Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted ~~and posted~~ pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See definition of “large accelerated filer”, “accelerated filer”, “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

On ~~May 1,~~July 31, 2020, the registrant had ~~33,527,943~~33,516,316 outstanding shares of Class A common stock, par value $.01 per share, and 662,296 outstanding shares of Class B common stock, par value ~~$.01~~$0.1 per share.

	March 31,			December 31,			June 30,			December 31,
	2020			2019			2020			2019
ASSETS	(unaudited)						(unaudited)
CURRENT ASSETS:
Cash and cash equivalents	$	276,880		$	168,729		$	203,173		$	168,729
Accounts receivable trade		462,813			450,451			456,619			450,451
Allowance for credit losses		(7,795	)		(6,912	)
Allowance for uncollectible trade accounts								(8,500	)		(6,912	)
Other receivables		1,297			3,237			1,028			3,237
Prepaid taxes		673			630			708			630
Prepaid expenses and other current assets		14,993			24,086			13,682			24,086
TOTAL CURRENT ASSETS		748,861			640,221			666,710			640,221

Restricted investments		18,192			22,601			20,961			22,601
Property and equipment, net		668,398			663,165			650,990			663,165
Right-of-use assets - operating leases		33,332			35,548			35,889			35,548
Right-of-use assets - financing leases		5,298			5,865			4,704			5,865
Other intangibles, net		117,511			120,967			114,128			120,967
Goodwill, net		484,404			484,459			484,350			484,459
Other assets		18,611			18,748			21,445			18,748
TOTAL ASSETS	$	2,094,607		$	1,991,574		$	1,999,177		$	1,991,574

LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable trade	$	270,384		$	257,247		$	257,752		$	257,247
Accounts payable other		18,085			11,585			16,049			11,585
Accrued payroll		23,663			45,540			29,835			45,540
Accrued other		84,748			86,686			89,696			86,686
Lease liability - operating leases		8,244			8,567			8,760			8,567
Lease liability - financing leases		3,064			3,048			3,061			3,048
Current portion of long term debt		94,620			94,691			90,948			94,691
TOTAL CURRENT LIABILITIES		502,808			507,364			496,101			507,364

Long term debt		284,076			186,934			167,857			186,934
Non-current liabilities		35,577			36,355			41,424			36,355
Lease liability - operating leases		26,564			28,518			28,662			28,518
Lease liability - financing leases		1,051			1,820			278			1,820
Deferred taxes		155,822			155,304			159,018			155,304

STOCKHOLDERS' EQUITY:
Preferred stock: $.01 par value; 2,000,000 shares authorized; 0 shares issued or outstanding in 2020 and 2019	-			-			-			-
Common stock
Class A: $.01 par value; 97,337,700 shares authorized and 41,224,792 shares issued in 2020 and 2019; 33,544,287 shares outstanding in 2020 and 33,353,904 shares outstanding in 2019		412			412
Class A: $.01 par value; 97,337,700 shares authorized and 41,224,792 shares issued in 2020 and 2019; 33,518,154 shares outstanding in 2020 and 33,353,904 shares outstanding in 2019								412			412
Class B: $.01 par value; 662,300 shares authorized; 662,296 shares issued and outstanding in 2020 and 2019		7			7			7			7
Additional paid-in capital		175,370			179,637			178,914			179,637
Purchase price in excess of predecessor basis, net of tax benefit of $10,306		(15,458	)		(15,458	)		(15,458	)		(15,458	)
Retained earnings		1,192,837			1,179,601			1,205,991			1,179,601
Accumulated other comprehensive loss		(320	)		(186	)		(283	)		(186	)
Treasury stock; at cost, 7,680,505 shares in 2020 and 7,870,888 shares in 2019		(264,139	)		(268,734	)
Treasury stock; at cost, 7,706,638 shares in 2020 and 7,870,888 shares in 2019								(263,746	)		(268,734	)
TOTAL STOCKHOLDERS' EQUITY		1,088,709			1,075,279			1,105,837			1,075,279
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$	2,094,607		$	1,991,574		$	1,999,177		$	1,991,574

	Three Months						Three Months						Six Months
	Ended March 31,						Ended June 30,						Ended June 30,
	2020			2019			2020			2019			2020			2019

Revenue	$	838,859		$	932,998		$	779,243		$	921,163		$	1,618,102		$	1,854,161
Transportation costs		734,265			805,709			671,994			788,460			1,406,259			1,594,169
Gross margin		104,594			127,289			107,249			132,703			211,843			259,992

Costs and expenses:
Salaries and benefits		50,876			62,028			49,676			60,859			100,552			122,887
General and administrative		26,336			22,918			28,970			24,028			55,306			46,946
Depreciation and amortization		7,623			6,754			7,625			7,095			15,248			13,849
Total costs and expenses		84,835			91,700			86,271			91,982			171,106			183,682

Operating income		19,759			35,589			20,978			40,721			40,737			76,310

Other income (expense):
Interest expense		(2,455	)		(3,056	)		(3,006	)		(2,690	)		(5,461	)		(5,746	)
Interest and dividend income		403			373
Other expense, net		(222	)		(40	)
Other, net								47			565			228			898
Total other expense		(2,274	)		(2,723	)		(2,959	)		(2,125	)		(5,233	)		(4,848	)

Income before provision for income taxes		17,485			32,866			18,019			38,596			35,504			71,462

Provision for income taxes		4,249			8,972
Income tax expense								4,865			9,379			9,114			18,351

Net income		13,236			23,894			13,154			29,217			26,390			53,111

Other comprehensive income:
Foreign currency translation adjustments		(134	)		7			37			(3	)		(97	)		4

Total comprehensive income	$	13,102		$	23,901		$	13,191		$	29,214		$	26,293		$	53,115

Basic earnings per common share	$	0.40		$	0.71		$	0.40		$	0.87		$	0.80		$	1.58

Diluted earnings per common share	$	0.40		$	0.71		$	0.39		$	0.87		$	0.79		$	1.58

Basic weighted average number of shares outstanding		33,159			33,569			33,171			33,552			33,165			33,560
Diluted weighted average number of shares outstanding		33,488			33,585			33,455			33,715			33,472			33,650

								Purchase Price																									Purchase Price
	Class A & B							of Excess of						Accumulated												Class A & B							in Excess of						Accumulated
	Common Stock				Additional			Predecessor						Other			Treasury									Common Stock				Additional			Predecessor						Other			Treasury
	Shares				Paid-in			Basis, Net			Retained			Comprehensive			Stock									Shares				Paid-in			Basis, Net			Retained			Comprehensive			Stock
	Issued		Amount		Capital			of Tax			Earnings			Income			Shares			Amount			Total			Issued		Amount		Capital			of Tax			Earnings			Income			Shares			Amount			Total
Balance March 31, 2019																											41,887,088	$	419	$	163,340		$	(15,458	)	$	1,096,324		$	(175	)		(7,114,310	)	$	(237,386	)	$	1,007,064
Purchase of treasury stock																											-		-		-			-			-			-			(181,811	)		(7,282	)		(7,282	)
Stock withheld for payments of withholding taxes																											-		-		-			-			-			-			(3,805	)		(168	)		(168	)
Issuance of restricted stock awards, net of forfeitures																											-		-		3,525			-			-			-			(69,126	)		(3,525	)		-
Share-based compensation expense																											-		-		3,754			-			-			-			-			-			3,754
Net income																											-		-		-			-			29,217			-			-			-			29,217
Foreign currency translation adjustment																											-		-		-			-			-			(3	)		-			-			(3	)
Balance June 30, 2019																											41,887,088	$	419	$	170,619		$	(15,458	)	$	1,125,541		$	(178	)		(7,369,052	)	$	(248,361	)	$	1,032,582

Balance March 31, 2020																											41,887,088	$	419	$	175,370		$	(15,458	)	$	1,192,837		$	(320	)		(7,680,505	)	$	(264,139	)	$	1,088,709
Stock withheld for payments of withholding taxes																											-		-		-			-			-			-			(3,878	)		(175	)		(175	)
Issuance of restricted stock awards, net of forfeitures																											-		-		(568	)		-			-			-			(22,255	)		568			-
Share-based compensation expense																											-		-		4,112			-			-			-			-			-			4,112
Net income																											-		-		-			-			13,154			-			-			-			13,154
Foreign currency translation adjustment																											-		-		-			-			-			37			-			-			37
Balance June 30, 2020																											41,887,088	$	419	$	178,914		$	(15,458	)	$	1,205,991		$	(283	)		(7,706,638	)	$	(263,746	)	$	1,105,837

