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 and posted on its corporate Web site, if any, 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 and post 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. (Check one):

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 July ~~25, 2017,~~27, 2018, the registrant had ~~33,471,682~~33,719,269 outstanding shares of Class A common stock, par value $.01 per share, and 662,296 outstanding shares of Class B common stock, par value $.01 per share.

Hub Group, Inc. is filing this Amendment No. 1 to its Quarterly Report on Form 10-Q for the quarter ended June 30, 2017 (“Form 10-Q”) to add a date to the Section 906 certification in Exhibit 32.1.

	June 30,			December 31,			June 30,			December 31,
	2017			2016			2018			2017
ASSETS	(unaudited)						(unaudited)
CURRENT ASSETS:
Cash and cash equivalents	$	151,739		$	127,404		$	26,753		$	28,557
Accounts receivable trade, net		448,916			473,608			615,690			583,994
Accounts receivable other		2,786			4,331			3,851			5,722
Prepaid taxes		3,648			294			5,268			12,088
Prepaid expenses and other current assets		12,165			16,653			15,763			25,697
TOTAL CURRENT ASSETS		619,254			622,290			667,325			656,058

Restricted investments		23,285			20,877			24,107			24,181
Property and equipment, net		440,838			438,594			618,931			562,150
Other intangibles, net		11,196			11,844			71,501			74,348
Goodwill, net		262,266			262,376			348,106			348,661
Other assets		6,931			4,278			3,534			5,543
TOTAL ASSETS	$	1,363,770		$	1,360,259		$	1,733,504		$	1,670,941

LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable trade	$	262,529		$	266,555		$	348,222		$	338,933
Accounts payable other		25,404			21,070			12,418			12,268
Accrued payroll		20,913			36,223			36,487			28,994
Accrued other		43,277			46,013			78,598			59,305
Current portion of capital lease		2,733			2,697			2,794			2,777
Current portion of long term debt		47,582			45,163			86,740			77,266
TOTAL CURRENT LIABILITIES		402,438			417,721			565,259			519,543

Long term debt		106,141			115,529			179,444			214,808
Non-current liabilities		24,807			23,595			39,083			37,927
Long term portion of capital lease		9,141			10,576			6,196			7,696
Deferred taxes		171,417			164,659			132,463			121,095

STOCKHOLDERS' EQUITY:
Preferred stock, $.01 par value; 2,000,000 shares authorized; no shares issued or outstanding in 2017 and 2016	-			-
Preferred stock, $.01 par value; 2,000,000 shares authorized; no shares issued or outstanding in 2018 and 2017							-			-
Common stock
Class A: $.01 par value; 97,337,700 shares authorized and 41,224,792 shares issued in 2017 and 2016; 33,433,910 shares outstanding in 2017 and 33,192,982 shares outstanding in 2016		412			412
Class B: $.01 par value; 662,300 shares authorized; 662,296 shares issued and outstanding in 2017 and 2016		7			7
Class A: $.01 par value; 97,337,700 shares authorized and 41,224,792 shares issued in 2018 and 2017; 33,717,169 shares outstanding in 2018 and 33,447,070 shares outstanding in 2017								412			412
Class B: $.01 par value; 662,300 shares authorized; 662,296 shares issued and outstanding in 2018 and 2017								7			7
Additional paid-in capital		168,443			173,565			168,614			173,011
Purchase price in excess of predecessor basis, net of tax benefit of $10,306		(15,458	)		(15,458	)		(15,458	)		(15,458	)
Retained earnings		755,439			735,563			908,934			870,716
Accumulated other comprehensive loss		(181	)		(273	)		(190	)		(194	)
Treasury stock; at cost, 7,790,882 shares in 2017 and 8,031,810 shares in 2016		(258,836	)		(265,637	)
Treasury stock; at cost, 7,507,623 shares in 2018 and 7,777,722 shares in 2017								(251,260	)		(258,622	)
TOTAL STOCKHOLDERS' EQUITY		649,826			628,179			811,059			769,872
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$	1,363,770		$	1,360,259		$	1,733,504		$	1,670,941

	Three Months						Six Months						Three Months						Six Months
	Ended June 30,						Ended June 30,						Ended June 30,						Ended June 30,
	2017			2016			2017			2016			2018			2017			2018			2017

