives of 
the  control  system  are  met,  and  no  evaluation  controls  can  provide  absolute  assurance  that  all  control  issues  and  instances  of  fraud,  if  any,  within  the 
Company have been detected. 

Ernst & Young LLP, an independent registered public accounting firm, who audited and reported on the consolidated financial statements, included in this 
report, has issued an attestation report on the Company’s internal control over financial reporting. 

56

 
 
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM 

To the Stockholders and the Board of Directors of Hub Group, Inc.   

Opinion on Internal Control over Financial Reporting 

We  have  audited  Hub  Group,  Inc.’s  internal  control  over  financial  reporting  as  of  December  31,  2021,  based  on  criteria  established  in  Internal  Control—Integrated 
Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) (the COSO criteria). In our opinion, Hub Group, Inc. 
(the Company) maintained, in all material respects, effective internal control over financial reporting as of December 31, 2021, based on the COSO criteria.

As  indicated  in  the  accompanying  Management  Annual  Report  on  Internal  Control  Over  Financial  Reporting,  management’s  assessment  of  and  conclusion  on  the 
effectiveness of internal control over financial reporting did not include the internal controls of Choptank Transport, LLC (Choptank), which was acquired on October 19, 
2021 and is included in the 2021 consolidated financial statements of the Company and constituted 7.8% and 9.6% of total and net assets, respectively, as of December 31, 
2021 and 2.7% and 0.2% of revenues and net income, respectively, for the year then ended. Our audit of internal control over financial reporting of the Company also did 
not include an evaluation of the internal control over financial reporting of Choptank.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of 
Hub Group, Inc. as of December 31, 2021and 2020, the related consolidated statements of income and comprehensive income, stockholders’ equity and cash flows for each 
of the three years in the period ended December 31, 2021, and the related notes and financial statement schedule listed in the Index at Item 15(b), and our report dated 
February 25, 2022 expressed an unqualified opinion thereon.  

Basis for Opinion 

The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control 
over  financial  reporting  included  in  the  accompanying  Management’s  Annual  Report  on  Internal  Control  Over  Financial  Reporting.    Our  responsibility  is  to  express  an 
opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be 
independent  with  respect  to  the  Company  in  accordance  with  the  U.S.  federal  securities  laws  and  the  applicable  rules  and  regulations  of  the  Securities  and  Exchange 
Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about 
whether effective internal control over financial reporting was maintained in all material respects. 

Our  audit  included  obtaining  an  understanding  of  internal  control  over  financial  reporting,  assessing  the  risk  that  a  material  weakness  exists,  testing  and  evaluating  the 
design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We 
believe that our audit provides a reasonable basis for our opinion.

Definition and Limitations of Internal Control Over Financial Reporting 

A  company’s  internal  control  over  financial  reporting  is  a  process  designed  to  provide  reasonable  assurance  regarding  the  reliability  of  financial  reporting  and  the 
preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting 
includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions 
of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with 
generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and 
directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s 
assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to 
future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures 
may deteriorate.

/s/ Ernst & Young LLP

Chicago, Illinois 
February 25, 2022

57

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Item 9B.  

OTHER INFORMATION 

None. 

Item 9C.    DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS

            Not applicable

PART III

Item 10.  DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE 

(a)  Information Regarding Directors and Executive Officers.  The information required by this Item 10 regarding our directors and director nominees is 
contained under the captions “Who are the nominees this year” and “Are there any family relationships between any of the directors, executive officers or 
nominees,”  in  each  case  under  the  heading  “Proposal  1:  Election  of  Directors”  in  the  2022  Proxy  Statement,  which  information  under  such  captions  is 
incorporated herein by reference. Information required by this Item 10 regarding our executive officers appears in Part I of this Annual Report under the 
caption “Information About Our Executive Officers,” which information under such caption is incorporated herein by reference. 