Balance December 31, 2018		41,887,088	$	419	$	172,220		$	(15,458	)	$	1,072,456		$	(182	)		(7,431,083	)	$	(248,621	)	$	980,834			41,887,088	$	419	$	172,220		$	(15,458	)	$	1,072,456		$	(182	)		(7,431,083	)	$	(248,621	)	$	980,834
Purchase of treasury stock																											-		-		-			-			-			-			(181,811	)		(7,282	)		(7,282	)
Stock withheld for payments of withholding taxes		-		-		-			-			-			-			(68,908	)		(2,578	)		(2,578	)		-		-		-			-			-			-			(72,713	)		(2,746	)		(2,746	)
Issuance of restricted stock awards, net of forfeitures		-		-		(13,813	)		-			-			-			385,681			13,813			-			-		-		(10,288	)		-			-			-			316,555			10,288			-
Share-based compensation expense		-		-		4,933			-			-			-			-			-			4,933			-		-		8,687			-			-			-			-			-			8,687
Net income		-		-		-			-			23,894			-			-			-			23,894			-		-		-			-			53,111			-			-			-			53,111
Adoption of ASU 2016-02		-		-		-			-			(26	)		-			-			-			(26	)		-		-		-			-			(26	)		-			-			-			(26	)
Foreign currency translation adjustment		-		-		-			-			-			7			-			-			7			-		-		-			-			-			4			-			-			4
Balance March 31, 2019		41,887,088	$	419	$	163,340		$	(15,458	)	$	1,096,324		$	(175	)		(7,114,310	)	$	(237,386	)	$	1,007,064

Balance June 30, 2019																											41,887,088	$	419	$	170,619		$	(15,458	)	$	1,125,541		$	(178	)		(7,369,052	)	$	(248,361	)	$	1,032,582

Balance December 31, 2019		41,887,088	$	419	$	179,637		$	(15,458	)	$	1,179,601		$	(186	)		(7,870,888	)	$	(268,734	)	$	1,075,279			41,887,088	$	419	$	179,637		$	(15,458	)	$	1,179,601		$	(186	)		(7,870,888	)	$	(268,734	)	$	1,075,279
Stock withheld for payments of withholding taxes		-		-		-			-			-			-			(71,717	)		(3,769	)		(3,769	)		-		-		-			-			-			-			(75,595	)		(3,944	)		(3,944	)
Issuance of restricted stock awards, net of forfeitures		-		-		(8,364	)		-			-			-			262,100			8,364			-			-		-		(8,932	)		-			-			-			239,845			8,932			-
Share-based compensation expense		-		-		4,097			-			-			-			-			-			4,097			-		-		8,209			-			-			-			-			-			8,209
Net income		-		-		-			-			13,236			-			-			-			13,236			-		-		-			-			26,390			-			-			-			26,390
Foreign currency translation adjustment		-		-		-			-			-			(134	)		-			-			(134	)		-		-		-			-			-			(97	)		-			-			(97	)
Balance March 31, 2020		41,887,088	$	419	$	175,370		$	(15,458	)	$	1,192,837		$	(320	)		(7,680,505	)	$	(264,139	)	$	1,088,709
Balance June 30, 2020																											41,887,088	$	419	$	178,914		$	(15,458	)	$	1,205,991		$	(283	)		(7,706,638	)	$	(263,746	)	$	1,105,837

	Three Months Ended March 31,						Six Months Ended June 30,
	2020			2019			2020			2019
Cash flows from operating activities:
Net Income	$	13,236		$	23,894		$	26,390		$	53,111
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		30,576			28,383			61,759			57,029
Deferred taxes		696			6,335			4,989			4,272
Compensation expense related to share-based compensation plans		4,097			4,933			8,209			8,687
Loss (gain) on sale of assets		121			(835	)		96			(1,526	)
Donated equipment		240			-			5,626			-
Changes in operating assets and liabilities:
Restricted investments		4,409			(1,841	)		1,640			(2,736	)
Accounts receivable, net		(9,480	)		32,906			(2,392	)		55,089
Prepaid taxes		(50	)		447			(83	)		(422	)
Prepaid expenses and other current assets		9,054			12,560			10,350			15,932
Other assets		(477	)		(819	)		(637	)		(2,349	)
Accounts payable		19,657			(14,389	)		4,989			(38,391	)
Accrued expenses		(28,551	)		(30,123	)		(9,440	)		(14,620	)
Non-current liabilities		(2,875	)		1,982			21			1,187
Net cash provided by operating activities		40,653			63,433			111,517			135,263

Cash flows from investing activities:
Proceeds from sale of equipment		497			3,799			521			7,664
Purchases of property and equipment		(25,467	)		(17,057	)		(49,271	)		(28,712	)
Proceeds from the disposition of discontinued operations		-			19,439			-			19,439
Net cash (used in) provided by investing activities		(24,970	)		6,181
Acquisition, net of cash acquired								-			(734	)
Net cash used in investing activities								(48,750	)		(2,343	)

Cash flows from financing activities:
Purchase of treasury stock								-			(7,282	)
Proceeds from issuance of debt		121,444			10,456			127,462			18,335
Repayments of long-term debt		(24,373	)		(25,780	)
Repayments of long term debt								(150,282	)		(51,324	)
Stock withheld for payments of withholding taxes		(3,769	)		(2,578	)		(3,944	)		(2,746	)
Finance lease payments		(747	)		(740	)		(1,493	)		(1,465	)
Net cash provided by (used in) financing activities		92,555			(18,642	)
Net cash used in financing activities								(28,257	)		(44,482	)


Effect of exchange rate changes on cash and cash equivalents		(87	)		(5	)		(66	)		(10	)

Net increase in cash and cash equivalents		108,151			50,967			34,444			88,428
Cash and cash equivalents beginning of the period		168,729			61,435			168,729			61,435
Cash and cash equivalents end of the period	$	276,880		$	112,402		$	203,173		$	149,863

Supplemental disclosures of cash paid for:
Interest	$	2,563		$	2,749		$	5,323		$	5,578
Income taxes	$	355		$	191		$	822		$	21,500

~~Our~~The accompanying unaudited 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 ~~March 31,~~June 30, 2020 and results of operations for the three and six months ended ~~March 31,~~June 30, 2020 and 2019.

These unaudited 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, 2019. Results of operations in interim periods are not necessarily indicative of results to be expected for a full year due partially to seasonality.

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

	Three Months Ended, March 31,				Three Months Ended June 30,				Six Months Ended June 30,
	2020		2019		2020		2019		2020		2019

Net income for basic and diluted earnings per share	$	13,236	$	23,894	$	13,154	$	29,217	$	26,390	$	53,111

Weighted average shares outstanding - basic		33,159		33,569		33,171		33,552		33,165		33,560

Dilutive effect of restricted stock		329		16		284		163		307		90

Weighted average shares outstanding - diluted		33,488		33,585		33,455		33,715		33,472		33,650

Earnings per share - basic	$	0.40	$	0.71	$	0.40	$	0.87	$	0.80	$	1.58

Earnings per share - diluted	$	0.40	$	0.71	$	0.39	$	0.87	$	0.79	$	1.58

The Company capitalizes commissions incurred in connection with obtaining a Dedicated contract. In 2020 and 2019, the amount of commissions that were capitalized and the amortization related to these commissions were both immaterial. Costs incurred to obtain an intermodal, truck brokerage or logistics contract are expensed as incurred according to the practical expedient that allows contract acquisition costs to be recognized immediately if the deferral period is one year or less.

Hub offers comprehensive multimodal solutions including intermodal, logistics, truck brokerage ~~logistics~~ and dedicated services. Hub has full time employees located throughout the United States, Canada and Mexico.

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

~~Truck Brokerage.~~ We operate one of the largest truck brokerage operations, providing customers with an over the road service option for their transportation needs. Our brokerage service does not operate any trucks; instead we match customers’ needs with carriers’ capacity to provide the most effective service and price combination. We have contracts with a substantial base of carriers allowing us to meet the varied needs of our customers. As part of our truck brokerage services, we negotiate rates, track shipments in transit and handle claims for freight loss or damage on behalf of our customers.