Revenue	$	924,513		$	855,557		$	1,817,961		$	1,661,416		$	1,179,093		$	923,596		$	2,275,064		$	1,816,352
Transportation costs		823,196			741,067			1,615,059			1,438,539			1,042,903			822,279			2,016,083			1,613,450
Gross margin		101,317			114,490			202,902			222,877			136,190			101,317			258,981			202,902

Costs and expenses:
Salaries and benefits		45,038			43,602			88,217			87,465			58,092			45,038			114,099			88,217
Agent fees and commissions		17,038			18,360			35,031			35,262			21,969			17,038			41,111			35,031
General and administrative		20,114			16,083			40,938			32,727			20,216			20,114			40,720			40,938
Depreciation and amortization		2,549			2,148			4,961			4,283			3,960			2,549			7,965			4,961
Total costs and expenses		84,739			80,193			169,147			159,737			104,237			84,739			203,895			169,147

Operating income		16,578			34,297			33,755			63,140			31,953			16,578			55,086			33,755

Other income (expense):
Interest expense		(1,032	)		(857	)		(2,130	)		(1,767	)		(2,187	)		(1,032	)		(4,291	)		(2,130	)
Interest and dividend income		200			120			330			181			22			200			44			330
Other, net		-			216			194			1,152			(189	)		-			(244	)		194
Total other expense		(832	)		(521	)		(1,606	)		(434	)		(2,354	)		(832	)		(4,491	)		(1,606	)

Income before provision for income taxes		15,746			33,776			32,149			62,706			29,599			15,746			50,595			32,149

Provision for income taxes		6,204			13,105			12,273			24,069			7,548			6,204			12,377			12,273

Net income	$	9,542		$	20,671		$	19,876		$	38,637		$	22,051		$	9,542		$	38,218		$	19,876

Other comprehensive income:
Foreign currency translation adjustments		28			(54	)		92			(53	)		(25	)		28			4			92

Total comprehensive income	$	9,570		$	20,617		$	19,968		$	38,584		$	22,026		$	9,570		$	38,222		$	19,968

Basic earnings per common share	$	0.29		$	0.61		$	0.60		$	1.12		$	0.66		$	0.29		$	1.14		$	0.60

Diluted earnings per common share	$	0.29		$	0.61		$	0.60		$	1.12		$	0.66		$	0.29		$	1.14		$	0.60

Basic weighted average number of shares outstanding		33,220			33,944			33,213			34,541			33,389			33,220			33,382			33,213
Diluted weighted average number of shares outstanding		33,262			34,027			33,318			34,575			33,562			33,262			33,520			33,318

	Six Months Ended June 30,						Six Months Ended June 30,
	2017			2016			2018			2017
Cash flows from operating activities:
Net Income	$	19,876		$	38,637		$	38,218		$	19,876
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		25,288			21,426			38,251			25,288
Deferred taxes		7,713			7,777			11,767			7,713
Compensation expense related to share-based compensation plans		4,972			4,245			6,982			4,972
Loss (gain) on sale of assets		307			(255	)
Excess tax benefits from share based compensation		-			132
Contingent consideration adjustment								(3,571	)		-
(Gain) loss on sale of assets								(90	)		307
Changes in operating assets and liabilities:
Restricted investments		(2,408	)		1,117			74			(2,408	)
Accounts receivable, net		26,240			(12,826	)		(29,748	)		26,240
Prepaid taxes		(3,352	)		(2,977	)		6,820			(3,352	)
Prepaid expenses and other current assets		4,493			2,685			9,935			4,493
Other assets		(2,653	)		561			1,869			(2,653	)
Accounts payable		307			24,740			9,878			307
Accrued expenses		(18,013	)		(14,031	)		4,857			(18,013	)
Non-current liabilities		368			1,211			2,382			368
Net cash provided by operating activities		63,138			72,442			97,624			63,138

Cash flows from investing activities:
Proceeds from sale of equipment		2,356			1,148			1,234			2,356
Purchases of property and equipment		(29,593	)		(25,217	)		(69,261	)		(29,593	)
Net cash used in investing activities		(27,237	)		(24,069	)		(68,027	)		(27,237	)

