Item 1. Financial Statements
Item 1. Financial Statements
HUB GROUP, INC.
CONDENSED CONSOLIDATED BAL ANCE SHEETS
(in thousands, except share amounts)
June 30,
December 31,
2024
2023
ASSETS
(unaudited)
CURRENT ASSETS:
Cash and cash equivalents
$
220,247
$
187,270
Accounts receivable trade, net
583,759
600,197
Accounts receivable other
3,771
3,358
Prepaid taxes
12,791
17,331
Prepaid expenses and other current assets
16,139
41,089
TOTAL CURRENT ASSETS
836,707
849,245
Restricted investments
21,044
20,763
Property and equipment, net
759,779
791,692
Right-of-use assets - operating leases
196,465
210,742
Right-of-use assets - financing leases
1,538
2,522
Other intangibles, net
248,391
304,607
Goodwill
771,894
733,695
Other non-current assets
22,885
22,781
TOTAL ASSETS
$
2,858,703
$
2,936,047
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable trade
$
325,569
$
349,378
Accounts payable other
24,143
14,471
Accrued payroll
29,429
21,731
Accrued other
111,874
121,253
Lease liability - operating leases
40,142
44,690
Lease liability - financing leases
805
1,579
Current portion of long-term debt
103,192
105,108
TOTAL CURRENT LIABILITIES
635,154
658,210
Long-term debt
209,875
245,574
Other non-current liabilities
53,213
55,287
Lease liability - operating leases
163,669
177,699
Lease liability - financing leases
664
865
Deferred taxes
154,998
163,767
STOCKHOLDERS' EQUITY:
Preferred stock, $ .01 par value; 2,000,000 shares authorized; no shares issued or outstanding in 2024 and 2023.
-
-
Common stock
Class A: $ .01 par value; 97,337,700 shares authorized; 72,303,228 shares issued in 2024 and 75,524,189 shares issued in 2023; 61,653,003 shares outstanding in 2024 and 62,200,921 shares outstanding in 2023.
723
755
Class B: $ .01 par value; 662,300 shares authorized; 574,903 shares issued and outstanding in 2024 and 2023.
6
6
Additional paid-in capital
211,346
209,830
Retained earnings
1,989,600
1,949,110
Accumulated other comprehensive loss
( 200
)
( 129
)
Treasury stock; at cost, 10,650,225 shares in 2024 and 13,323,268 shares in 2023.
( 560,345
)
( 524,927
)
TOTAL STOCKHOLDERS' EQUITY
1,641,130
1,634,645
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY
$
2,858,703
$
2,936,047
See notes to unaudited condensed consolidated financial statements.
3
HUB GROUP, INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS
O F INCOME AND COMPREHENSIVE INCOME
(in thousands, except per share amounts)
Three Months Ended
Six Months Ended
June 30,
June 30,
2024
2023
2024
2023
Operating revenue
$
986,495
$
1,040,462
$
1,985,988
$
2,192,727
Operating expenses:
Purchased transportation and warehousing
727,236
763,609
1,467,408
1,630,540
Salaries and benefits
141,856
141,823
286,352
279,254
Depreciation and amortization
37,772
35,386
76,103
70,835
Insurance and claims
12,639
11,676
25,257
24,359
General and administrative
27,877
26,757
55,111
52,298
Gain on sale of assets, net
( 413
)
( 859
)
( 910
)
( 4,834
)
Total operating expenses
946,967
978,392
1,909,321
2,052,452
Operating income
39,528
62,070
76,667
140,275
Other income (expense):
Interest expense
( 3,689
)
( 3,116
)
( 7,588
)
( 6,086
)
Interest income
1,808
2,087
3,201
3,463
Other, net
( 66
)
69
( 236
)
108
Total other expense, net
( 1,947
)
( 960
)
( 4,623
)
( 2,515
)
Income before provision for income taxes
37,581
61,110
72,044
137,760
Provision for income taxes
8,566
14,605
15,976
29,475
Net income
29,015
46,505
56,068
108,285
Other comprehensive income:
Foreign currency translation adjustments
( 63
)
44
( 71
)
78
Total comprehensive income
$
28,952
$
46,549
$
55,998
$
108,363
Basic earnings per common share
$
0.48
$
0.73
$
0.92
$
1.68
Diluted earnings per common share
$
0.47
$
0.72
$
0.91
$
1.66
Basic weighted average number of shares outstanding
60,710
64,074
61,018
64,586
Diluted weighted average number of shares outstanding
61,108
64,586
61,387
65,132
See notes to unaudited condensed consolidated financial statements.