Logistics. Hub’s 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 web-based shipment visibility. Our multi-modal transportation capabilities include small parcel, heavyweight, expedited, less-than-truckload, truckload, intermodal, railcar and international shipping. In 2018, we acquired CaseStack, Inc. (“CaseStack”) which leverages proprietary technology along with collaborative partnerships with retailers and logistics providers to deliver cost savings and performance-enhancing supply chain services to consumer packaged goods clients. CaseStack contracts with third-party warehouse providers in seven markets across North America to which its customers ship their goods to be stored and eventually consolidated, along with goods from other CaseStack customers, into full truckload shipments destined to major North American retailers. CaseStack offers its

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

~~Dedicated Trucking.~~Truck Brokerage. Our truck brokerage operation provides customers with an over the road service option for their transportation needs. Our brokerage service does not operate any trucks; instead we match customers’ needs with carriers’ capacity to provide the most effective service and price combination. We have contracts with a substantial base of carriers allowing us to meet the varied needs of our customers. As part of our truck brokerage services, we negotiate rates, track shipments in transit and handle claims for freight loss or damage on behalf of our customers.

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

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

	Three Months Ended March 31,				Three Months Ended June 30,				Six Months Ended June 30,
	2020		2019		2020		2019		2020		2019
Intermodal	$	495,324	$	536,032	$	460,676	$	542,890	$	955,999	$	1,078,923
Logistics						163,743		193,463		346,999		396,725
Truck brokerage		98,017		117,587		86,675		107,081		184,692		224,669
Logistics		183,255		203,263
Dedicated		62,263		76,116		68,149		77,729		130,412		153,844
Total revenue	$	838,859	$	932,998	$	779,243	$	921,163	$	1,618,102	$	1,854,161

The carrying value of cash and cash equivalents, accounts receivable and accounts payable ~~and borrowings under our revolving line of credit~~ approximated fair value as of ~~March 31,~~June 30, 2020 and December 31, 2019. As of ~~March 31,~~June 30, 2020 and December 31, 2019, ~~respectively,~~ the fair value of the Company’s fixed-rate borrowings was ~~$5.6~~$8.5 million and $3.8 million more than the historical carrying value of ~~$278.7~~$258.8 million and $281.6 ~~million.~~million, respectively. The fair value of the fixed-rate borrowings was estimated using an income approach based on current interest rates available to the Company for borrowings on similar terms and maturities.

We consider as cash equivalents all highly liquid instruments with an original maturity of three months or less. As of ~~March 31,~~June 30, 2020 and December 31, 2019, our cash ~~and temporary investments were~~is with high quality financial institutions in demand deposit accounts, ~~(DDAs),~~ savings accounts and an interest bearing checking account.

Restricted investments included ~~$18.2~~$21.0 million and $22.6 million as of ~~March 31,~~June 30, 2020 and December 31, 2019, respectively, of mutual funds which are reported at fair value.

Our assets and liabilities measured at fair value are based on valuation techniques ~~which~~that 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, mutual funds, accounts receivable and accounts payable 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.

On January 1, 2020, we adopted ASU 2016-13 Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (ASC 326), which replaces the incurred loss methodology with an expected loss methodology that is referred to as the Current Expected Credit Loss (“CECL”). The measurement of expected credit losses under the CECL methodology is

applicable to financial assets measured at amortized cost, including trade receivables. Results for reporting periods beginning January 1, 2020 are presented under ASC 326 while prior period amounts continue to be reported in accordance with previously applicable generally accepted accounting principles. The impact of adopting the standard was immaterial. In accordance with the standard, trade receivables are reported at amortized cost net of the allowance for credit losses.

The allowance for credit losses is a valuation account that is deducted from the trade receivables’ amortized cost basis to present the net amount expected to be collected on the receivables. Trade receivables are charged off against the allowance when we believe the uncollectibility of a receivable balance is confirmed, and the expected recoveries do not exceed the aggregate of amounts previously charged-off and expected to be charged-off.

We pool into one category our trade receivables that we believe share similar risk characteristics and estimate the allowance balance using an aging schedule based on relevant available information, from internal and external sources, relating to past events, current conditions, and reasonable and supportable forecasts. Historical credit loss experience provides the basis for the estimation of expected credit losses. Annually, we review, in hindsight, the percentage of receivables that are collected that aged over one year, those that are less than one year old and the accounts that went into bankruptcy. We provide for credit allowances for accounts less than one year old based on specifically identified uncollectible balances and our historical collection percentages. In establishing an Our allowance for credit losses for certain account balances specifically identified as uncollectible, we consider the aging of the customer receivables, the specific details as to why the receivable has not yet been paid, the customer’s current and projected financial results, the customer’s ability to meet and sustain its financial commitments, the positive or negative effects of the current and projected industry outlook and general economic conditions. Adjustments to historical loss information are made for differences in current receivable-specific risk characteristics such as differences in delinquency levels or term as well as changes in environmental conditions or other relevant factors.

~~We believe that this historical loss information~~ is a reasonable basis on which to determine expected credit losses because the composition of the trade receivables at the reporting date is consistent with that used in developing the historical credit loss percentages. That is, the similar risk characteristics of our customers and our lending practices have not changed significantly over time. However, we have determined that current reasonable and supportable forecasted economic conditions, including the effects of the COVID-19 pandemic, have deteriorated as compared with the economic conditions includedpresented in the ~~historical information. As such, the Company adjusted the historical loss rates to reflect the differences in current conditions and forecasted changes for total estimated~~ allowance for ~~credit losses as of March 31, 2020. The allowance for credit losses was $7.8 million~~uncollectible trade accounts and ~~$6.9 million~~is immaterial at ~~March 31,~~June 30, 2020 and December 31, ~~2019, respectively. There were no material write offs charged or increases to the allowance for credit losses during the first quarter of 2020.~~ 2019.

On July 1, 2017, we entered into a $350 million unsecured credit agreement (the “Credit Agreement”) that matures on July 1, 2022. In March 2020, we elected to borrow $~~100.0~~100 million under the Credit Agreement as a precautionary measure in order to increase our cash position and preserve financial flexibility in light of ~~current~~ uncertainty in the global markets resulting from the COVID-19 pandemic. ~~The $100.0~~We repaid the $100 million ~~of proceeds from the borrowing may be used for general corporate purposes.~~in June 2020. At ~~March 31,~~June 30, 2020, we had standby letters of credit that expire at various dates in2020. As of ~~March 31,~~June 30, 2020, our letters of credit were ~~$30.8~~$32.6 million.

Our unused and available borrowings were ~~$219.2~~$317.4 million as of ~~March 31,~~June 30, 2020 and $318.5 million as of December 31, 2019. We were in compliance with our debt covenants as of ~~March 31,~~June 30, 2020 and December 31, 2019.

We have entered into various Equipment Notes (“Notes”) ~~for~~to fund the purchase of tractors, trailers, containers and ~~containers.~~other equipment. The Notes are secured by the underlying equipment financed inwith proceeds from the ~~agreements.~~

On January 25, 2013, a complaint was filed in the U.S. District Court for the Eastern District of California (Sacramento Division) by Salvador Robles against our subsidiary HGT. The action was brought on behalf of a class comprised of present and former California-based truck drivers for HGT who, from January 2009 to September 2014, were classified as independent contractors. It

alleged that HGT misclassified these drivers as independent contractors and that such drivers were employees. It asserted various violations of the California Labor Code and claimed that HGT engaged in unfair competition practices. The complaint sought, among other things, declaratory and injunctive relief, monetary damages and attorney’s fees. In May 2013, the complaint was amended to add similar claims based on Mr. Robles’ status as an employed company driver. These additional claims were only on behalf of Mr. Robles and not a putative class.

Although the Company believes that the California drivers were properly classified as independent contractors at all times, because litigation is expensive, time-consuming and could interrupt our business operations, HGT decided to make settlement offers to individual drivers with respect to the claims alleged in this lawsuit, without admitting liability. In late 2014, HGT converted its model from independent contractors to employee drivers in California. In early 2016, HGT closed its operations in Southern California.

On August 5, 2015, a suit was filed in state court in San Bernardino County, California on behalf of 63 named ~~plaintiffs~~Plaintiffs against ~~HGT~~Hub Group Trucking and 5 Company employees. The lawsuit alleges claims similar to those being made in the Robles case and seeks monetary penalties under the Private Attorneys General Act.

