What changed in this filing

/stocks — the workspaceLOADING

Item 8. Financial Statements and Supplementary Data

2024-02-27 compared with 2023-02-24 · 202 added, 297 removed, 525 unchanged (49% of the section changed)

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Consolidated Balance Sheets - December 31, 2023 and December 31, 2022

Consolidated Statements of Income and Comprehensive Income –

Years ended December 31, 2022, December 31, 2021 and December 31, 2020

Consolidated Statements of Stockholders’

Equity –

Years ended December 31, 2022, December 31, 2021 and December 31, 2020

Consolidated Statements of Cash Flows –

Years ended December 31, 2022, December 31, 2021 and December 31, 2020

Consolidated Statements of Income and Comprehensive Income – Years ended December 31, 2023, December 31, 2022 and December 31, 2021

Consolidated Statements of Stockholders’ Equity – Years ended December 31, 2023, December 31, 2022 and December 31, 2021

Consolidated Statements of Cash Flows – Years ended December 31, 2023, December 31, 2022 and December 31, 2021

Notes to Consolidated Financial Statements

Schedule II –

Valuation and Qualifying Accounts

REP ORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

Schedule II – Valuation and Qualifying Accounts

R EPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

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

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We have audited the accompanying consolidated balance sheets of Hub Group, Inc.

(the “Company”) as of December 31, 2022 and 2021, 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, 2022, and the related notes and financial statement schedule listed in the Index at Item 15(b) (collectively referred to as the “consolidated financial statements”).

(the Company) as of December 31, 2023 and 2022, 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, 2023, 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, 2023 and 2022, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2023, 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, 2022, 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 24, 2023 expressed an unqualified opinion thereon.

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, 2023, 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 27, 2024 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.

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Description of the Matter

At December 31, 2022, 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 $38.8 million.

At December 31, 2023, 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 $39.1 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.

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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

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Lease liability - operating leases

Lease liability - financing leases

Deferred taxes

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97,337,700 shares authorized;

41,312,185 shares issued in 2022 and 41,224,792 shares issued in 2021;

75,524,189 shares issued in both 2023 and 2022;

62,200,921 shares outstanding in 2023 and 65,868,145 shares outstanding in 2022.

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662,300 shares authorized;

574,903 shares issued and outstanding in 2022 and 662,296 shares issued and outstanding in 2021.

574,903 shares issued and outstanding in 2023 and 2022.

Additional paid-in capital

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(in thousands, except per share amounts)

Years Ended December 31,

Transportation costs

Costs and expenses:

Twelve Months Ended

Operating revenue

Operating expenses:

Purchased transportation and warehousing

Salaries and benefits

General and administrative

Depreciation and amortization

Total costs and expenses

Insurance and claims

General and administrative

Gain on sale of assets, net

Total operating expenses

Operating income

Other income (expense):

Interest expense, net

Interest expense

Interest income

Total other expense, net

Income from continuing operations before income taxes

Income tax expense

Other comprehensive income (loss):

Income before provision for income taxes

Provision for income taxes

Other comprehensive income:

Foreign currency translation adjustments

Total comprehensive income

Earnings per share net income

Basic earnings per common share

Diluted earnings per common share

Basic weighted average number of shares outstanding

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HUB GROUP, INC.

C ONSOLIDATED STATEMENTS OF STOCKHOLDERS’

C ONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(in thousands, except shares)

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Stock tendered for payments of withholding taxes

Purchase of treasury stock

Purchase of treasury stock from related party (Note 17)

Issuance of restricted stock awards, net of forfeitures

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Purchase of treasury stock

Purchase of treasury stock from related party (Note 17)

Issuance of restricted stock awards, net of forfeitures

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Adjustments to reconcile net income to net cash provided by operating activities:

Depreciation and amortization

Depreciation and amortization of intangibles and right-of-use assets

Impairment of right-of-use asset

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Compensation expense related to share-based compensation plans

(Gain) loss on sale of assets

Other operating activities

Gain on sale of assets

Changes in operating assets and liabilities, net of acquisitions:

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Cash flows from financing activities:

Proceeds from issuance of debt

Repayments of long-term debt

Purchase of treasury stock

Purchase of treasury stock from related party (Note 17)

Repayments of long-term debt

Stock tendered for payments of withholding taxes

Finance lease payments

Purchase of treasury stock from related party (Note 17)

Proceeds from issuance of debt

Net cash used in financing activities

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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.