Cash flows from financing activities:
Proceeds from issuance of debt		16,149			13,274			58,161			16,149
Repayments of long term debt		(23,118	)		(16,180	)		(84,051	)		(23,118	)
Stock tendered for payments of withholding taxes		(3,293	)		(2,379	)		(4,017	)		(3,293	)
Purchase of treasury stock		-			(85,000	)
Capital lease payments		(1,399	)		(1,297	)		(1,483	)		(1,399	)
Excess tax benefits from share-based compensation		-			(359	)
Net cash used in financing activities		(11,661	)		(91,941	)		(31,390	)		(11,661	)


Effect of exchange rate changes on cash and cash equivalents		95			(31	)		(11	)		95

Net increase (decrease) in cash and cash equivalents		24,335			(43,599	)
Net (decrease) increase in cash and cash equivalents								(1,804	)		24,335
Cash and cash equivalents beginning of the period		127,404			207,749			28,557			127,404
Cash and cash equivalents end of the period	$	151,739		$	164,150		$	26,753		$	151,739

Supplemental disclosures of cash paid for:
Interest	$	2,176		$	1,762		$	4,182		$	2,176
Income taxes	$	10,743		$	22,399		$	752		$	10,743

Our accompanying unaudited consolidated financial statements of Hub Group, Inc. (“we”, “us”, “our” or ~~“our”~~“Company”) 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, ~~2017~~2018 and results of operations for the six months ended June 30, ~~2017~~2018 and ~~2016.~~2017. Certain amounts in prior periods have been reclassified to conform with current period presentation.

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, ~~2016.~~2017. Results of operations in interim periods are not necessarily indicative of results to be expected for a full year due partially to seasonality.

Accounting Standards Update. On January 1, 2018 we adopted the Accounting Standards Codification (ASC) topic 606, Revenue from Contracts with Customers. Under this new standard our significant accounting policy for revenue is as follows:

Revenue:Revenue is recognized at the time (1) persuasive evidence of an arrangement exists, (2) services have been rendered, (3) the sales price is fixed and determinable and (4) collectability is reasonably assured. We generally recognize revenue over time because of continuous transfer of control to the customer. Since control is transferred over time, revenue and related transportation costs are recognized based on relative transit time, which is based on the extent of progress towards completion of the related performance obligation. We enter into contracts that can include various combinations of services, which are capable of being distinct and accounted for as separate performance obligations. We account for a contract when it has approval and commitment from both parties, the rights of the parties are identified, payment terms are identified, the contract has commercial substance and collectability of consideration is probable. Taxes assessed by a governmental authority that are both imposed on and concurrent with a specific revenue-producing transaction, that are collected by the Company from a customer, are excluded from revenue. Further, in most cases, we report our revenue on a gross basis because we are the primary obligor as we are responsible for providing the service desired by the customer. Our customers view us as responsible for fulfillment including the acceptability of the service. Service requirements may include, for example, on-time delivery, handling freight loss and damage claims, setting up appointments for pick-up and delivery and tracing shipments in transit. We have discretion in setting sales prices and as a result, the amount we earn varies. In addition, we have the discretion to select our vendors from multiple suppliers for the services ordered by our customers. These factors, discretion in setting prices and discretion in selecting vendors, further support reporting revenue on a gross basis for most of our revenue.

The Company capitalizes commissions incurred in connection with obtaining a contract. The Company capitalized commissions associated with dedicated services of $0.4 million at June 30, 2018. Capitalized commission fees are amortized based on the transfer of services to which the assets relate and are included in selling, general and administrative expenses. In 2018, the amount of amortization was approximately $30,000.

Costs incurred to fulfill 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.

The Company applied Topic 606 retrospectively using the practical expedient in paragraph 606-10-65-1(f)(3), under which the Company does not disclose the amount of consideration allocated to the remaining performance obligations or an explanation of when the Company expects to recognize that amount as revenue for all reporting periods presented before January 1, 2018. We do not generally have a remaining performance obligation due to revenue generally being recognized using relevant transit time. We only had one significant accounting policy change that is disclosed below.