The plaintiffs’ counsel and Hub agreed in principle to settle all claims under both the Robles and Adame matters for $4.8 million, which was recorded in the third quarter of 2019 and is included in Accrued other on the accompanying Consolidated Balance Sheet. The settlements are subject to final court approval.

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

In January 2017, the FASB issued ASU No. 2017-04 Intangibles – Goodwill and other (Topic 350): simplifying the test for goodwill impairment. This ASU simplifies how all entities assess goodwill for impairment by eliminating step two from the goodwill impairment test. As amended, the goodwill impairment test will consist of one step comparing the fair value of a reporting unit with its carrying amount. An entity should recognize a goodwill impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value. The standard is effective for fiscal years beginning after December 15, ~~2019 and early adoption is permitted for interim or annual goodwill impairment tests performed on testing dates after January 1, 2017.~~2019. We adopted this standard on January 1, 2020, as required. The adoption of Topic 350 did not have a material effect on our financial statements.

In August 2018, the FASB issued ASU No. 2018-13, Fair Value Measurement. This standard is effective for public business entities in fiscal years beginning after December 15, 2019, and for interim periods within those fiscal years. This standard requires changes to the disclosure requirements for fair value measurements for certain Level 3 items and specifies that some of the changes must be applied prospectively, while others should be applied retrospectively. We adopted the standard as of January 1, 2020, but it did not have an impact on our financial statements.

In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes. This ASU clarifies and simplifies accounting for income taxes by eliminating certain exceptions for intraperiod tax allocation principles, the methodology for calculating income tax rates in an interim period, and recognition of deferred taxes for outside basis differences in an investment, among other updates. The effective date of this ASU is for fiscal years and interim periods beginning after December 15, 2020. The Company is evaluating the impact of this ASU.

We provided assistance and support to hospitals, food banks and other organizations across the United States by donating refrigerated trailers to be used by emergency responders in fighting the COVID-19 pandemic. In April 2020, we donated refrigerated trailers with a carrying value of approximately $5.2 million.

The information contained in this quarterly report contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Words such as “expects,” “hopes,” “believes,” “intends,” “estimates,” “anticipates,” “predicts,” “projects,” “potential,” “may,” “could,” “might,” “should,” and variations of these words and similar expressions are intended to identify these forward-looking statements. Forward-looking statements are neither historical facts nor assurance of future performance. Instead, they are based on our beliefs, expectations and assumptions regarding the future of our business, future plans and strategies, projections, anticipated events and trends, the economy and other future conditions. Because forward-looking statements relate to the future, they are subject to inherent uncertainties, risks and changes in circumstances that are difficult to predict and many of which are outside of our control. Such factors include, but are not limited to, uncertainties caused by adverse economic conditions, including, without limitation, as a result of extraordinary events or circumstances such as the coronavirus (COVID-19)

pandemic, and their impact on our customers’ businesses and workforce levels, disruptions of our business and operations, or the operations of our customers.

Our actual results and financial condition may differ materially from those indicated in the forward-looking statements. All forward-looking statements made by us in this report are based upon information available to us on the date of this report and speak only as of the date in which they are made. Except as required by law, we expressly disclaim any obligations to publicly update any forward-looking statements, whether written or oral, that may be made from time to time, whether as a result of new information, future developments or otherwise. Important factors that could cause our actual results and financial condition to differ materially from those indicated in the forward-looking statements, in addition to those identified in “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2019 (the “2019 10-K”) as well as in Part II, Item 1A of this Quarterly Report on Form 10-Q, include the following as they may be affected, either individually, or in the aggregate, by the ongoing effects of the COVID-19 outbreak:

We are anticipating a mid- to high-teens percentage decline in our April 2020 revenue as compared to April of 2019. As a result, our revenue is expected to decline in the second quarter of 2020 as compared to 2019.

All business lines are experiencing soft demand from customers whose businesses are being impacted by the COVID-19 pandemic. ~~We estimate that approximately 20% of our revenue from our top 100 customers is from businesses that are currently closed.~~ Intermodal revenue is also being impacted by competitive conditions in the ~~loose~~ truckload ~~environment~~and intermodal markets as well as lower ~~import activity and lower~~ fuel prices. ~~Brokerage~~Intermodal gross margin is ~~being impacted by weakness in the spot truckload market~~expected to decline from second quarter levels due to ~~abundant capacity. Logistics~~lower pricing and increased rail costs. Revenue for logistics, brokerage and dedicated is ~~experiencing soft customer demand,~~expected to decline from second quarter levels due to the impact of lost customers and softness from existing customers, partially offset ~~in part~~ by ~~strong growth at CaseStack. Dedicated is seeing surges with our home improvement and general retail customers that is partially offsetting softer demand~~revenue from ~~other~~new customers.

We provided assistance and support to hospitals, food banks and other organizations across the United States by donating refrigerated trailers to be used by emergency responders in fighting the COVID-19 pandemic. ~~In April 2020, we~~We donated refrigerated trailers with a carrying value of approximately ~~$5.2 million.~~$5.4 million during the second quarter of 2020 and $5.6 million in total for the six months ended June 30, 2020.

Hub Group, Inc. (the “Company”, “Hub”, “we”, “us” or “our”) is a leading, world class supply chain management company that provides value-added multi-modal transportation and logistics solutions by offering reliability, visibility and value to our customers. Our mission is to continuously elevate each customer’s business to drive long term success. Our vision is to build the industry’s premier customer-centric supply chain solutions. Our service offerings include comprehensive intermodal, truck brokerage, dedicated trucking, managed transportation, freight consolidation, warehousing, international transportation and other logistics services. The Company is a Delaware corporation that was incorporated on March 8, 1995 as successor to a business that was founded in 1971.

As an intermodal provider, we arrange for the movement of our customers’ freight in containers, typically over long distances of 750 miles or more. We contract with railroads to provide transportation for the long-haul portion of the shipment between rail terminals. Local pickup and delivery services between origin or destination and rail terminals (referred to as “drayage”) are provided by our HGT subsidiary and third-party local trucking companies.

For the ~~three~~six months ended ~~March 31,~~June 30, 2020, HGT accounted for approximately 60% of ~~Hub’s~~our drayage needs by assisting us in providing reliable, cost effective intermodal services to our customers. As of ~~March 31,~~June 30, 2020, HGT ~~leased or owned~~operated approximately ~~1,300~~1,450 tractors and ~~200~~250 trailers, employed approximately 1,500 drivers and contracted with approximately ~~1,000~~950 owner-operators.

Our dedicated ~~service line~~operation contracts with customers who seek to outsource a portion of their trucking transportation needs. We offer a dedicated fleet of equipment and drivers to each customer, as well as the management and infrastructure to operate according to the customer’s high service expectations. Contracts with customers generally include fixed and variable pricing arrangements and may include charges for early termination which serves to reduce the financial risk we bear with respect to the utilization of our equipment. Our dedicated operation currently operates a fleet of approximately 1,200 tractors and 5,400 trailers at 8684 locations throughout the U.S. As of ~~March 31,~~June 30, 2020, our dedicated operation employed approximately ~~1,400~~1,350 drivers.

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 web-based shipment visibility. Our multi-modal transportation capabilities include small parcel, heavyweight, expedited, less-than-truckload, truckload, intermodal, railcar and international shipping. In 2018, we acquired CaseStack, which leverages proprietary technology along with collaborative

partnerships with retailers and logistics providers to deliver cost savings and performance-enhancing supply chain services to consumer packaged goods clients. CaseStack contracts with third-party warehouse providers in seven markets across North America to which its customers ship their goods to be stored and eventually consolidated, along with goods from other CaseStack customers, into full truckload shipments destined to major North American retailers. CaseStack offers its customers shipment visibility, transportation cost savings, high service and compliance with retailers’ increasingly stringent supply chain requirements.

Our truck brokerage operation arranges for the transportation of freight by truck, providing customers with an over the road service option for their transportation needs. Our brokerage service does not operate any trucks; instead we match customers’ needs with carriers’ capacity to provide the most effective service and price combination. We have contracts with a substantial base of carriers allowing us to meet the varied needs of our customers. As part of our truck brokerage services, we negotiate rates, track shipments in transit and handle claims for freight loss or damage on behalf of our customers.