(“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 using 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 August 22, 2022, we acquired TAGG Logistics, LLC (“TAGG”), o n 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.

On December 20, 2023, we acquired Forward Air Final Mile (“FAFM”).

On August 22, 2022, we acquired TAGG Logistics, LLC (“TAGG”).

On October 19, 2021, we acquired Choptank Transport, LLC (“Choptank”).

Refer to Note 4 “ Acquisitions ” for additional information.

Principles of Consolidation :

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We consider as cash equivalents all highly liquid instruments with an original maturity of three months or less.

As of December 31, 2022 and 2021 , our cash and temporary investments were with high quality financial institutions in demand deposit accounts (“DDAs”), savings accounts, checking accounts and money market accounts.

As of December 31, 2023 and 2022 , our cash and temporary investments were with high quality financial institutions in demand deposit accounts (“DDAs”), savings accounts, checking accounts and money market accounts.

Accounts Receivable and Allowance for Uncollectible Accounts:

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.

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.

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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 2022 and 2021 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.

Beginning with the first quarter of 2023, we concluded that we had two reportable segments and two reporting units:

Intermodal and Transportation Solutions (“ITS”) and Logistics which are based primarily on the services each segment provides.

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 units is less than their 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 its reporting units to their fair value.

If the fair value of a 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 2023 and 2022 as required and determined it was not more-likely-than-not that the fair value of our reporting units was less than its carrying value.

We evaluate the potential impairment of finite-lived acquired intangible assets when impairment indicators exist.

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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, 2022 and 2021, we had an accrual of approxima tely $ 38.8 million an d $ 30.8 mil lion, respectively for estimated claims.

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, 2023 and 2022, we had an accrual of approximately $ 39.1 million and $ 38.8 million, respectively for estimated claims.

We had no significant receivables recorded for payments in excess of our self-insu red levels.

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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, 2022, 2021 and 2020 , one customer accounted for more than 10 % of our annual revenue.

We revie w a customer’s credit history before extending credit.

In each of the years ended December 31, 2023, 2022 and 2021 , one customer accounted for more than 10 % of our annual revenue in both segments.

We review a custo mer’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.

The following table includes the one customer that represented 10% or more of our annual revenue by segment during the last three fiscal years:

Total operating revenue

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:

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.

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

New Pronouncements:

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740):

Improvements to Income Tax Disclosures ("ASU 2023-09").

ASU 2023-09 enhanced annual disclosures regarding the rate reconciliation and income taxes paid information.

For public business entities, ASU 2023-09 is effective for annual periods beginning after December 15, 2024.

We are assessing the impact of this guidance on our disclosures;

it will not have an impact on our results of operations, cash flows, or financial condition.

In November 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standard Update (“ASU”) No.

2023-07, Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures, which requires retrospective disclosure of significant segment expenses and other segment items on an annual and interim basis.

Additionally, it requires disclosure of the title and position of the Chief Operating Decision Maker (“CODM”).

This ASU will be effective for the Company’s fiscal December 31, 2024 year-end and interim periods beginning in fiscal 2025, with early adoption permitted.

We are assessing the impact of this guidance on our disclosures;

it will not have an impact on our results of operations, cash flows or financial condition.

Use of Estimates :

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Actual results could differ from these estimates.

Reclassifications:

Due to presentation changes made in our consolidated statements of income, certain prior year amounts have been reclassified to conform with the current year presentation.

On January 4, 2024, the Company announced a two-for-one stock split of the Company’s Class A and Class B common stock.

The stock split was implemented in the form of a distribution of one additional Class A share for each share outstanding.

The record date for the stock split was as of the close of business on January 16, 2024.

The Company distribution date of the additional shares was January 26, 2024.