(b)    Code  of  Business  Conduct  and  Ethics.    The  Company  has  adopted  a  Code  of  Business  Conduct  and  Ethics  (“Code”)  that  applies  to  all  of  our 
employees, officers and Board members. The Code is posted on the “Investors” section of our Internet website at www.hubgroup.com. If we choose to no 
longer post such Code, we will provide a free copy to any person upon written request to Investor Relations, Hub Group, Inc. 2000 Clearwater Drive, Oak 
Brook, Illinois 60523. We intend to provide any required disclosure of an amendment to or waiver from such Code that applies to our principal executive 
officer,  principal  financial  officer,  principal  accounting  officer  or  controller,  or  persons  performing  similar  functions,  on  our  Internet  website  located  at 
www.hubgroup.com promptly following any such amendment or waiver. We may elect to disclose any such amendment or waiver in a Current Report on 
Form 8-K filed with the SEC either in addition to or in lieu of the website disclosure. The information contained on or connected to our Internet website is 
not incorporated by reference into this Form 10-K and should not be considered part of this or any other report that we file with or furnish to the SEC.

(c)  Procedures for Shareholders to Recommend Director Nominees.  There have been no material changes to the procedures by which security holders may 
recommend nominees to the registrant’s Board of Directors.

(d)  Audit Committee Information.  Information required by this Item 10 regarding our Audit Committee and our audit committee financial experts may be 
found under the captions “What functions are performed by the Audit, Compensation, and Nominating Committees” and “Does Hub Group have an audit 
committee financial expert serving on its Audit Committee,” in each case under the heading “Corporate Governance” in the 2022 Proxy Statement, which 
information  pertaining  to  the  audit  committee  and  its  membership  and  audit  committee  financial  experts  under  such  captions  is  incorporated  herein  by 
reference. 

Item 11.  EXECUTIVE COMPENSATION 

The information required by this Item 11 regarding director and executive officer compensation, the Compensation Committee Report, the risks arising 
from  our  compensation  policies  and  practices  for  employees,  pay  ratio  disclosure,  and  compensation  committee  interlocks  and  insider  participation  is 
contained under the captions “Director Compensation” and “Executive Compensation” appearing in our 2022 Proxy Statement, which information under 
such captions is incorporated herein by reference. 

58

 
 
 
  
  
 
Item 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER 

MATTERS 

(a)  Equity Compensation Plan Information.  The following table sets forth information about securities authorized for issuance under our compensation 
plans (including individual compensation arrangements) as of December 31, 2021:

Plan Category

Equity compensation plans approved by security holders

Equity compensation plans not approved by security holders

Total

Number of 
securities
to be issued
upon exercise of
outstanding 
options,
warrants and 
rights
(a)

Weighted-average
exercise price of
outstanding options,
warrants and rights

—

 $

—

—

 $

Number of securities
remaining available 
for
future issuance 
under
equity compensation
plans (excluding
securities reflected 
in
column (a))

 —     

401,451  

—     

—  

—     

401,451  

(b)    Other  Information.    The  information  required  by  this  Item  12  regarding  security  ownership  of  certain  beneficial  owners  and  our  management  is 
contained under the caption “Security Ownership” in the 2022 Proxy Statement, which information under such caption is incorporated herein by reference.

Item 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE 

The  information  required  by  this  Item  13  regarding  certain  relationships  and  related  transactions  is  contained  under  the  caption  “Transactions  with 
Management and Others” in the 2022 Proxy Statement, which information under such caption is incorporated herein by reference.

The  information  required  by  this  Item  13  regarding  director  independence  is  contained  under  the  caption  “Director  Independence”  in  the  2022  Proxy 
Statement, which information under such caption is incorporated herein by reference.

Item 14.  PRINCIPAL ACCOUNTANT FEES AND SERVICES 

The information required by this Item 14 regarding fees we paid to our principal accountant and the pre-approval policies and procedures established by the 
Audit Committee of our Board of Directors is contained under the caption “Fees Paid to Auditors” in the 2022 Proxy Statement, which information under 
such caption is incorporated herein by reference.