4
HUB GROUP, INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(in thousands, except per share amounts)
Class A & B
Accumulated
Common Stock
Additional
Other
Shares
Paid-in
Retained
Comprehensive
Treasury Stock
Issued
Amount
Capital
Earnings
Income
Shares
Amount
Total
Balance March 31, 2023
76,099,092
$
761
$
190,311
$
1,843,362
$
( 180
)
( 9,542,030
)
$
( 375,206
)
$
1,659,048
Stock tendered for payments of withholding taxes related to awards vested
-
-
-
-
-
( 2,695
)
( 212
)
( 212
)
Purchase of treasury stock
-
-
-
-
-
( 1,323,425
)
( 100,026
)
( 100,026
)
Issuance of restricted stock awards, net of forfeitures
-
-
2,868
-
-
( 32,507
)
( 2,868
)
-
Share-based compensation expense
-
-
5,377
-
-
-
-
5,377
Net income
-
-
-
46,505
-
-
-
46,505
Foreign currency translation adjustment
-
-
-
-
44
-
-
44
Balance June 30, 2023
76,099,092
$
761
$
198,556
$
1,889,867
$
( 136
)
( 10,900,657
)
$
( 478,312
)
$
1,610,736
Balance March 31, 2024
72,878,131
$
729
$
208,964
$
1,968,361
$
( 137
)
( 10,455,784
)
$
( 555,701
)
$
1,622,216
Stock tendered for payments of withholding taxes related to awards vested
-
-
-
-
-
( 4,237
)
( 178
)
( 178
)
Purchase of treasury stock
-
-
-
-
-
( 179,875
)
( 7,182
)
( 7,182
)
Federal excise tax on purchased treasury stock
-
-
-
-
-
-
( 295
)
( 295
)
Issuance of restricted stock awards, net of forfeitures
-
-
( 3,011
)
-
-
( 10,329
)
3,011
-
Share-based compensation expense
-
-
5,393
-
-
-
-
5,393
Dividends paid
-
-
-
( 7,604
)
-
-
-
( 7,604
)
Dividends accrued
-
-
-
( 172
)
-
-
-
( 172
)
Net income
-
-
-
29,015
-
-
-
29,015
Foreign currency translation adjustment
-
-
-
-
( 63
)
-
-
( 63
)
Balance June 30, 2024
72,878,131
$
729
$
211,346
$
1,989,600
$
( 200
)
( 10,650,225
)
$
( 560,345
)
$
1,641,130
Balance December 31, 2022
76,099,092
$
761
$
192,365
$
1,781,582
$
( 214
)
( 9,656,044
)
$
( 374,892
)
$
1,599,602
Stock tendered for payments of withholding taxes related to awards vested
-
-
-
-
-
( 98,209
)
( 7,818
)
( 7,818
)
Purchase of treasury stock
-
-
-
-
-
( 1,323,425
)
( 100,026
)
( 100,026
)
Issuance of restricted stock awards, net of forfeitures
-
-
( 4,424
)
-
-
177,021
4,424
-
Share-based compensation expense
-
-
10,615
-
-
-
-
10,615
Net income
-
-
-
108,285
-
-
-
108,285
Foreign currency translation adjustment
-
-
-
-
78
-
-
78
Balance June 30, 2023
76,099,092
$
761
$
198,556
$
1,889,867
$
( 136
)
( 10,900,657
)
$
( 478,312
)
$
1,610,736
Balance December 31, 2023
76,099,092
$
761
$
209,830
$
1,949,110
$
( 129
)
( 13,323,268
)
$
( 524,927
)
$
1,634,645
Adjustment related to stock split
( 3,220,961
)
( 32
)
32
-
-
3,220,961
-
-
Stock tendered for payments of withholding taxes related to awards vested
-
-
-
-
-
( 190,304
)