As a result of the stock split, the number of authorized shares remained unchanged .

Additionally, the par value per share of the common stock remains unchanged.

All other sh are amounts in our consolidated balance sheets, consolidated statements of income and comprehensive income, consolidated statements of stockholders' equity and related footnote disclosures have been adjusted and presented as though the stock split had occurred on January 1, 2021.

Capital Structure

We have authorized common stock comprised of Class A Common Stock and Class B Common Stock.

We have authorized common stock comprised of Class A Common Stock and Cla ss 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.

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Earnings per share net income

TAGG Logistics, LLC Acquisition

On August 22, 2022 , we acquired 100 % of the equity interests of TAGG Logistics, LLC (“TAGG”), a provider of e-commerce, B2B and omnichannel fulfillment solutions, including warehousing and transportation services.

Total consideration for the transaction was $ 103.4 million.

$ 103.5 million was paid in cash during the third quarter of 2022 while $ 0.1 million is due back from the seller in the first quarter of 2023 as part of the post-closing true-up.

TAGG is a nationwide provider with over 4 million square feet of warehousing space throughout the United States allowing for responsive e-commerce and B2B fulfillment services.

The acquisition improved our presence in the consolidation and fulfillment space and added a complementary e-commerce offering to serve our customers' multimodal transportation and logistics needs.

The acquisition added scale to our logistics service line and has resulted in complementary cross-selling opportunities.

The initial accounting for the acquisition of TAGG 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 including the review of the applicable future cash flows used in determining the purchase accounting.

As a result, the amounts recorded in the consolidated financial statements related to the TAGG acquisition are preliminary and the measurement period remains open.

The following table summarizes the preliminary allocation of the total purchase consideration to the net assets acquired and liabilities assumed as of the date of the acquisition (in thousands):

August 22, 2022

Cash and cash equivalents

Accounts receivable trade

Prepaid expenses and other current assets

Property and equipment

Right of use assets - operating leases

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

The TAGG 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 August 22, 2022 with the remaining unallocated purchase price recorded as goodwill.

The goodwill recognized in the TAGG 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 $ 3.1 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, 2022.

The components of “Other intangibles”

listed in the above table as of the acquisition date are summarized as follows (in thousands):

Estimated Useful

Forward Air Final Mile Acquisition

On December 20, 2023 , we acquired 100 % of the equity interest of Forward Air Final Mile (“FAFM”).

FAFM provides residential last mile delivery services and installation of big and bulky goods, with a focus on appliances, throughout the United States.

Total consideration for the transaction was $ 261 million paid from cash on hand.

The financial results of FAFM, since the date of acquisition, are included in our Logistics segment.

The acquisition of FAFM expanded our final mile services to include the delivery and installation of appliances.

FAFM provides residential last mile delivery services through a non-asset business model, working with a network of over 350 carriers throughout the country.

The initial accounting for the acquisition of FAFM 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, the Company is in the preparation and final review process 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 FAFM acquisition are preliminary and the measurement period remains open.

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):

December 20, 2023

Customer relationships

Developed technology

The above intangible assets are amortized using the straight-line method.

Amortization expense related to this acquisition for the year ended December 31, 2022 was $ 1.3 million.

The intangible assets have a weighted average useful life of approximately 8.86 years.

Amortization expense related to TAGG for the next five years is as follows (in thousands):

From the date of the acquisition through December 31, 2022, TAGG's revenue was $ 64.0 million and operating income was $ 1.1 million.

Choptank Transport, LLC Acquisition

On October 19, 2021 , we acquired 100 % of the equity interests of Choptank Transport, LLC (“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 proprietary technology platform that we will leverage to enhance our truck brokerage service line.

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):

October 19, 2021

Cash and cash equivalents

Accounts receivable trade

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Accounts payable trade

Accounts payable other

Accrued payroll

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Lease liability - operating leases short-term

Other long term liabilities

Lease liability - operating leases long-term

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Cash paid, net

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.

The FAFM 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 20, 2023 with the remaining unallocated purchase price recorded as goodwill.