Hub’s 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 web-based shipment visibility. Our multi-modal transportation capabilities include small parcel, heavyweight, expedited, less-than-truckload, truckload, intermodal,

railcar and international shipping. In 2018, we acquired CaseStack, which leverages proprietary technology along with collaborative partnerships with retailers and logistics providers to deliver cost savings and performance-enhancing supply chain services to consumer packaged goods clients. CaseStack contracts with third-party warehouse providers in seven markets across North America to which its customers ship their goods to be stored and eventually consolidated, along with goods from other CaseStack customers, into full truckload shipments destined to major North American retailers. CaseStack offers its customers shipment visibility, transportation cost savings, high service and compliance with retailers’ increasingly stringent supply chain requirements.

~~Hub has~~We have full time marketing representatives throughout North America who service local, regional and national accounts. We believe that fostering long-term customer relationships is critical to our success and allows us to better understand our customers’ needs and specifically tailor our transportation and logistics services to them.

~~Hub’s~~Our multimodal solutions group works with our pricing, account management and operations teams to enhance ~~Hub’s~~our customer margins across all lines of business. We are working on margin enhancement ~~projects~~initiatives including pricing optimization, matching of inbound and outbound loads, reducing empty miles, improving the retention of our drivers, controlling our maintenance costs, improving tractor and driver utilization, enhancing our procurement strategy, improving our recovery of accessorial costs, ~~optimizing our drayage costs, enhancing our procurement strategy,~~ reducing repositioning costs, providing holistic solutions, and reviewing and improving low profit freight.

~~Hub’s~~Our top 50 customers represent approximately ~~68%~~67% of revenue for the ~~three~~six months ended ~~March 31,~~June 30, 2020. We use various performance indicators to manage our business. We closely monitor ~~margin and gains and losses for~~profitability of our top 50 customers. We also evaluate on-time performance, customer service, cost per load and ~~daily sales outstanding by~~trade receivables of these customer ~~account.~~accounts. Vendor cost changes and vendor service issues are also monitored closely. Management continuously reviews and assesses the environment, especially with the ~~current,~~ rapidly-changing COVID-19 pandemic and its potential ~~impacts~~impact on the credit worthiness and collectability of our accounts receivable with customers most affected by the COVID-19 pandemic.

Three Months Ended ~~March 31,~~June 30, 2020 Compared to the Three Months Ended ~~March 31,~~June 30, 2019

	Three Months Ended March 31,				Three Months Ended June 30,
	2020		2019		2020		2019
Intermodal	$	495,324	$	536,032	$	460,676	$	542,890
Logistics						163,743		193,463
Truck brokerage		98,017		117,587		86,675		107,081
Logistics		183,255		203,263
Dedicated		62,263		76,116		68,149		77,729
Total revenue	$	838,859	$	932,998	$	779,243	$	921,163

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

	Three Months Ended
	March 31,						Three Months Ended June 30,
	2020			2019			2020			2019
Revenue	$	838,859	100.0%	$	932,998	100.0%	$	779,243	100.0%	$	921,163	100.0%
Transportation costs		734,265	87.5%		805,709	86.4%		671,994	86.2%		788,460	85.6%
Gross margin		104,594	12.5%		127,289	13.6%		107,249	13.8%		132,703	14.4%

Costs and expenses:
Salaries and benefits		50,876	6.1%		62,028	6.6%		49,676	6.4%		60,859	6.6%
General and administrative		26,336	3.1%		22,918	2.5%		28,970	3.7%		24,028	2.6%
Depreciation and amortization		7,623	0.9%		6,754	0.7%		7,625	1.0%		7,095	0.8%
Total costs and expenses		84,835	10.1%		91,700	9.8%		86,271	11.1%		91,982	10.0%

Operating income	$	19,759	2.4%	$	35,589	3.8%	$	20,978	2.7%	$	40,721	4.4%

Total revenue decreased ~~10.1%~~15.4% to ~~$838.9~~$779.2 million in 2020 from ~~$933.0~~$921.2 million in 2019. Intermodal revenue decreased ~~7.6%~~15.1% to ~~$495.3 million primarily due to a 6.8% decrease in volume as well as lower pricing. Truck brokerage revenue decreased 16.6%to $98.0~~$460.7 million due to ~~a 9.6% decrease~~an 8.1% decline in volume, ~~while~~lower pricing, and lower fuel ~~price and mix combined were down 7.0% due primarily to the soft demand environment.~~revenue. Logistics revenue ~~decreased 9.8%~~declined 15.4% to ~~$183.3~~$163.7 million ~~primarily due to~~as a result of the soft demand environment, partially offset by ~~strong~~ growth at CaseStack. ~~Dedicated’s~~Truck brokerage revenue decreased ~~18.2%~~19.1% to ~~$62.3~~$86.7 million due in part to a 12.1% decline in loads resulting from the soft demand environment and lower fuel revenue. Dedicated revenue decreased 12.3% to $68.1 million primarily due to the impact of business we exited, partially offset by growth with new accounts.

~~Hub’s transportation~~ costs decreased ~~8.9%~~14.8% to ~~$734.3~~$672.0 million in 2020 from ~~$805.7~~$788.5 million in 2019. Transportation costs in 2020 consisted of purchased transportation costs of ~~$568.7~~$513.4 million and equipment and driver related costs of ~~$165.6~~$158.6 million. InTransportation costs in 2019 consisted of purchased transportation costs ~~were $652.7~~of $631.7 million and equipment and driver related costs ~~were $153.0~~of $156.8 million. The ~~12.9%~~18.7% decrease in purchased transportation costs was primarily due to ~~decreases~~lower volumes in intermodal and truck brokerage, ~~volumes and~~ improved purchasing, and lower fuel costs, partially offset by rail cost increases. Equipment and driver related costs increased ~~8.2%~~1.1% in 2020 ~~primarily~~ due to an increased usage of our internal drayage resources from ~~53%~~54% of total drayage in ~~the first quarter of~~ 2019 to ~~60%~~61% in ~~the first quarter of~~ 2020 and an increase in equipment depreciation ~~expense.~~expense, partially offset by the benefits from operational improvements in our trucking operation and declines in fuel cost.

~~Hub’s gross~~Gross margin decreased ~~17.8%~~19.2% to ~~$104.6~~$107.2 million in 2020 from ~~$127.3~~$132.7 million in 2019. ~~The $22.7 million gross~~Gross margin ~~decrease was the result of decreases~~decreased in all lines of business. Intermodal gross margin decreased compared to the prior year primarily due to ~~a 6.8% decrease~~an 8.1% decline in volume, lower prices, ~~higher insuranceand claims costs,~~unfavorable mix and rail cost increases, partially offset by the benefits from operational improvements ~~and better purchasing.~~in our trucking operation. Logistics gross margin decreased primarily due to soft demand. Truck brokerage gross margin decreased primarily due to a ~~9.6% decrease~~12.1% decline in volume. ~~Logistics gross margin decreased primarily due to soft customer demand, partially offset by strong growth at CaseStack.~~ Dedicated gross margin ~~decreased~~declined primarily due to business we ~~exited, repairs expense, start up costs and idle equipment cost, partially offset by revenue management initiatives.~~

As a percentage of revenue, gross margin ~~decreased~~declined to ~~12.5%~~13.8% in 2020 from ~~13.6%~~14.4% in 2019. Intermodal gross margin as a percentage of revenue ~~decreased 210~~declined 220 basis points due to lower prices and rail cost increases, ~~and~~ ~~higher insurance and claims costs,~~partially offset by the benefits from operational ~~improvements~~improvements. Logistics gross margin as a percentage of revenue expanded by 190 basis points due to our continuous improvement initiatives, higher margin new business and ~~better purchasing~~.growth at CaseStack. Truck brokerage gross margin as a percentage of revenue ~~increased 150~~was up 100 basis points as a result of the benefits from the transformation of our operating model, an enhanced technology platform and a deeper engagement with our carrier network. ~~Logistics gross margin as a percentage of revenue increased 70 basis points due to our continuous improvement initiatives, revenue management, and strong growth at CaseStack.~~ Dedicated gross margin as a ~~percentage~~percent of revenue ~~decreased 160~~increased by 200 basis points compared to the prior year due ~~primarily~~ to ~~increased idle equipment costs, start up costs and repairs and maintenance expense.~~our profit improvement initiatives.

Salaries and benefits decreased to ~~$50.9~~$49.7 million in 2020 from ~~$62.0~~$60.9 million in 2019. As a percentage of revenue, ~~Hub’s~~ salaries and benefits decreased to ~~6.1%~~6.4% in 2020 from 6.6% in 2019.