Taxes assessed by a governmental authority that are both imposed on and concurrent with a specific revenue-producing transaction and collected by Hub Group from a customer were previously recorded on a gross basis. Under Topic 606, these taxes are excluded from revenue. This change had an effect of $0.9 million and $1.6 million on revenue and transportation costs for the three and six months ending June 30, 2017, respectively.

Hub Group Trucking (HGT), a wholly owned subsidiary of Hub Group, Inc., acquired all of the outstanding equity interests of Estenson Logistics, LLC (“Estenson”) on July 1, 2017 (the “Estenson Acquisition”). Estenson is now our wholly owned subsidiary, operating under the name Hub Group Dedicated (“HGD”). As a result of the Estenson Acquisition, HGT acquired substantially all of the assets of Estenson, which include tractors and trailers, as well as assumed certain liabilities, including equipment debt. HGD is included in the Hub segment.

The following unaudited pro forma consolidated results of operations for 2017 assume that the acquisition of Estenson was completed as of January 1, 2017 (in thousands, except for per share amounts):

The unaudited pro forma consolidated results for the three and six month periods were prepared using the acquisition method of accounting and are based on the historical financial information of Hub Group and HGD. The historical financial information has been adjusted to give effect to the pro forma adjustments that are: (i) directly attributable to the acquisition, (ii) factually supportable and (iii) expected to have a continuing impact on the combined results. The unaudited pro forma consolidated results are not necessarily indicative of what our consolidated results of operations actually would have been had we completed the acquisition on January 1, 2017.

We report two distinct business segments. The first segment is Mode, which includes the Mode Transportation, LLC (“Mode LLC”) business ~~we acquired on April 1, 2011.~~only. The second segment is Hub, which is all business other than Mode.

Hub offers comprehensive multimodal solutions including intermodal, truck brokerage, logistics and ~~logistics~~dedicated services. Our employees operate the freight through a network of operating centers and terminals located in the United States, Canada and Mexico. Each operating center is strategically located in a market with a significant concentration of shipping customers and one or more railheads. Hub has full time employees located throughout the United States, Canada and Mexico.

Mode LLC has Independent Business Owners (“IBOs”) who sell and operate the business throughout North America, as well as sales only agents. Mode LLC also has a ~~company managed operation and~~ corporate offices in Dallas, TX, a temperature protected services division, Temstar, located in Oak Brook, IL and a corporate ~~offices~~office in Memphis, TN.

Mode LLC markets and operates its freight transportation services, consisting of intermodal, truck brokerage and logistics, primarily through agents who enter into contractual arrangements with Mode LLC.

~~The~~Our transportation services for both Hub and Mode segments can be broadly placed into the following ~~is a summary~~categories:

Intermodal. As an intermodal provider, we arrange for the movement of ~~operating results~~our customers’ freight in containers and ~~certain other financial data~~trailers, typically over long distances of 750 miles or more. We contract with railroads to provide transportation for the long-haul portion of the shipment and with local trucking companies, known as “drayage companies,” for pickup and delivery. As part of our ~~business segments (in thousands):~~

Three Months

Three Months

Ended June 30, 2017

Ended June 30, 2016

Inter-

Hub

Inter-

Hub

Segment

Group

Segment

Group

Hub

Mode

Elims

Total

Hub

Mode

Elims

Total

Revenue
$
705,208

$
243,051

$
(23,746
)
$
924,513

$
648,523

$
231,924

$
(24,890
)
$
855,557

Transportation costs

632,651

214,291

(23,746
)

823,196

565,448

200,509

(24,890
)

741,067

Gross margin

72,557

28,760

-

101,317

83,075

31,415

-

114,490

Costs and expenses:

Salaries and benefits

41,569

3,469

-

45,038

39,787

3,815

-

43,602

Agent fees and commissions

14

17,024

-

17,038

13

18,347

-

18,360

General and administrative

18,331

1,783

-

20,114

14,226

1,857

-

16,083

Depreciation and amortization

2,249

300

-

2,549

1,830

318

-

2,148

Total costs and expenses

62,163

22,576

-

84,739

55,856

24,337

-

80,193

Operating income
$
10,394

$
6,184

$
-

$
16,578

$
27,219

$
7,078

$
-

$
34,297

Capital Expenditures
$
22,937

$
31

$
-

$
22,968

$
20,314

$
10

$
-

$
20,324

intermodal services, we negotiate rail and drayage rates, electronically track shipments in transit, consolidate billing and handle claims for freight loss or damage on behalf of our customers.