59

 
  
 
 
 
 
 
 
 
 
  
 
 
   
 
 
 
 
 
 
 
   
 
 
 
 
 
   
 
 
   
 
 
 
 
 
 
 
 
  
 
Item 15.  EXHIBITS AND FINANCIAL STATEMENT SCHEDULES 

(a) Financial Statements 

The following consolidated financial statements of the Registrant are included under Item 8 of this Form 10-K: 

PART IV 

Report of Independent Registered Public Accounting Firm

Consolidated Balance Sheets - December 31, 2021 and December 31, 2020   

Consolidated Statements of Income and Comprehensive Income - Years ended December 31, 2021, December 31, 2020 and December 31, 2019   

Consolidated Statements of Stockholders’ Equity - Years ended December 31, 2021, December 31, 2020 and December 31, 2019   

Consolidated Statements of Cash Flows - Years ended December 31, 2021, December 31, 2020 and December 31, 2019 

Notes to Consolidated Financial Statements   

(b) Financial Statement Schedules 

The following financial statement schedules of Hub Group, Inc. are filed as part of this report and should be read in conjunction with the consolidated 
financial statements of Hub Group, Inc.: 

II. Valuation and qualifying accounts and reserves

Page

S-1

All other schedules are omitted because they are not required, are not applicable, or the required information is shown in the consolidated financial 
statements or notes thereto. 

(c) Exhibits 

The exhibits included as part of this Form 10-K are set forth in the Exhibit Index immediately preceding the signature page to this report, which Exhibit 
Index is incorporated herein by reference. 

Item 16.  FORM 10-K SUMMARY

None. 

60

 
 
 
  
  
 
  
  
 
 
 
SCHEDULE II 

HUB GROUP, INC. 
VALUATION AND QUALIFYING ACCOUNTS AND RESERVES 

Allowance for uncollectible trade accounts 

Year Ended
December 31:

Balance at
Beginning of
Year

Charged to
Costs &
Expenses

Charged to
Other
Accounts (1)

  Deductions (2)

Balance at
End of
Year

2021

2020

2019

$

$

$

8,280,000  

6,910,000  

6,728,000  

  $

  $

  $

308,000  

135,000  

180,000  

  $

  $

  $

11,510,000  

1,242,000  

5,000  

  $

  $

  $

(37,000 )

  $

20,061,000  

(7,000 )

  $

8,280,000  

(3,000 )

  $

6,910,000  

Deferred tax valuation allowance 

Year Ended
December 31:

2021

2020

2019

Balance at
Beginning of
Year

Charged to
Costs &
Expenses

Balance at
End of
Year

$

$

$

6,518,000  

4,713,000  

3,128,000  

  $

  $

  $

(1,495,000 )

1,805,000  

1,585,000  

  $

  $

  $

5,023,000  

6,518,000  

4,713,000  

(1)  Expected customer account adjustments charged to revenue and write-offs, net of recoveries. 
(2)  Represents bad debt recoveries. 

S-1

 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
   
 
   
 
 
 
 
 
 
 
 
 
   
 
   
   
 
 
 
 
 
 
 
 
   
 
   
   
 
  
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
   
 
 
 
 
 
 
   
 
   
 
 
 
 
   
 
   
 
 
 
INDEX TO EXHIBITS

Exhibit

Amended and Restated Certificate of Incorporation of the Registrant (incorporated by reference to Exhibit 3.1 to the Registrant’s quarterly 
report on Form 10-Q filed July 23, 2007, File No. 000-27754)

By-Laws of the Registrant (incorporated by reference to Exhibit 3.1 to the Registrant’s report on Form 8-K dated February 18, 2016 and filed 
February 23, 2016, File No. 000-27754)

  Description of Hub Group, Inc. Class A Common Stock, $.01 par value 

Amended and Restated Stockholders’ Agreement (incorporated by reference to Exhibit 10.1 to the Registrants report on Form 10-Q dated and 
filed July 30, 2014, File No 000-27754)