~~Hub’s salaries and benefits~~ The decrease of $11.2 million iswas primarily due to lower variable compensation and lower ~~headcount. Variable compensation had decreases~~headcount, including reductions in bonus expense of ~~$7.0~~$5.0 million, salaries expense of ~~$3.5~~$4.9 million ~~commissions expense of $0.7 million, payroll tax and restricted stock expenses of $0.5 million each,~~ and employee benefits expense of ~~$0.3~~$0.7 million. ~~These decreases were partially offset by an increase in severance expense of $1.3 million. Salary and benefit expenses included $2.1 million of severance expense in 2020.~~

~~Hub’s headcount~~Headcount as of ~~March 31,~~June 30, 2020 and 2019 was ~~1,971~~1,891 and ~~2,247,~~2,205, respectively, which excludes drivers, as driver costs are included in transportation costs. The decrease in ~~Hub’s~~ headcount is primarily due to technology driven efficiencies and improved processes.

~~Hub’s general~~General and administrative expenses increased to ~~$26.3~~$29.0 million in 2020 from ~~$22.9~~$24.0 million in 2019. These expenses, as a percentage of revenue, increased to ~~3.1%~~3.7% in 2020 from ~~2.5%~~2.6% in 2019. The increase of ~~$3.4~~$5.0 million in general and administrative expense was primarily due to $5.7 million of expense related to donations of refrigerated trailers in support of COVID-19 relief efforts, a ~~$3.1~~$2.6 million increase in professional services ~~primarily~~ related ~~to IT development and implementation costs, legal expenses, and costs related~~primarily to a consulting project, ~~less gains on the sale of equipment of $1.0 million and trailer donations of $0.2 million,~~ partially offset by ~~a $0.5 million decrease~~decreases in travel and meals and entertainment expenses of $1.9 million and ~~decreases in voice data services and temporary labor expenses of $0.2 million each.~~other cost reduction measures.

~~Hub’s depreciation~~Depreciation and amortization increased to $7.6 million in 2020 from ~~$6.8~~$7.1 million in 2019. This expense as a percentage of revenue increased to ~~0.9%~~1.0% in 2020 from 0.8% in 2019. This increase was related primarily to the deployment of IT initiatives.

Other expense increased to $3.0 million in 2020 from $2.1 million in 2019 due to higher interest expense related to higher borrowings and lower interest income on cash balances due to the decrease in interest rates.

Provision for income taxes decreased to $4.9 million in 2020 from $9.4 million in 2019. We provided for income taxes using an effective rate of 27.0% in 2020 and an effective rate of 24.3% in 2019. The 2020 effective tax rate was higher due to a combination of lower book income in 2020 and the establishment of a new tax reserve related to state taxes. We expect our effective tax rate for the full year of 2020 will range from 24.5% to 25.5%.

Net income decreased to $13.2 million in 2020 from $29.2 million in 2019 due primarily to decreases in gross margin, partially offset by lower costs and expenses, and income tax expenses.

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

Total revenue decreased to $1.6 billion in 2020 from $1.9 billion in 2019. Intermodal revenue decreased 11.4% to $956.0 million due to an 7.5% decline in volume, lower pricing, and lower fuel revenue. Logistics revenue decreased 12.5% to $347.0 million due to soft demand, partially offset by strong growth at CaseStack. Truck brokerage revenue decreased 17.8% to $184.7 million due to a 10.9% decline in volume, while fuel, price and mix combined were down 6.9% due to soft demand. Dedicated revenue decreased 15.2% to $130.4 million primarily due to the impact of business we exited, partially offset by growth with new accounts.

Transportation costs decreased 11.8% to $1.4 billion in 2020 from $1.6 billion in 2019. Transportation costs in 2020 consisted of purchased transportation costs of $1.1 billion and equipment and driver related costs of $324.1 million compared to 2019, which consisted of purchased transportation costs of $1.3 billion and equipment and driver related costs of $309.8 million. The 15.7% decline in purchased transportation costs was primarily due to lower volumes in intermodal and truck brokerage, improved purchasing, and lower fuel costs, partially offset by rail cost increases. Equipment and driver related costs increased 4.6% in 2020 primarily due to an increased usage of our internal drayage resources from 54% in 2019 to 60% in 2020 and an increase in equipment depreciation expense, partially offset by the benefits from operational improvements in our trucking operation and declines in fuel cost.

Gross margin decreased to $211.8 million in 2020 from $260.0 million in 2019. The $48.1 million gross margin decrease was the result of decreases in all lines of business. Intermodal gross margin decreased compared to the prior year primarily due to an 7.5% decline in volume, lower prices, unfavorable mix and rail cost increases, partially offset by the benefits from operational improvements in our trucking operation and better purchasing. Logistics gross margin decreased primarily due to soft demand, partially offset by growth at CaseStack. Truck brokerage gross margin decreased primarily due to a 10.9% decline in volume and lower pricing, fuel, and mix. Dedicated gross margin declined primarily due to business we exited.

As a percentage of revenue, gross margin declined to 13.1% in 2020 from 14.0% in 2019. Intermodal gross margin as a percentage of revenue declined 220 basis points because of lower prices and rail cost increases, partially offset by the benefits from operational improvements and better purchasing.Logistics gross margin as a percentage of revenue expanded by 130 basis points due to our continuous improvement initiatives, higher margin new business, procurement benefits and growth at CaseStack. Truck brokerage gross margin as a percentage of revenue was up 120 basis points as a result of the benefits from the transformation of our operating model, an enhanced technology platform and a deeper engagement with our carrier network. Dedicated gross margin as a percent of revenue increased by 30 basis points compared to the prior year due to our profit improvement initiatives.

Salaries and benefits decreased to $100.6 million in 2020 from $122.9 million in 2019. As a percentage of revenue, salaries and benefits decreased to 6.2% in 2020 from 6.7% in 2019. The decrease of $22.3 million was primarily due to lower variable compensation and lower headcount, including a decrease in bonus expense of $12.0 million, salaries expense of $7.1 million and commissions expense and payroll tax expense of $1.1 million each. Salary and benefit expenses included $3.3 million of severance expense in 2020 versus $1.9 million in 2019.

General and administrative expenses increased to $55.3 million in 2020 from $46.9 million in 2019. As a percentage of revenue, these expenses increased to 3.4% in 2020 from 2.5% in 2019. The increase of $8.4 million was primarily due to $5.9 million of expense related to donations of refrigerated trailers in support of COVID-19 efforts, a $3.6 million increase in professional services related primarily to a consulting project and lower gains on the sale of equipment of $1.6 million, partially offset by decreases of travel and entertainment expenses of $2.4 million, temporary labor expenses of $0.5 million and the impact of our cost reduction efforts.

Depreciation and amortization increased to $15.2 million in 2020 from $13.8 million in 2019. This expense as a percentage of revenue increased to 1.0% in 2020 from 0.7% in 2019. This increase was related primarily to the deployment of IT initiatives.

~~Hub’s other~~Other expense ~~decreased~~increased to ~~$2.3~~$5.2 million in 2020 from ~~$2.7~~$4.8 million in 2019 due to lower interest ~~expense~~income on ~~debt~~cash balances related to ~~equipment purchases.~~lower interest rates.

Provision for income taxes decreased to $9.1 million in 2020 from $18.4 million in 2019. The provision for income taxes decreased primarily due to ~~$4.2~~lower pre-tax income in 2020, while the effective tax rate stayed the same year over year.

Net income decreased to $26.4 million in 2020 from $9.0 million in 2019. We provided for income taxes using an effective rate of 24.3% in 2020 and an effective rate of 27.3% in 2019. The 2020 effective tax rate was lower primarily due to a tax benefit related to stock-based compensation realized in the first quarter of 2020, compared to a tax deficit realized in the first quarter of 2019.

~~Net income decreased to $13.2 million in 2020 from $23.9~~$53.1 million in 2019 due primarily to ~~decreased~~decreases in gross margin, partially offset by lower ~~costs~~operating and ~~expenses and a lower provision for~~ income ~~taxes.~~tax expenses.

During the first ~~three~~six months of 2020, we funded operations, capital expenditures, payments for finance leases, repayments of debt and the purchase of our stock related to employee withholding upon vesting of restricted stock through cash flows from operations, proceeds from the issuance of long-term debt including our revolver and cash on hand. In March 2020, we elected to borrow $~~100.0~~100 million under the Credit Agreement as a precautionary measure in order to increase our cash position and preserve financial flexibility in light of current uncertainty in the global markets resulting from the COVID-19 pandemic. ~~The $100.0~~We repaid the $100 million of ~~proceeds from the borrowing may be used for general corporate purposes.~~borrowings in June 2020. We believe that our cash, cash flows from operations and borrowings available under ~~our credit agreement~~the Credit Agreement will be sufficient to meet our cash needs for at least the next twelve months.