The goodwill recognized in the FAFM acquisition was primarily attributable to potential expansion and future development of the acquired business.

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):

We incurred approximately $ 5.1 million of transaction costs associated with this transaction prior to the closing date that are reflected in general and administrative expense and insurance and claims expense in the accompanying Consolidated Statements of Income for the year ended December 31, 2023.

The components of “Other intangibles” listed in the above table as of the acquisition date are preliminarily estimated based on prior final mile acquisitions as follows (in thousands):

Estimated Useful

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Customer relationships

Carrier network

Developed technology

The above intangible assets are amortized using the straight-line method.

Amortization expense related to this acquisition for the years ended December 31, 2022 and 2021 was $ 9.1 million and $ 2.3 million, respectively.

The intangible assets have a weighted average useful life of approximately 10.51 years.

Amortization expense related to Choptank for the next five years is as follows (in thousands):

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

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

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.

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):

Estimated Useful

December 31, 2022

Customer relationships

Agent relationships

The above intangible assets are amortized using the straight-line method.

Amortization expense related to this acquisition for the years ended December 31, 2022 and 2021 was $ 3.5 million and $ 3.7 million, respectively.

Amortization expense related to this acquisition for the year ended December 20, 2023 was $ 0.4 million.

The intangible assets have a weighted average useful life of approximately 14.37 years.

While TAGG's actual results are included since August 22, 2022, Choptank's actual results are included since October 19, 2021 and NSD's actual results are included since December 9, 2020, the following unaudited pro forma consolidated results of operations present the effects of TAGG as though it had been acquired as of January 1, 2021 and Choptank and NSD as though they had been acquired as of January 1, 2020 (in thousands, except for per share amounts):

December 31, 2022

Amortization expense related to FAFM for the next five years is as follows (in thousands):

From the date of the acquisition through December 31, 2023, FAFM’s revenue was $ 6.4 million and operating income was $ 0.2 million.

FAFM's actual results are included in our consolidated financial statements since the acquisition date of December 20, 2023.

The following unaudited pro forma consolidated results of operations present the effects of FAFM as though it had been acquired as of January 1, 2022 (in thousands, except for per share amounts):

Twelve Months Ended

December 31, 2023

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Earnings per share

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, TAGG, Choptank and NSD.

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 and FAFM.

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 TAGG acquisition as of January 1, 2021 and the Choptank and NSD acquisitions on January 1, 2020.

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 throughout the United States, Canada and Mexico.

As part of our profit improvement initiatives, we have focused on realizing efficiencies between our drayage trucking operation (which supports our intermodal service) and our dedicated trucking operation, including through the sharing of equipment and drivers, and by leveraging a combined set of driver support services including driver recruiting, asset management and safety functions.

As a result, in 2022, we report revenue for these operations under the “Intermodal and Transportation Solutions”

line of business.

We have recast the prior period information to conform with current year presentation.

We operate the following lines of business:

(i) directly attributable to the acquisition, (ii) factually supportable and (iii) expected to have a continuing impact on the com bined 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 FAFM acquisition as of January 1, 2022.

Segment Reporting

As we have continued to expand our service offerings and diversify our business, we have also made changes to the financial information that our CEO, who has been identified as our Chief Operating Decision Maker (CODM), uses to make operating and capital decisions.

Beginning in the first quarter of 2023, we concluded that we have two reportable segments:

Intermodal and Transportation Solutions (“ITS”) and Logistics which are based primarily on the services each segment provides.

We have recast the prior period information to conform with the current year presentation.

Our ITS segment includes our asset-light business lines:

intermodal and dedicated trucking.

Our Logistics segment includes our non-asset business lines:

managed transportation, truck brokerage, final mile, consolidation, warehousing and fulfillment.

We operate the following segments:

Intermodal and Transportation Solutions.

Our intermodal and transportation solutions 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.

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 one of our 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 (referred to as “drayage”) between origin or destination and rail terminals are provided by our own trucking operations and third parties with whom we contract.

Our predictive track and trace technology monitors the shipment to ensure that it arrives as scheduled and provides notification to our customer service personnel if there are service delays.