Class B Common Stock Issuance Agreement (incorporated by reference to Exhibit 10.2 to the Registrant’s report on Form 10-Q dated and filed 
July 30, 2014, File No. 000-27754)

Hub Group’s Nonqualified Deferred Compensation Plan Basic Plan Document as amended and restated as of January 1, 2008 (incorporated by 
reference to Exhibit 10.4 to the Registrant’s report on Form 10-K dated February 21, 2008 and filed February 22, 2008, File No. 000-27754)

Hub Group’s Nonqualified Deferred Compensation Plan Adoption Agreement as amended and restated as of January 1, 2008 (incorporated by 
reference to Exhibit 10.5 to the Registrant’s report on Form 10-K dated February 21, 2008 and filed February 22, 2008, File No. 000-27754).

Hub Group’s 2002 Long Term Incentive Plan (as amended and restated effective May 7, 2007) (incorporated by reference from Appendix B to 
the Registrant’s definitive proxy statement on Schedule 14A dated and filed March 26, 2007)

Credit Agreement, dated July 1, 2017, among the Registrant, Hub City Terminals, Inc., the Guarantors, the Lenders and Bank of Montreal 
(incorporated by reference to Exhibit 10.1 to the Registrant’s report on Form 8-K dated July 1, 2017 and filed July 7, 2017, File No. 000-27754)

Form of Terms of Restricted Stock Award under Hub Group, Inc. 2002 Long-Term Incentive Plan (incorporated by reference to Exhibit 10.2 to 
the Registrant’s report on Form 8-K dated May 22, 2006 and filed May 26, 2006, File No. 000-27754)

Hub Group’s 2017 Long Term Incentive Plan (incorporated by reference from Exhibit A to the Registrant’s definitive proxy statement on 
Schedule 14A dated and filed March 22, 2017)

Form of Terms of Restricted Stock Award to Directors under Hub Group, Inc. 2017 Long-Term Incentive Plan (incorporated by reference to 
Exhibit 10.1 to the Registrant’s report on Form 8-K dated May 10, 2017 and filed May 16, 2017, File No. 000-27754)

Number

3.1

3.2

4.1

10.1

10.2

10.3*

10.4*

10.7*

10.8

10.11*

10.12

10.13*

10.14*

Form of Terms of Restricted Stock Award to non-directors under Hub Group, Inc. 2017 Long-Term Incentive Plan (incorporated by reference to 
Exhibit 10.2 to the Registrant’s report on Form 8-K dated May 10, 2017 and filed May 16, 2017, File No. 000-27754)

10.15*

Form of Terms of Performance Based Restricted Stock Award under Hub Group, Inc. 2017 Long-Term Incentive Plan (incorporated by 
reference to Exhibit 10.3 to the Registrant’s report on Form 8-K dated January 2, 2018 and filed January 5, 2018, File No. 000-27754)

 21

Subsidiaries of the Registrant

S-1

 
  
 
  
 
     
  
 
 
 
 
  
 
 
 
 
 
 
 
  
 
 
 
 
  
 
 
 
 
  
 
 
 
 
  
 
 
 
 
  
 
 
 
 
  
 
 
 
 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  
 
 
 
 
 
 
23.1

Consent of Ernst & Young LLP

24.1

31.1

31.2

32.1

101

  Powers of Attorney (included as part of the signature pages hereto)

Certification of David P. Yeager, Chairman and Chief Executive Officer, Pursuant to Rule 13a-14(a) promulgated under the Securities Exchange 
Act of 1934

Certification of Geoffrey F. DeMartino, Executive Vice President, Chief Financial Officer and Treasurer, Pursuant to Rule 13a-14(a) 
promulgated under the Securities Exchange Act of 1934

Certification of David P. Yeager and Geoffrey F. DeMartino, Chief Executive Officer and Chief Financial Officer respectively, Pursuant to 18 
U.S.C. Section 1350

Inline XBRL Document Set for the consolidated financial statements and accompanying notes in Part II, Item 8, “Financial Statements and 
Supplementary Data” of this Annual Report on Form 10-K

104

  Inline XBRL for the cover page of this Annual Report on Form 10-K, included in the Exhibit 101 Inline XBRL Document Set

*  Management contract or compensatory plan or arrangement. 