( 8,664
)
( 8,664
)
Purchase of treasury stock
-
-
-
-
-
( 767,803
)
( 32,938
)
( 32,938
)
Federal excise tax on purchased treasury stock
-
-
-
-
-
-
( 1,765
)
( 1,765
)
Issuance of restricted stock awards, net of forfeitures
-
-
( 7,949
)
-
-
410,189
7,949
-
Share-based compensation expense
-
-
9,433
-
-
-
-
9,433
Dividends paid
-
-
-
( 15,230
)
-
-
-
( 15,230
)
Dividends accrued
-
-
-
( 348
)
-
-
-
( 348
)
Net income
-
-
-
56,068
-
-
-
56,068
Foreign currency translation adjustment
-
-
-
-
( 71
)
-
-
( 71
)
Balance June 30, 2024
72,878,131
$
729
$
211,346
$
1,989,600
$
( 200
)
( 10,650,225
)
$
( 560,345
)
$
1,641,130
See notes to unaudited condensed consolidated financial statements.
5
HUB GROUP, INC.
U NAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
Six Months Ended June 30,
2024
2023
Cash flows from operating activities:
Net income
$
56,068
$
108,285
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization of intangibles and right-of-use assets
99,100
91,474
Impairment of right-of-use asset
-
2,012
Deferred taxes
( 9,249
)
10,837
Non-cash share-based compensation expense
9,433
10,615
Gain on sale of assets, net
( 910
)
( 4,834
)
Changes in operating assets and liabilities, net of acquisition:
Restricted investments
( 281
)
( 2,197
)
Accounts receivable, net
15,784
103,270
Prepaid taxes
4,537
1,729
Prepaid expenses and other current assets
19,697
17,469
Other non-current assets
( 1,503
)
( 1,899
)
Accounts payable
( 14,270
)
( 55,085
)
Accrued expenses
( 6,542
)
( 47,700
)
Non-current liabilities
( 21,399
)
( 12,595
)
Net cash provided by operating activities
150,465
221,381
Cash flows from investing activities:
Proceeds from sale of equipment
5,750
15,135
Purchases of property and equipment
( 31,255
)
( 65,635
)
Acquisitions, net of cash acquired
3,701
108
Net cash used in investing activities
( 21,804
)
( 50,392
)
Cash flows from financing activities:
Repayments of long-term debt
( 53,233
)
( 56,191
)
Purchase of treasury stock
( 32,938
)
( 100,026
)
Dividends paid
( 15,230
)
-
Stock withheld for payments of withholding taxes
( 8,664
)
( 7,818
)
Finance lease payments
( 1,217
)
( 1,501
)
Proceeds from issuance of debt
15,618
50,289
Net cash used in financing activities
( 95,664
)
( 115,247
)
Effect of exchange rate changes on cash and cash equivalents
( 20
)
45
Net increase in cash and cash equivalents
32,977
55,787
Cash and cash equivalents beginning of the period
187,270
286,642
Cash and cash equivalents end of the period
$
220,247
$
342,429
Supplemental disclosures of cash paid for:
Interest paid
$
7,413
$
6,688
Income taxes paid, net
$
20,684
$
14,410
See notes to unaudited condensed consolidated financial statements.
6
HUB GROUP, INC.