During 2022, approximately 55 % of Hub’s drayage needs were provided by our own drivers and tractors, or by owner operators with whom we contracted.

Our Intermodal and Transportation Solutions segment offers high service, nationwide door-to-door intermodal transportation, providing value, visibility and reliability in both transcontinental and local lanes by combining rail transportation with local trucking.

This segment includes our trucking operations which provides our customers with local pickup and delivery as well as high service local and regional trucking transportation using equipment dedicated to their needs.

In 2023 , approximately 78 % of our drayage services was provided by our own fleet.

We arrange for the movement of our customers’ freight in one of our approximately 50,000 containers.

As of December 31, 2023, we operated trucking terminals at 26 locations throughout the United States, with locations in many large metropolitan areas.

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These assets and contractual services are used to support drayage for our intermodal service offering and to serve our customers who require high service local and regional trucking transportation using equipment dedicated to their needs.

Our dedicated service operation offers fleets of equipment and drivers to each customer on a contract basis, as well as the management and infrastructure to operate according to the customer’s high service expectations.

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”

The remaining portion of our volume is generated based on shorter term transactional lane-based rates (referred to as “transactional”

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 in October 2021.

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 contract with railroads to provide transportation for the long-haul portion of the shipment between rail terminals.

Drayage between origin or destination and rail terminals are provided by our own trucking operations and third parties with whom we contract.

As of December 31, 2023, our trucking transportation operation consisted of approximately 2,300 tractors, 2,900 employee drivers and 4,300 trailers.

We also contract for services with approximately 460 independent owner-operators.

Our Logistics segment offers a wide range of services including transportation management, freight brokerage services, shipment optimization, load consolidation, mode selection, carrier management, load planning and execution, warehousing, fulfillment, cross-docking, consolidation services and final mile delivery.

Logistics includes our brokerage business which consists of a full range of trucking transportation services, including dry van, expedited, less-than-truckload (“LTL”), refrigerated and flatbed, all of which is provided by third-party carriers with whom we contract.

We leverage proprietary technology along with collaborative relationships with third-party service providers to deliver cost savings and performance-enhancing supply chain services to our clients.

Our transportation management offering also serves as a source of volume for our intermodal and truck brokerage service lines.

Our logistics offering also includes warehousing, fulfillment, cross-docking and consolidation services.

Our transportation management offering also serves as a source of volume for our ITS segment.

Many of the customers for these solutions are consumer goods companies who sell into the retail channel.

Our final mile delivery offering provides residential final mile delivery and installation of appliances and big and bulky goods.

Final mile operates through a network of independent service providers in company, customer and third-party facilities throughout the continental United States.

Our business operates or has access to approximately 11 million square feet of warehousing and cross-dock space across North America, to which our customers ship their goods to be stored and distributed to destinations including residences, retail stores and other commercial locations.

These services offer our customers shipment visibility, transportation cost savings, high service and compliance with retailers’

increasingly stringent supply chain requirements.

In August 2022, we acquired TAGG which enhanced our presence in the consolidation and fulfillment space and added a complementary e-commerce offering to serve our customers' multimodal transportation and logistics needs.

The acquisition added scale to our logistics service line and has resulted in cross-selling opportunities.

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 revers e logistics services.

Customers for our final mile services include retailers and consumer goods companies.

We contract with nearly 200 vendors ac ross the United States who provide warehousing and transportation to support our final mile offering.

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

These services offer our customers shipment visibility, transportation cost savings, high service and compliance with retailers’ increasingly stringent supply chain requirements.

Logistics also includes our brokerage business which provides third-party truckload, less-than-truckload (“LTL”), flatbed and temperature-controlled needs.

The following table summarizes our financial and operating data by segment (in thousands):

Operating Revenue

Intermodal and Transportation Solutions

Truck brokerage

Total revenue

Inter-segment eliminations

Total operating revenue

Operating Income

Intermodal and Transportation Solutions

Total operating income

Depreciation and Amortization

Intermodal and Transportation Solutions

Total depreciation and amortization

Separate balance sheets are not presented by segment to our CODM.