S-1

 
  
 
 
 
 
 
 
 
  
 
 
 
 
  
 
 
 
 
  
 
 
 
 
  
 
 
 
 
  
 
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its 

SIGNATURES

behalf by the undersigned, thereunto duly authorized. 

Date: February 25, 2022

HUB GROUP, INC.

By

/s/ DAVID P. YEAGER

David P. Yeager

Chairman and Chief Executive Officer

We, the undersigned directors and officers of the registrant, hereby severally constitute David P. Yeager and Geoffrey F. DeMartino, and each of them 
singly, our true and lawful attorneys with full power to them and each of them to sign for us, and in our names in the capacities indicated below, any and all 
amendments to this Annual Report on Form 10-K filed with the Securities and Exchange Commission.

Pursuant  to  the  requirements  of  the  Securities  Exchange  Act  of  1934,  this  report  has  been  signed  below  by  the  following  persons  on  behalf  of  the 

registrant and in the capacities and on the dates indicated: 

/s/ David P. Yeager
David P. Yeager

  Chairman and Chief Executive Officer

/s/ Geoffrey F. DeMartino
Geoffrey F. DeMartino

  Executive Vice President, Chief Financial Officer, and
  Treasurer

Title

Date

February 25, 2022

February 25, 2022

/s/ Kevin W. Beth
Kevin W. Beth

/s/ Charles R. Reaves
Charles R. Reaves

/s/ Martin P. Slark
Martin P. Slark

/s/ James C. Kenny
James C. Kenny

/s/ Peter B. McNitt
Peter B. McNitt

/s/ Mary H. Boosalis
Mary H. Boosalis

/s/ Jenell Ross
Jenell Ross

  Executive Vice President and Chief Accounting Officer

February 25, 2022

  Director

  Director

  Director

  Director

  Director

  Director

S-1

February 25, 2022

February 25, 2022

February 25, 2022

February 25, 2022

February 25, 2022

February 25, 2022

 
  
 
 
 
 
 
  
 
 
 
  
 
 
  
 
  
 
 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  
 
Description of the Company’s Common Stock Registered
Under Section 12 of the Securities Exchange Act of 1934

EXHIBIT 4.1

The  following  summary  of  the  Class  A  Common  Stock  (par  value  $0.01  per  share)  of  Hub  Group,  Inc.  (“Hub  Group”  or  the 
“Company”)  is  based  on  and  qualified  by  the  Company’s  Certificate  of  Incorporation  (the  “Certificate”)  and  Amended  and 
Restated Bylaws, as amended (the “Amended Bylaws”). For a complete description of the terms and provisions of the Company’s 
equity securities, including its Common Stock, refer to the Certificate of Incorporation and Amended Bylaws, each of which is 
filed or incorporated by reference as an exhibit to this Annual Report on Form 10-K.

Hub  Group’s  Certificate  of  Incorporation  authorizes  the  issuance  of  97,337,700  shares  of  Class  A  Common  Stock 
(“Class  A  Common  Stock”),  662,300  shares  of  Class  B  Common  Stock  (“Class  B  Common  Stock”)  and  2,000,000  shares  of 
preferred stock (“Preferred Stock”), all with a par value of $0.01 per share.  

Voting  Rights .        The  holders  of  Class  A  Common  Stock  have  one  vote  per  share  and  the  holders  of  the  Class  B 
Common Stock have 20 votes per share. Except as otherwise required by law, the holders of the Class A Common Stock and the 
Class B Common Stock vote together as a single class with respect to all matters submitted for a vote of stockholders. Shares of 
Class A Common Stock and Class B Common Stock do not have cumulative voting rights.