Cash provided by operating activities for the ~~three~~six months ended ~~March 31,~~June 30, 2020 was ~~$40.7~~approximately $111.5 million, which resulted primarily from income of $26.4 million adjusted for non-cash charges of ~~$35.8 million, net income of $13.2~~$80.7 million and a ~~negative~~positive change in operating assets and liabilities of ~~$8.3~~$4.4 million.

Cash provided by operating activities decreased ~~$22.8~~$23.7 million in 2020 versus 2019. The decrease was due to ~~a $10.7 million decrease~~decreases in net income ~~a $9.0~~of $26.7 million ~~decrease in the change of~~and operating assets and liabilities ~~and a $3.1~~of $9.2 million ~~decrease~~in 2020, partially offset by increases in non-cash ~~items in 2020 as compared to 2019.~~charges of $12.2 million.

The decrease in the change of operating assets and liabilities of ~~$9.0~~$9.2 million was caused by decreases in the change of accounts receivable of ~~$42.4 million, non-current liabilities of $4.8~~$57.5 million, prepaid expenses of ~~$3.5~~$5.6 million and ~~prepaid taxes~~non-current liabilities of ~~$0.5~~$1.2 million. These decreases were partially offset by increases in the changes in accounts payable of ~~$34.0~~$43.4 million, accrued expenses of $5.2 million, restricted investments of ~~$6.3~~$4.4 million, ~~accrued expenses of $1.6 million and~~ other assets of ~~$0.3~~$1.7 million and prepaid taxes of $0.4 million. The ~~negative~~ change in non-cash items was due to ~~decreases~~the increase in donated equipment of $5.6 million, an increase in depreciation and amortization of $4.7 million related to equipment purchases as well as lease amortization, lower gains on the sale of equipment of $1.6 million and an increase in deferred taxes of ~~$5.6~~$0.7 million, ~~and~~partially offset by a decrease in compensation expense related to stock-based compensation plans of $0.8 million, partially offset by increases in depreciation and amortization related to equipment purchases as well as additional amortization incurred for lease accounting of $2.2 million and a lower gain on the sale of equipment of $1.2$0.5 million.

Net cash used in investing activities for the ~~three~~six months ended ~~March 31,~~June 30, 2020 was ~~$25.0~~$48.8 million which included capital expenditures of $49.3 million, partially offset by proceeds from the sale of equipment of $0.5 million. Capital expenditures of ~~$25.5~~$49.3 million related primarily to ~~containers of $8.8 million, trailers of $7.8 million, technology investments of $4.8 million and~~ construction of a new building on our corporate headquarters campus of ~~$3.9 million. Proceeds from the sale of equipment was $0.5 million.~~

Net cash provided by investing activities for the quarter ended March 31, 2019 was $6.2 million. The decrease in net cash provided by investing activities of $31.2 million in 2020 versus 2019 was due primarily to lower proceeds related to the disposition of discontinued operations of $19.4 million, ~~an increase in capital expenditures~~containers of ~~$8.4~~$13.0 million, ~~related primarily to the purchase~~trailers of ~~containers and trailers, technology development and construction of a new building on our corporate headquarters campus~~$9.1 million and the ~~decrease in proceeds from the sale of equipment of $3.3 million.~~ remainder for technology investments.

We estimate capital expenditures for the remainder of 2020 will range from ~~$50~~$65 million to ~~$80~~$75 million and will primarily consist of purchases for tractors, trailers and containers to support growth in our ~~business, as well as technology investments.~~business. We plan to fund these expenditures with a combination of cash and debt.

Net cash used in investing activities for the six months ended June 30, 2019 was $2.3 million. The net cash used in investing activities increased $46.4 million in 2020 from 2019 due to an increase in capital expenditures related primarily to the construction of a new building on our corporate headquarters campus of $19.0 million, no proceeds from the disposition of discontinued operations which was $19.4 million in 2019, a decrease of $7.1 million of proceeds from the sale of equipment and $0.7 million less cash used in acquisitions.

The net cash ~~provided by~~used in financing activities for the ~~three~~six months ended ~~March 31,~~June 30, 2020 was ~~$92.6~~$28.3 million, which resulted from the ~~proceeds from the issuance of long-term debt of $121.4 million which included $100.0 million we borrowed on our revolver~~ ~~as noted above,~~ ~~partially offset by the~~ repayment of long-term debt and borrowings on our revolver of ~~$24.3~~$150.3 million, stock withheld for payments of withholding taxes of ~~$3.8~~$3.9 million and finance lease payments of ~~$0.7~~$1.5 million, partially offset by proceeds from the issuance of debt of $127.4 million.

The decrease in net cash used in financing activities of ~~$111.2~~$16.2 million infrom 2020 versus 2019 ~~was~~is primarily due to anthe increase ofin proceeds from the issuance of ~~long-term~~ debt of ~~$111.0~~$109.1 million ~~including the $100.0~~and $7.3 million ~~borrowing under our revolving line~~less purchases of ~~credit and less repayments of long-term debt of $1.4 million,~~treasury stock, partially offset by an increase in the repayments of long term debt and our revolver of $99.0 million and stock ~~withheld~~tendered for payments of withholding taxes of $1.2 million.

In 2020, we expect our cash paid for income taxes to be significantly less than in ~~2020~~2019 due to less book income and larger favorable timing differences related to depreciation in 2020. We expect our cash paid for taxes to be more than our income tax ~~expense.~~ expense in 2020 due to the payment of prior year tax extensions. The CARES Act, and similar state acts, allowed us to defer $11 million in federal and state income tax until July 2020. We have also deferred $1 million of payroll tax through the second quarter

2020 that will not be paid until years 2021 and 2022. This payroll tax deferral will continue through December 31, 2020 and total between $5 million and $8 million.

Our unused and available borrowings were ~~$219.2~~$317.4 million as of ~~March 31,~~June 30, 2020 and $318.5 million as of December 31, 2019. We had standby letters of credit that expire at various dates in 2020. As of ~~March 31,~~June 30, 2020, our letters of credit were ~~$30.8~~$32.6 million. We were in compliance with our debt covenants as of ~~March 31,~~June 30, 2020 and December 31, 2019.

We are continually evaluating the possible effects of current economic conditions and reasonable and supportable economic forecasts in operational cash flows, including the risks of declines in the overall freight market and our customers’ liquidity and ability to pay. We are monitoring working capital on a daily basis and are in frequent communications with our customers.

There have been no material changes in our market risk as of ~~March 31,~~June 30, 2020 from that presented in our 2019 10-K.

During the ~~three~~six months ended ~~March 31,~~June 30, 2020, there have been no material developments from the legal proceedings disclosed in our 2019 10-K, except those disclosed in Note 7 to the unaudited consolidated financial statements under “Legal Matters,” which is incorporated herein by reference.

Investing in shares of our stock involves certain risks, including those identified and described in Part I, Item 1A of our 2019 10-K, as well as cautionary statements contained in this Quarterly Report on Form 10-Q, including those under the caption “Forward-Looking Information” in Part I, Item 2 of this Quarterly Report on Form 10-Q and in our other filings with the SEC.

The Company is providing the following additional risk factor to supplement the risk factors contained in Part I, Item 1A of our 2019 10-K.

The COVID-19 pandemic has disrupted and has and could materially and adversely affect our business, financial condition and results of operations, and the ultimate impacts of the pandemic on our business, financial condition and results of operations will depend on future developments and other factors that are highly uncertain and will be affected by the scope and duration of the pandemic and actions taken by individuals and governmental authorities in response to the pandemic.

The ongoing COVID-19 pandemic has caused and will continue to cause significant disruption in the international and United States economies and financial markets and has had and may continue to have a significant and a material adverse effect on our business, financial condition and results of operations. The spread of COVID-19 has caused illness, quarantines, cancellation of events and travel, business and school shutdowns, reduction in business activity and financial transactions, supply chain interruptions and overall economic and financial market instability. In response to the COVID-19 pandemic, the governments of most ~~other~~ states have taken preventative or protective actions, such as imposing restrictions on travel and business operations, advising or requiring individuals to limit or forego their time outside of their homes, and ordering temporary closures of businesses that have been deemed to be non-essential.