Our CEO uses consolidated asset information to make capital decisions.

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.

Due to the change in segments in the first quarter of 2023, consolidated goodwill was reallocated to the two new reporting units based on their relative fair values.

The Company performed an evaluation before and after the change and concluded it was not more-likely-than-not that the fair value of our reporting units 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):

The following table presents the carrying amount of Goodwill by segment (in thousands):

Balance at December 31, 2021

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Balance at December 31, 2023

The change noted as “other”

in the table above for 2021 refers 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):

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

As of December 31, 2023:

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Developed technology

Consolidated Total

As of December 31, 2022:

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Developed technology

Consolidated Total

The above intangible assets are amortized using the straight-line method.

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Total deferred taxes

We are subject to income taxation in the United States, numerous state jurisdictions, Mexico and Canada.

We are subject to income taxation in the United States, numerous state jurisdictions, Mexico, Canada, and India.

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 was fully utilized in 2022.

Our state tax net operating losses total $ 0.2 million.

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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 years ended December 31, 2022, December 31, 2021 or 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 years ended December 31, 2022, December 31, 2021 or 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, Though some provisions of the CARES Act and CAA do impact the Company, there was no material effect on the Company’s consolidated financial condition or results of operations for the years ended December 31, 2023, 2022 or 2021.

The Inflation Reduction Act of 2022 was signed into law on August 16, 2022, and the CHIPS and Science Act of 2022 was signed into law on August 9, 2022.

These laws implement new tax provisions, primarily a 15 % corporate alternative minimum tax and a nondeductible 1 % excise tax on the fair market value of stock repurchased by publicly traded corporations.

As of December 31, 2022, we do not anticipate any material impact of these provisions which are effective January 1, 2023.

We do not anticipate any other material impact of these provisions.

The two acts also provide various tax credits, several of which are transferable or refundable, for the investment in or production of clean-energy effective January 1, 2023.

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The carrying value of cash and cash equivalents, accounts receivable and accounts payable materially approximated fair value as of December 31, 2023 and 2022.

As of December 31, 2022, the fair value of the Company’s fixed-rate borrowings was $ 11.7 million less than the historical carrying value of $ 342.5 million.

As of December 31, 2023, the fair value of the Company’s fixed-rate borrowings was $ 1.4 million less than the historical carrying value of $ 350.7 million.

As of December 31, 2022, the $ 342.5 million carrying value of the Company's fixed-rate borrowings approximated the fair value.

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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.

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.

Property and Equipment

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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.

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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.

We have standby letters of credit that expire in 2023 .

As of December 31, 2022 and December 31, 2021, our letters of credit were $ 43.4 million and $ 41.3 million, respectively.

As of December 31, 2022 and December 31, 2021 , we had no borrowings under our respective credit agreements and our unused and available borrowings were $ 306.6 million and $ 308.7 million, respectively.

We have standby letters of credit that expir e in 2024 .

A s of December 31, 2023 and December 31, 2022, our letters of credit were $ 0.9 million and $ 43.4 million, respectively.

As of December 31, 2023 and December 31, 2022, we ha d no borrowings under our respective credit agreements and our unused and available borrowings were $ 349.1 million and $ 306.6 million, respectively.

We were in compliance with the financial covenants in our debt agreements as of December 31, 2023 and December 31, 2022.

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.

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interest is paid monthly at a fixed annual rate between 1.51 % and 1.80 %

Secured Equipment Notes due on various dates in 2023 commencing on various dates from 2015 to 2019 ;

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 of between 2.20 % and 2.96 %

interest is paid monthly at a fixed annual rate between 2.70 % and 4.10 %

Less current portion

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Aggregate principal payments, in thousands, due subsequent to December 31, 2023, are as follows:

In accordance with ASC 842, “Leases,”

(“ASC 842”) which requires lessees to recognize a right-of-use asset (“ROU”) and a lease obligation for all leases, we made an accounting policy election to not recognize an asset and liability for leases with a term of twelve months or less.