Dividend Rights.    Each share of Class A Common Stock and Class B Common Stock is entitled to dividends if, as and 
when dividends are declared by the Company’s Board of Directors (“Board”). Any dividend declared and payable in cash, our 
capital stock (other than Class A Common Stock or Class B Common Stock) or other property must be paid equally on a share-
for-share basis on Class A Common Stock and Class B Common Stock. Dividends and distributions payable in shares of Class A 
Common  Stock  may  be  paid  only  on  shares  of  Class  A  Common  Stock,  and  dividends  and  distributions  payable  in  shares  of 
Class B Common Stock may be paid only on shares of Class B Common Stock. If a dividend or distribution payable in Class A 
Common Stock is made on Class A Common Stock, the number of votes per share to which the holders of Class B Common 
Stock are entitled will be adjusted in order to keep the voting power of the Class B Common Stock consistent with the voting 
power of the Class B Common Stock prior to the dividend or distribution of shares of Class A Common Stock. If a dividend or 
distribution payable in Class B Common Stock is made on Class B Common Stock, a simultaneous and equivalent dividend or 
distribution in Class A Common Stock must be made on Class A Common Stock.

Conversion Rights.    The Class A Common Stock is not convertible. Each share of Class B Common Stock is convertible 
into one share of Class A Common Stock at any time at the option of and without cost to the holder thereof. In addition, the Class 
B  Common  Stock  automatically  converts  on  a  share-for-share  basis  into  a  Class  A  Common  Stock  in  the  event  of  certain 
transfers of the Class B Common Stock.

 
 
 
 
 
 
  
  
 
  
 
 
Liquidation Rights.    The holders of the Class A Common Stock and the holders of the Class B Common Stock are entitled to 
participate equally on a share-for-share basis in all distributions to the holders of Common Stock in any liquidation, distribution 
or  winding  up  of  Hub  Group,  subject  to  the  rights  of  the  holders  of  any  class  or  series  of  Preferred  Stock.  If  a  dividend  or 
distribution payable in Class A Common Stock is made on the Class A Common Stock, the liquidation preference on the Class B 
Common Stock will be adjusted proportionately.

Preemptive  Rights.        Neither  the  holders  of  Class  A  Common  Stock  nor  the  holders  of  Class  B  Common  Stock  have 

preemptive rights to purchase shares of any class of our capital stock.

Redemption and Sinking Fund Privileges.    Neither the holders of the Class A Common Stock nor the holders of the Class 

B Common Stock have any redemption or sinking fund privileges.

Other Terms.    Upon any subdivision, consolidation, reclassification or other change in the Class A Common Stock, the 
Class B Common Stock will be adjusted proportionately such that the Class B Common Stock retains the same relative voting 
power  as  prior  to  the  subdivision,  consolidation,  reclassification  or  other  change.  The  Class  B  Common  Stock  may  not  be 
subdivided, consolidated, reclassified or otherwise changed unless contemporaneously therewith the Class A Common Stock is 
subdivided, consolidated, reclassified or otherwise changed in the same proportion and in the same manner.

In any merger, consolidation or business combination, the consideration to be received per share by holders of either Class 
A Common Stock or Class B Common Stock must be identical to that received by holders of the other class of Common Stock, 
except that in any such transaction in which shares of capital stock are distributed, such shares may differ as to voting rights only 
to the extent that voting rights now differ between Class A Common Stock and Class B Common Stock.

Issuance of Preferred Stock. Hub Group’s Preferred Stock is issuable at any time, and from time to time, in such amounts 
and  series  and  bearing  such  voting,  dividend,  conversion,  liquidation  and  other  rights  and  preferences  as  the  Board  may 
determine.  The Preferred Stock could be issued for any lawful corporate purpose without further action by the shareholders.  The 
issuance of any Preferred Stock having conversion rights could have the effect of diluting the interests of the other shareholders.  
Shares of Preferred Stock also could be issued with such rights, privileges and preferences as would deter a tender or exchange 
offer or to discourage the acquisition of control of the Company.  