N OTES TO UNAUDITED CONDENSED
CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1. Interim Financial Statements
Our accompanying unaudited condensed consolidated financial statements of Hub Group, Inc. (the “Company,” “Hub,” “we,” “us” or “our”) have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in annual financial statements have been omitted pursuant to those rules and regulations. However, we believe that the disclosures contained herein are adequate to make the information presented not misleading.
The financial statements reflect, in our opinion, all material adjustments (which include only normal recurring adjustments) necessary to fairly present our financial position as of June 30, 2024 and results of operations for the three and six months ended June 30, 2024 and 2023.
These unaudited condensed consolidated financial statements and notes thereto should be read in conjunction with the consolidated financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2023 (the “2023 10-K”). Results of operations in interim periods are not necessarily indicative of results to be expected for a full year due partially to seasonality.
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 share amounts in our condensed consolidated balance sheets, condensed consolidated statements of income and comprehensive income, condensed consolidated statements of stockholders' equity and related footnote disclosures have been adjusted and presented as though the stock split had occurred as of the earliest period presented.
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 was paid on March 27, 2024 to stockholders of record as of March 8, 2024. On May 23, 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 was paid on June 26, 2024 to stockholders of record as of June 7, 2024. The declarations and payments of the quarterly cash dividends were subject to the approval of the Board at its sole discretion and in compliance with applicable laws and regulations.
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. During the quarter ended June 30, 2024 , we purchased 179,875 shares for approximately $ 7 million. During the six months ended June 30, 2024 , we purchased 767,803 shares for approximately $ 33 million.
Due to presentation changes made in our condensed consolidated balance sheets and condensed consolidated statement of shareholders' equity, certain prior year amounts have been reclassified to conform with the current year presentation.
NOTE 2. Earnings Per Share
The following is a reconciliation of our earnings per share (in thousands, except for per share data):
Three Months Ended June 30,
Six Months Ended June 30,
2024
2023
2024
2023
Net income for basic and diluted earnings per share
$
29,015
$
46,505
$
56,068
$
108,285
Weighted average shares outstanding - basic
60,710
64,074
61,018
64,586
Dilutive effect of restricted stock
398
512
369
546
Weighted average shares outstanding - diluted
61,108
64,586
61,387
65,132
Earnings per share - basic
$
0.48
$
0.73
$
0.92
$
1.68
Earnings per share - diluted
$
0.47
$
0.72
$
0.91
$
1.66
7
NOTE 3. Acquisitions
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 $ 257.2 million. $ 260.9 million was paid in cash in December 2023 while $ 3.7 million was received from the seller in the second quarter of 2024 as part of the post-closing true-up of net working capital. The financial results of FAFM, since the date of acquisition, are included in our Logistics segment.
The FAFM acquisition 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 ca rriers 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. Based on refined inputs incorporated into the fair market value calculations during the quarter ended June 30, 2024, we have estimated that the fair value of intangible assets totals $ 94.7 million as of December 20, 2023. This represents a $ 39.8 million decrease relative to the initial estimated fair value of the intangible assets and results in a corresponding increase to goodwill. The amounts recorded in the condensed consolidated financial statements related to the FAFM acquisition are preliminary pending finalization of the fair market value analyses, 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
Accounts receivable trade
$
28,355
Prepaid expenses and other current assets
2,305
Property and equipment
2,792
Right-of-use assets - operating leases
15,258
Other intangibles
94,700
Goodwill
142,122
Other assets
173
Total assets acquired
$
285,705
Accounts payable trade
$
155
Accounts payable other
2,298
Accrued payroll
1,271
Accrued other
9,488
Lease liability - operating leases short-term
5,697
Other long-term liabilities
19
Lease liability - operating leases long-term
9,560
Total liabilities assumed
$
28,488
Total consideration, net
$
257,217
Cash paid, net
$
257,217
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 condensed 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.
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 f ully tax deductible over a period of 15 years.