In accordance with ASC 842, “Leases,” (“ASC 842”) which requires lessees to recognize a right-of-use asset (“ROU”) and a lease obligation for all leases, we made an accounting policy election to not recognize an asset and liability for leases with a term of twelve months or less.

As of December 31, 2023, we recorded $ 213.3 million of ROU assets and $ 224.8 million of lease liabilities on our consolidated balance sheet.

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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 SOFR 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.

As of December 31, 2023, we are in the process of evaluating the leases for the FAFM acquisition.

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:

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December 31, 2022

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

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

Internal-Use Software

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Stock-Based Compensation Plans

The 2022 Long-Term Incentive Plan (the “2022 Incentive Plan”) was approved by the Board of Directors and subsequently approved by the Company’s stockholders at the 2022 annual meeting.

Upon stockholder approval of the 2022 Incentive Plan, no further grants were authorized under the Company’s 2017 Long-Term Incentive Plan (referred to herein as the “2017 Incentive Plan”).

The 2022 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 2022 Long-Term Incentive Plan (the “2022 Incentive Plan”) was approved by the Board of Directors and subsequently approved by the Company’s stockholders at the 2022 annual meeting.

Upon stockholder approval of the 2022 Incentive Plan, no further grants were authorized under the Company’s 2017 Long-Term Incentive Plan (referred to herein as the “2017 Incentive Plan”).

The 2022 Incentive Plan is effective as of May 24, 2022.

As of December 31, 2023 , 2,888,438 shares were available for future grant under the 2022 Incentive Plan.

We have awarded time-based restricted stock to our employees and the Company’s non-employee directors (“Outside Directors”).

This restricted stock 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.

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 2023, 2022 and 2021, we also granted performance-based restricted stock to our executive officers.

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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.

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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, 2023 and 2022.

Both realized and unrealized gains and losses are included in income and expense and offset the change in the deferred compensation liabilit y.

Both realized and unrealized gains and losses are included in inco me 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 this plan in 2023, 2022 and 2021.

The liabilities related to these plans as of December 31, 2022 and 2021 were $ 17.8 million and $ 24.1 million, respectively.

The liability related to the Plan as of December 31, 2023 and 2022 were $ 20.5 million and $ 17.8 million, respectively.

Legal Matters

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Stock Repurchase Plans

In October 2022, the Board authorized the purchase of up to $ 200 million of our Class A Common Stock pursuant to a share repurchase program (the “

2022 Program ”

In October 2022, the Board authorized the purchase of up to $ 200 million of our Class A Common Stock pursuant to a share repurchase program (the “ 2022 Program ” ).

Under the 2022 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.

The approved share repurchase program does not obligate us to repurchase any dollar amount or number of shares and the program may be modified, suspended or discontinued at any time.

The 2022 Program was terminated in October 2023 in conjunction with the authorization of the 2023 Program (as defined below) and as a result, no shares were purchased under the 2022 Program in the fourth quarter of 2023.

In October 2023, the Board authorized the purchase of up to $ 250 million of our Class A Common Stock pursuant to a share repurchase program (the “ 2023 Program ” ), which replaces the 2022 Program.

Under the 2023 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.

The approved share repurchase program does not obligate us to repurchase any dollar amount or number of shares and the program may be modified, suspended or discontinued at any time.

We purchased 4,020,598 shares for $ 153.9 million during 2023 , 2,957,330 shares for $ 118.1 million during 2022 and 268,658 shares for $ 9.1 million in 2021.

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 2022.

The shares repurchased to satisfy the mandatory tax withholding requirements do not reduce the repurchase authority under our share repurchase program.

Shares purchased in connection with the related party transactions are presented as part of publicly announced plan because the transaction was separately approved by our Board of Directors.

Refer to Note 17 “Related Party Transactions”

for additional information.