Provisions in Hub Group’s Certificate of Incorporation.  Hub Group’s Certificate of Incorporation contain certain other 

provisions that could impede or delay a change in control of the Company, including:

• Until such time as sufficient shares of Class B Common Stock are converted to shares of Class A Common Stock or we 
issue  sufficient  shares  of  Class  A  Common  Stock  to  dilute  the  voting  power  of  the  holders  of  the  Class  B  Common 
Stock, the holders of Class B Common Stock will have the power to defeat any attempt to acquire control of Hub Group 

 
  
  
  
  
  
 
 
 
 
even though such a change in control may be favored by stockholders holding substantially more than a majority of our 
outstanding shares of Class A Common Stock. This may have the effect of precluding holders of Class A Common Stock 
from  receiving  any  premium  above  market  price  for  their  shares  which  may  be  offered  in  connection  with  any  such 
attempt to acquire control. The holders of Class B Common Stock will also generally have the power to effect certain 
fundamental corporate changes, such as a sale of substantially all of our assets, a merger involving us, or an amendment 
to our certificate of incorporation that does not directly affect the rights of holders of Class A Common Stock, without 
the approval of holders of Class A Common Stock. The holders of the Class B Common Stock have agreed to vote their 
shares of Class B Common Stock in accordance with the vote of the holders of a majority of such shares.

• A provision that allows directors, in determining whether to take or refrain from taking corporate action on any matter, 
including  proposing  any  matter  to  the  stockholders  of  the  Corporation,  to  take  into  account  the  long-term  as  well  as 
short-term interests of the Company and its stockholders (including the possibility that these interests may be best served 
by  the  continued  independence  of  the  Company),  employees,  customers,  and  other  constituencies  of  the  Company, 
including the effect upon communities in which the Company does business; 

•

•

•

•

a provision that amendments to certain portions of Hub Group’s Certificate of Incorporation must be approved by a two-
thirds of the votes that could be cast by the holders of all shares of the Company’s capital stock entitled to vote; and

a provision that any special meeting of shareholders may be called only by the Hub Group’s chairman, chief executive 
officer, president, Board or the holders of a majority of the votes that could be cast by holders of all shares of capital 
stock of the Company.

Provisions  in  Hub  Group’s  Amended  Bylaws.    Hub  Group’s  Amended  Bylaws  contain  certain  provisions  that  could 
impede or delay a change in control of the Company, including:

a  provision  that  amendments  to  certain  portions  of  Hub  Group’s  Amended  Bylaws  must  be  approved  by  a  holders  of 
shares having 80% of the votes that could be cast by the holders of all shares of the Company’s capital stock entitled to 
vote; and

a  provision  establishing  certain  advance  notice  procedures  for  matters  (including  the  nomination  of  directors)  to  be 
considered at an annual meeting of Hub Group’s shareholders.

 
 
 
 
 
 
 
 
 
Subsidiaries of Hub Group, Inc.

SUBSIDIARIES

Hub City Terminals, Inc.
Hub Group Atlanta, LLC
Hub Group Associates, Inc.
Hub Chicago Holdings, Inc.
Hub Group Transport, LLC
Hub Freight Services, Inc.
Hub Group Trucking, Inc.
HGNA Group de Mexico, S. de RL de C.V.
Hub Group Canada Inc.
Hub Group Dedicated, LLC
CaseStack, LLC
Hub Group Global, LLC
Hub Group, LLC
NonstopDelivery, LLC
Quality Services, LLC
Hub Group Trucking California, LLC
Choptank Transport, LLC
Choptank Leasing, LLC
PJ Assurance, Inc.