8
The components of “Other intangibles” listed in the table above as of the acquisition date are preliminary and are pending finalization of the fair market valuations of the acquired intangibles. Amounts for these components are as follows (in thousands):
Estimated
Accumulated
Balance at
Useful
Amount
Amortization
June 30, 2024
Life
Customer relationships
$
92,500
$
3,854
$
88,646
13 years
Developed technology
$
1,200
$
325
$
875
2 years
Independent service provider network
$
1,000
$
542
$
458
1 year
The above intangible assets are amortized using the straight-line method. Amortization expense related to this acquisition was $ 1.7 million and $ 4.3 million for the three months and six months ended June 30, 2024, respectively. T he intangible assets have a remaining weighted average useful life of approximately 12. 25 years.
Amortization expense related to FAFM for the next five years is expected to be as follows (in thousands):
Total
2024 (Remainder of year)
$
4,316
2025
7,690
2026
7,115
2027
7,115
2028
7,115
FAFM's actual results are included in our condensed consolidated financial statements since the acquisition date of December 20, 2023. The following unaudited pro forma condensed consolidated results of operations present the effects of FAFM as though it had been acquired as of January 1, 2023 (in thousands, except for per share amounts):
Three Months Ended
Six Months Ended
June 30, 2023
June 30, 2023
Revenue
$
1,109,022
$
2,330,644
Net income
$
46,953
$
108,767
Earnings per share
Basic
$
0.73
$
1.68
Diluted
$
0.73
$
1.67
The unaudited pro forma condensed consolidated results for the periods above 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 condensed consolidated results are not necessarily indicative of what our condensed consolidated results of operations actually would have been had we completed the FAFM acquisition as of January 1, 2023.
NOTE 4. Segment Reporting
We have two reportable segments: Intermodal and Transportation Solutions (“ITS”) and Logistics which are based primarily on the services each segment provides. 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.
9
Intermodal and Transportation Solutions. 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 (referred to as “drayage”) as well as high service local and regional trucking transportation using equipment dedicated to their needs. We arrange for the movement of our customers’ freight in one of our approximately 50,000 containers. We contract with railroads to provide transportation for the long-haul portion of the shipment between rail terminals. Drayage between origin or destination and rail terminals are provided by our own trucking operations and third parties with whom we contract. Our dedicated service operation offers fleets of equipment and drivers to each customer on a contract basis, as well as the management and infrastructure to operate according to the customer’s high service expectations. As of June 30, 2024, our trucking transportation operation consisted of approximately 2,200 tractors, 2,900 employee drivers and 4,300 trailers. We also contract for services with approximately 400 independent owner-operators.
Logistics . 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. These services include a full range of trucking transportation services, including dry van, expedited, less-than-truckload, refrigerated and flatbed, all of which is provided by third party carriers with whom we contract. We also leverage proprietary technology along with collaborative relationships with third party service providers to deliver cost savings and performance-enhancing supply chain services to our clients. Our transportation management offering also serves as a source of volume for our ITS segment.
The following tables summarize our financial and operating data by segment (in thousands):
Three Months Ended
Six Months Ended
Operating Revenue
June 30,
June 30,
2024
2023
2024
2023
Intermodal and Transportation Solutions
$
561,033
$
614,632
$
1,113,066
$
1,323,881
Logistics
459,088
453,549
939,312
922,690
Inter-segment eliminations
( 33,626
)
( 27,719
)
( 66,390
)
( 53,844
)
Total operating revenue
$
986,495
$
1,040,462
$
1,985,988
$
2,192,727
Three Months Ended
Six Months Ended
Operating Income
June 30,
June 30,
2024
2023
2024
2023
Intermodal and Transportation Solutions
$
13,639
$
31,777
$
26,670
$
80,981
Logistics
25,889
30,293
49,997
59,294
Total operating income
$
39,528
$
62,070
$
76,667
$
140,275
Three Months Ended
Six Months Ended
Depreciation and Amortization
June 30,
June 30,
2024
2023
2024
2023
Intermodal and Transportation Solutions
$
27,270
$
27,117
$
54,319
$
54,003
Logistics
10,502
8,269
21,784
16,832
Total depreciation and amortization
$
37,772
$
35,386
$
76,103
$
70,835
Separate balance sheets are not presented by segment to our Chief Operating Decision Maker (“CODM”). Our CODM uses consolidated asset information to make capital decisions.