Maximum Value of

Total Number of

Shares that May Yet

Shares Purchased as

Be Purchased Under

Part of Publicly

Announced Plan

(in 000’s)

1/1/2022 - 1/31/2022

2/1/2022 - 2/28/2022

3/1/2022 - 3/31/2022

4/1/2022 - 4/30/2022

5/1/2022 - 5/31/2022

6/1/2022 - 6/30/2022

7/1/2022 - 7/31/2022

8/1/2022 - 8/31/2022

9/1/2022 - 9/30/2022

10/1/2022 - 10/31/2022

11/1/2022 - 11/30/2022

12/1/2022 - 12/31/2022

These amounts include the number of shares delivered to us by employees to satisfy the mandatory tax withholding requirement upon vesting of restricted stock, which do not reduce the repurchase authority under our share repurchase program.

Related Party Transactions

In August 2022, the Company entered into a Common Stock Exchange and Repurchase Agreement (the “Agreement”) with entities affiliated with David P.

Yeager, then the Company’s Chairman of the Board of Directors and Chief Executive Officer (collectively, the “DPY Entities”) and entities affiliated with Mark A.

In August 2022, the Company entered into a Common Stock Exchange and Repurchase Agreement (the “Agreement”) with entities affiliated with David P.

Yeager, then the Company’s Chairman of the Board of Directors and Chief Executive Officer (collectively, the “DPY Entities”) and entities affiliated with Mark A.

Yeager, the brother of David P.

Yeager (collectively, the “MAY Entities”).

Pursuant to the Agreement, the MAY Entities transferred 243,755 shares of Class B Common Stock, $ 0.01 par value per share, to the DPY Entities in exchange for 342,728 shares of Class A Common Stock, $ 0.01 par value per share (the “Class A Exchange Shares”;

such transfer in exchange for the Class A Exchange Shares is referred to herein as the “Exchange”) .

Immediately after the consummation of the Exchange, the MAY Entities sold to the Company (i) all of the Class A Exchange Shares and (ii) 87,393 shares of Class B Common Stock (the “Remaining Class B Shares”), representing all of the remaining shares of Class B Common Stock owned by the MAY Entities, for an aggregate purchase price of $ 34.8 million (the “Repurchase”

and, together with the “Exchange,”

the “Transaction”

Yeager (collectively, the “MAY Entities”).

Pursuant to the Agreement, the MAY Entities transferred 243,755 shares of Class B Common Stock, $ 0.01 par value per share, to the DPY Entities in exchange for 685,456 shares of Class A Common Stock, $ 0.01 par value per share (the “Class A Exchange Shares”;

such transfer in exchange for the Class A Exchange Shares is referred to herein as the “Exchange”).

Immediately after the consummation of the Exchange, the MAY Entities sold to the Company (i) all of the Class A Exchange Shares and (ii) 87,393 shares of Class B

Common Stock (the “Remaining Class B Shares”), representing all of the remaining shares of Class B Common Stock owned by the MAY Entities, for an aggregate purchase price of $ 34.8 million (the “Repurchase” and, together with the “Exchange,” the “Transaction”).

The purchase price for the Repurchase was based on a price per share equal to the closing price of Class A Common Stock on the Nasdaq Global Market on the date of the Agreement.

In accordance with the Company’s certificate of incorporation the Remaining Class B Shares acquired by the Company were cancelled and converted into Class A Common Stock upon acquisition and are not available for reissuance.

The Transaction was approved by the Company’s Audit Committee of the Board pursuant to the Company’s Related Person Transaction Policy approval procedures.

Subsequent Event

We continually monitor and review our segment reporting structure in accordance with authoritative guidance to determine whether any changes have occurred that would impact our reportable segments.

Because of the change in the Chief Operating Decision Maker (“CODM”) of the Company at the beginning of 2023, we are evaluating the potential realignment of the business and reportable segment information based on the information the CODM regularly reviews to evaluate performance for operating decision-making purposes, including evaluation and allocation of resources.

On February 22, 2024, the Board declared a quarterly cash dividend of $ 0.125 per share on the Company’s Class A and Class B common stock.

The dividend is scheduled to be paid on March 27, 2024 to stockholders of record as of March 8, 2024.

The declaration and payment of the quarterly cash dividend are subject to the approval of the Board at its sole discretion and compliance with applicable laws and regulations.

CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 8. Financial Statements and Supplementary Data