EXHIBIT 21

JURISDICTION OF INCORPORATION/ORGANIZATION

Delaware
Delaware
Illinois
Delaware
Delaware
Delaware
Delaware
Mexico
Ontario
Delaware
Delaware
Illinois
Delaware
Delaware
Missouri
Delaware
Delaware
Maryland
Vermont

 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

EXHIBIT 23.1

We consent to the incorporation by reference in the Registration Statement Form S-8 No. 333-218509 pertaining to the Hub Group, Inc. 2017 Long-Term Incentive Plan and 
Form S-8 No. 333-107745 pertaining to the Hub Group Employee Profit Sharing Plan and Trust of our reports dated February 25, 2022, with respect to the consolidated 
financial statements and schedule of Hub Group, Inc., and the effectiveness of internal control over financial reporting of Hub Group, Inc., included in this Annual Report 
(Form 10-K) of Hub Group, Inc. for the year ended December 31, 2021.

/s/ Ernst & Young LLP 

Chicago, Illinois
February 25, 2022

 
 
 
 
 
 
 
 
 
CERTIFICATION

EXHIBIT 31.1

I, David P. Yeager, certify that:

1)

2)

3)

4)

I have reviewed this report on Form 10-K of Hub Group, Inc.;

Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in 
light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, 
results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 
13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a)

b)

c)

d)

designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that 
material  information  relating  to  the  registrant,  including  its  consolidated  subsidiaries,  is  made  known  to  us  by  others  within  those  entities,  particularly 
during the period in which this report is being prepared;

designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to 
provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance 
with generally accepted accounting principles;

evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the 
disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter 
that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting and;

5)

The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors 
and the audit committee of registrant's board of directors (or persons performing the equivalent function):

a)

b)

all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to 
adversely affect the registrant's ability to record, process, summarize and report financial information; and

any  fraud,  whether  or  not  material,  that  involves  management  or  other  employees  who  have  a  significant  role  in  the  registrant's  internal  control  over 
financial reporting.

Date: February 25, 2022

/s/ David P.Yeager
Name:
Title:

  David P. Yeager
  Chairman and Chief Executive Officer 

 
 
 
 
CERTIFICATION

EXHIBIT 31.2

I, Geoffrey F. DeMartino, certify that:

1)

2)

3)

4)

I have reviewed this report on Form 10-K of Hub Group, Inc.;

Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in 
light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, 
results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 
13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a)

b)

c)

d)

designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that 
material  information  relating  to  the  registrant,  including  its  consolidated  subsidiaries,  is  made  known  to  us  by  others  within  those  entities,  particularly 
during the period in which this report is being prepared;

designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to 
provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance 
with generally accepted accounting principles;

evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the 
disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter 
that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting and;

5)  The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors 

and the audit committee of registrant's board of directors (or persons performing the equivalent function):

a)

b)

all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to 
adversely affect the registrant's ability to record, process, summarize and report financial information; and

any  fraud,  whether  or  not  material,  that  involves  management  or  other  employees  who  have  a  significant  role  in  the  registrant's  internal  control  over 
financial reporting.

Date: February 25, 2022

/s/ Geoffrey F. DeMartino
Name:
Title:

  Geoffrey F. DeMartino
  Executive Vice President,
  Chief Financial Officer and Treasurer

 
 
 
 
 
Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

EXHIBIT 32.1

The following statement is provided by the undersigned to accompany the Annual Report on Form 10-K for the year ended December 31, 2021 of Hub Group, Inc. pursuant 
to Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. 1350) and shall not be deemed filed pursuant to any provision of the Exchange Act of 1934 or any other 
securities law.

Each of the undersigned certifies that the foregoing Report on Form 10-K fully complies with the requirements of Section 13(a) of the Securities Exchange Act of 1934 (15 
U.S.C. 78m) and that the information contained in the Form 10-K fairly presents, in all material respects, the financial condition and results of operations of Hub Group, Inc.

Date: February 25, 2022

/s/David P. Yeager
David P. Yeager
Chairman and Chief Executive Officer

/s/Geoffrey F. DeMartino

  Geffrey F. DeMartino
  Executive Vice President, Chief Financial Officer and Treasurer