~~The following tables summarize~~Truck Brokerage (Highway Services). We are one of the largest truck brokers in the United States, providing customers with a highway service option for their transportation needs. We match the 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 ~~revenue by segment~~customers. As part of the truck brokerage services, we negotiate rates, track shipments in transit and handle claims for freight loss and damage on behalf of our customers.

Logistics and Other Services. Hub’s logistics business operates under the name of Unyson Logistics. Unyson Logistics is comprised of a network of logistics professionals dedicated to developing, implementing and operating customized logistics solutions for customers. Unyson Logistics 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. Unyson Logistics operates throughout North America, providing services through its main operating location in St. Louis with additional support locations in the Boston and Chicago metro areas. In addition, certain Mode LLC agents also provide logistics services. Our multi-modal transportation capabilities for both the Hub and Mode segments include small parcel, heavyweight, expedited, less-than-truckload, truckload, intermodal, railcar and international shipping.

Dedicated: Our dedicated service line, ~~(in thousands) for~~HGD, contracts with customers who wish to outsource a portion of their transportation needs. We offer a dedicated fleet of equipment and drivers to each customer, as well as the ~~quarter ended June 30:~~

management and infrastructure to operate according to the customer’s high service expectations.

The following is a summary of operating results and certain other financial data for our business segments (in thousands):

	Six Months									Six Months									Three Months									Three Months
	Ended June 30, 2017									Ended June 30, 2016									Ended June 30, 2018									Ended June 30, 2017
					Inter-			Hub						Inter-			Hub						Inter-			Hub						Inter-			Hub
					Segment			Group						Segment			Group						Segment			Group						Segment			Group
	Hub		Mode		Elims			Total		Hub		Mode		Elims			Total		Hub		Mode		Elims			Total		Hub		Mode		Elims			Total
Revenue	$	1,382,340	$	484,925	$	(49,304	)	$	1,817,961	$	1,263,751	$	440,755	$	(43,090	)	$	1,661,416	$	888,238	$	314,078	$	(23,223	)	$	1,179,093	$	704,344	$	242,998	$	(23,746	)	$	923,596
Transportation costs		1,237,978		426,385		(49,304	)		1,615,059		1,101,522		380,107		(43,090	)		1,438,539		788,087		278,039		(23,223	)		1,042,903		631,787		214,238		(23,746	)		822,279
Gross margin		144,362		58,540		-			202,902		162,229		60,648		-			222,877		100,151		36,039		-			136,190		72,557		28,760		-			101,317

Costs and expenses:
Salaries and benefits		81,164		7,053		-			88,217		79,883		7,582		-			87,465		53,839		4,253		-			58,092		41,569		3,469		-			45,038
Agent fees and commissions		31		35,000		-			35,031		27		35,235		-			35,262		11		21,958		-			21,969		14		17,024		-			17,038
General and administrative		36,810		4,128		-			40,938		28,948		3,779		-			32,727		17,768		2,448		-			20,216		18,331		1,783		-			20,114
Depreciation and amortization		4,357		604		-			4,961		3,644		639		-			4,283		3,719		241		-			3,960		2,249		300		-			2,549
Total costs and expenses		122,362		46,785		-			169,147		112,502		47,235		-			159,737		75,337		28,900		-			104,237		62,163		22,576		-			84,739

Operating income	$	22,000	$	11,755	$	-		$	33,755	$	49,727	$	13,413	$	-		$	63,140	$	24,814	$	7,139	$	-		$	31,953	$	10,395	$	6,184	$	-		$	16,578

Capital Expenditures	$	29,562	$	31	$	-		$	29,593	$	24,945	$	272	$	-		$	25,217	$	46,337	$	745	$	-		$	47,082	$	22,937	$	31	$	-		$	22,968