The ultimate duration of the pandemic and of responsive governmental regulations, including shelter-in-place orders and mandated business closures, is uncertain. New and changing government and private actions to address the COVID-19 pandemic have been occurring ~~on a daily basis.~~daily. We have been closely monitoring the COVID-19 pandemic and its impacts and potential impacts on our business. However, because developments with respect to the spread of COVID-19 and its impacts have been occurring so rapidly, we are unable to predict the extent and duration of the impact of COVID-19 on our business, financial condition and results of operations. These restrictions and other consequences of the pandemic, however, have resulted in significant adverse effects for many different types of businesses, including, among others, those in the retail, travel, hospitality and food and beverage industries, and have resulted in a significant number of layoffs and furloughs of employees nationwide and in the regions in which we operate.

We have been deemed an essential business and have been permitted to continue to operate in all of the jurisdictions in which we operate, including jurisdictions that have mandated the closure of certain businesses, and we expect to be permitted to continue to operate in the future. Nevertheless, there is no assurance that we will continue to be permitted to operate under every future government order or other restriction and in every location.

In addition, the COVID-19 pandemic has caused, and may in the future continue to cause, disruptions, and in some cases severe disruptions, to the business and operations of our customers as a result of quarantines, worker absenteeism as a result of illness or other factors, social distancing measures, consumer concerns, and other travel, health-related, business or other restrictions. Certain of our customers have been, and may in the future be, required to close ~~down~~ or operate at a lower capacity, which as a result, has and will continue to affect our business, financial condition and results of operations. There can be no assurance that any decrease in revenues resulting from the COVID-19 pandemic will be offset by increased revenues in the future. The ultimate effects of the COVID-19 pandemic on the broader economy and the markets that we serve are not known nor is the ultimate length of the restrictions described above and any accompanying effects. Additional impacts of the COVID-19 pandemic on our business could be widespread and material, and may include, or exacerbate, among other consequences, any of the risk factors described in the 2019 10-K or in any of the following:

These factors, together or in combination with other events or occurrences that may not yet be known or anticipated, may materially and adversely affect our business, financial condition and results of operations.

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

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

On May 28, 2019 our Board of Directors authorized the purchase of up to $100 million of our Class A Common Stock. Under the program, the shares may be repurchased in the open market or in privately negotiated transactions, from time to time subject to market and other conditions. We made no purchases under this authorization during the first ~~quarter~~six months of 2020. The approved share repurchase program does not obligate us to repurchase any dollar amount or number of shares, and the program may be extended, modified, suspended, or discontinued at any time.

The exhibits included as part of the Form 10-Q are set forth in the Exhibit ~~Index immediately preceding such Exhibits.~~

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.


	Page
PART I. Financial Information: ~~Item1. Financial Statements~~
Item 1. Financial Statements Consolidated Balance Sheets – ~~March 31,~~June 30, 2020 (unaudited) and December 31, ~~201~~92019	3
Unaudited Consolidated Statements of Income and Comprehensive Income – Three Months and Six Months Ended ~~March 31, 202~~0June 30, 2020 and 2019	4
Unaudited Consolidated Statements of Stockholders’ ~~Equity – Three~~Equity-Three and Six Months Ended ~~March 31, 202~~0June 30, 2020 and 2019	5
Unaudited Consolidated Statements of Cash Flows – ~~Three~~Six Months Ended ~~March 31, 202~~0June 30, 2020 and 2019	6
Notes to Unaudited Consolidated Financial Statements	7
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	11
Item 3. Quantitative and Qualitative Disclosures about Market Risk	1718
Item 4. Controls and Procedures	1718
PART II. Other Information	1718
Item 1. Legal Proceedings	1718
Item 1A. Risk Factors	1718
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	1920
Item 6. Exhibits	1920

	June 30,			December 31,
	2020			2019
	(in thousands)

Interim funding for a deposit on equipment to be received in late 2020; interest paid monthly at a variable rate		3,820			-

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%		21,840			-

Secured Equipment Notes due on various dates in 2024 commencing on various dates in 2018, 2019 and 2020; interest is paid monthly at a fixed annual rate between 2.49% and 3.59%		56,734			62,690

Secured Equipment Notes due on various dates in 2023 commencing on various dates in 2018 and 2019; interest is paid monthly at a fixed annual rate between 2.23% and 4.16%		133,499			153,350

Secured Equipment Notes due on various dates in 2022 commencing on various dates in 2017; interest is paid monthly at a fixed annual rate of between 2.16% and 2.85%		12,201			16,892

Secured Equipment Notes due on various dates in 2021 commencing on various dates from 2016 to 2017; interest is paid monthly at a fixed annual rate between 2.04% and 2.96%		25,034			35,076

Secured Equipment Notes due on various dates in 2020 commencing on various dates from 2015 to 2016; interest is paid monthly at a fixed annual rate between 1.84% and 2.78%		5,677			13,617

		258,805			281,625

Less current portion		(90,948	)		(94,691	)
Total long-term debt	$	167,857		$	186,934

	March 31,			December 31,
	2020			2019
	(in thousands)

Borrowings on revolving line of credit	$	100,000		$	-

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 1.79%		21,444			-

Secured Equipment Notes due on various dates in 2024 commencing on various dates in 2018, 2019 and 2020; interest is paid monthly at a fixed annual rate between 2.50% and 3.59%		59,517			62,690

Secured Equipment Notes due on various dates in 2023 commencing on various dates in 2018 and 2019; interest is paid monthly at a fixed annual rate between 2.23% and 4.16%		143,445			153,350

Secured Equipment Notes due on various dates in 2022 commencing on various dates in 2017; interest is paid monthly at a fixed annual rate of between 2.20% and 2.80%		14,546			16,892

Secured Equipment Notes due on various dates in 2021 commencing on various dates in 2016 and 2017; interest is paid monthly at a fixed annual rate between 2.04% and 2.96%		30,142			35,076

Secured Equipment Notes due on various dates in 2020 commencing on various dates in 2015 and 2016; interest is paid monthly at a fixed annual rate between 1.84% and 2.78%		9,602			13,617

		378,696			281,625

Less current portion		(94,620	)		(94,691	)
Total long-term debt	$	284,076		$	186,934


Exhibit No.	Description
~~3.1~~	Amended and Restated Certificate of Incorporation of Hub Group, Inc. (incorporated by reference to Exhibit 3.1 to the Company’s Quarterly Report on Form 10-Q filed July 23, 2007 (File No. 000-27754)).
~~3.2~~	~~By-laws of Hub Group, Inc. (incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K dated February 18, 2016 and filed February 23, 2016 (File No. 000-27754)).~~

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

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

32.1	Certification of David P. Yeager and ~~Terri A. Pizzuto,~~Geoffrey F. DeMartino, Chief Executive Officer and Chief Financial Officer, respectively, Pursuant to 18 U.S.C. Section 1350.
~~101~~
101 104	Interactive data files for ~~the following financial statements and footnotes from the~~ Hub Group, Inc.’s Quarterly Report on Form 10-Q for the quarter ended ~~March 31,~~June 30, 2020, formatted in Inline XBRL: (i) the Consolidated Balance ~~Sheets;~~Sheets (unaudited); (ii) the Unaudited Consolidated Statements of Income and ~~Other~~ Comprehensive Income; (iii) the Unaudited Consolidated Statements of ~~Stockholders~~Stockholders’ Equity; (iv) ~~Cash Flows~~the Unaudited Consolidated Statements of Cash ~~Flows;~~Flows (unaudited); and (v) the Notes to Unaudited Consolidated Financial ~~Statements.~~Statements. XBRL Instance Document-the XBRL Instance Document does not appear in the Interactive Data file because its XBRL tags are embedded within the Inline XBRL document.
~~104~~	The cover page from Hub Group, Inc.’s Quarterly Report on Form 10-Q for the quarter ended ~~March 31,~~June 30, 2020 (formatted in Inline XBRL and included in Exhibit 101).


		HUB GROUP, INC.

DATE:	~~May 8,~~August 5, 2020	/s/ ~~Terri A. Pizzuto~~Geoffrey F. DeMartino
		~~Terri A. Pizzuto~~Geoffrey F. DeMartino
		Executive Vice President, Chief Financial
		Officer and Treasurer
		(Principal Financial Officer)


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


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