NOTE 5. Fair Value Measurement
The carrying value of cash and cash equivalents, accounts receivable and accounts payable approximated fair value as of June 30, 2024 and December 31, 2023. As of June 30, 2024, the fair value of the Company’s fixed-rate borrowings was $ 2.1 million less than the historical carrying value of $ 313.1 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. 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.
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We consider as cash equivalents all highly liquid instruments with an original maturity of three months or less. As of June 30, 2024 and December 31, 2023, our cash and temporary investments were with high quality financial institutions in demand deposit accounts, savings accounts, checking accounts and money market accounts.
Restricted investments included $ 21.0 million and $ 20.8 million as of June 30, 2024 and December 31, 2023, respectively, of mutual funds and other security investments which are reported at fair value. These investments relate to our non-qualified deferred compensation plan 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 6. Long-Term Debt and Financing Arrangements
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.
We have standby letters of credit that expire in both 2024 and 2025 . As of June 30, 2024 and December 31, 2023, our letters of credit were $ 0.8 m illion and $ 0.9 million, respectively.
As of June 30, 2024 and December 31, 2023 , we had no borrowings under the Credit Agreement and our unused and available borrowings were $ 349.2 million and $ 349.1 million, respectively. We were in compliance with our debt covenants as of June 30, 2024 and December 31, 2023.
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We have entered into various Equipment Notes (“Notes”) for t he 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):
June 30,
December 31,
2024
2023
Interim funding for equipment received and expected to be converted to an equipment note in a subsequent period; interest paid at a variable rate
$
-
$
3,265
Secured Equipment Notes due on various dates in 2029 commencing on various dates in 2024 ; interest is paid monthly at a fixed annual rate between 5.73 % and 6.24 %
18,096
-
Secured Equipment Notes due on various dates in 2028 commencing on various dates in 2023 ; interest is paid monthly at a fixed annual rate between 5.21 % and 6.32 %
95,683
105,744
Secured Equipment Notes due on various dates in 2027 commencing on various dates in 2022 and 2023 ; interest is paid monthly at a fixed annual rate between 2.07 % and 6.45 %
128,222
147,192
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 %
47,617
55,797
Secured Equipment Notes due on various dates in 2025 commencing on various dates in 2020 ; interest is paid monthly at a fixed annual rate between 1.51 % and 1.80 %
21,585
30,930
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 3.40 %
1,864
7,754
Total debt
313,067
350,682
Less current portion of long-term debt
( 103,192
)
( 105,108
)
Total long-term debt
$
209,875
$
245,574
NOTE 7. Legal Matters
The Company is involved in certain claims and pending litigation arising from the normal conduct of business, including putative class-action lawsuits involving employment related claims. Based on management's present knowledge, management does not believe that any potential unrecorded 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 for settlements or losses determined to be probable and estimable. However, actual outcomes could be material to the Company's financial position, operating results, or cash flows for any particular period.
NOTE 8. Subs equent Event
In June 2024, we entered into a lease agreement for nearly one million square feet of additional warehouse space in Pennsylvania. The lease commenced on July 1, 2024 and includes a non-cancellable lease term of seven years . The total undiscounted non-cancellable lease payments over the lease term are estimated to be approximately $ 47 million.
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Text extracted from the filing as submitted to EDGAR. Formatting, tables and exhibits are simplified for reading; the original document is authoritative for anything you rely on.