As of June 30, 2017

As of December 31, 2016

Inter-

Hub

Inter-

Hub

Segment

Group

Segment

Group

Hub

Mode

Elims

Total

Hub

Mode

Elims

Total

Total assets
$
1,201,733

$
169,700

$
(7,663
)
$
1,363,770

$
1,178,110

$
191,374

$
(9,225
)
$
1,360,259

Goodwill

232,877

29,389

-

262,266

232,987

29,389

-

262,376

	Six Months									Six Months
	Ended June 30, 2018									Ended June 30, 2017
					Inter-			Hub						Inter-			Hub
					Segment			Group						Segment			Group
	Hub		Mode		Elims			Total		Hub		Mode		Elims			Total
Revenue	$	1,719,823	$	601,977	$	(46,736	)	$	2,275,064	$	1,380,824	$	484,832	$	(49,304	)	$	1,816,352
Transportation costs		1,529,297		533,522		(46,736	)		2,016,083		1,236,462		426,292		(49,304	)		1,613,450
Gross margin		190,526		68,455		-			258,981		144,362		58,540		-			202,902

Costs and expenses:
Salaries and benefits		105,909		8,190		-			114,099		81,164		7,053		-			88,217
Agent fees and commissions		25		41,086		-			41,111		31		35,000		-			35,031
General and administrative		36,170		4,550		-			40,720		36,810		4,128		-			40,938
Depreciation and amortization		7,478		487		-			7,965		4,357		604		-			4,961
Total costs and expenses		149,582		54,313		-			203,895		122,362		46,785		-			169,147

Operating income	$	40,944	$	14,142	$	-		$	55,086	$	22,000	$	11,755	$	-		$	33,755

Capital Expenditures	$	67,874	$	1,387	$	-		$	69,261	$	29,562	$	31	$	-		$	29,593

On January 1, 2018, the Company adopted ASC Topic 606 using the modified retrospective method applied to those contracts that were not completed as of January 1, 2018. Segment revenues were not significantly impacted under ASC Topic 606. The tables below represent disaggregated revenue from contracts with customers.

The following tables summarize our revenue by segment and business line (in thousands) for the quarter ended June 30:

The following tables summarize our revenue by segment and business line (in thousands) for the six months ended June 30:

	Six Months									Six Months									Six Months									Six Months
	Ended June 30, 2017									Ended June 30, 2016									Ended June 30, 2018									Ended June 30, 2017
					Inter-			Hub						Inter-			Hub						Inter-			Hub						Inter-			Hub
					Segment			Group						Segment			Group						Segment			Group						Segment			Group
	Hub		Mode		Elims			Total		Hub		Mode		Elims			Total		Hub		Mode		Elims			Total		Hub		Mode		Elims			Total
Intermodal	$	876,189	$	234,322	$	(28,103	)	$	1,082,408	$	851,940	$	229,329	$	(40,117	)	$	1,041,152	$	1,008,522	$	270,995	$	(17,829	)	$	1,261,688	$	875,843	$	234,269	$	(28,103	)	$	1,082,009
Truck brokerage		211,644		161,069		(695	)		372,018		164,550		148,722		(502	)		312,770		234,955		203,889		(442	)		438,402		210,473		161,031		(695	)		370,809
Logistics		294,507		89,534		(20,506	)		363,535		247,261		62,704		(2,471	)		307,494		342,098		127,093		(28,450	)		440,741		294,508		89,532		(20,506	)		363,534
Dedicated																				134,248		-		(15	)		134,233		-		-		-			-
Total revenue	$	1,382,340	$	484,925	$	(49,304	)	$	1,817,961	$	1,263,751	$	440,755	$	(43,090	)	$	1,661,416	$	1,719,823	$	601,977	$	(46,736	)	$	2,275,064	$	1,380,824	$	484,832	$	(49,304	)	$	1,816,352

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,				Three Months Ended, June 30,				Six Months Ended, June 30,
	2017		2016		2017		2016		2018		2017		2018		2017

Net income for basic and diluted earnings per share	$	9,542	$	20,671	$	19,876	$	38,637	$	22,051	$	9,542	$	38,218	$	19,876

Weighted average shares outstanding - basic		33,220		33,944		33,213		34,541		33,389		33,220		33,382		33,213

Dilutive effect of stock options and restricted stock		42		83		105		34		173		42		138		105

Weighted average shares outstanding - diluted		33,262		34,027		33,318		34,575		33,562		33,262		33,520		33,318

Earnings per share - basic	$	0.29	$	0.61	$	0.60	$	1.12	$	0.66	$	0.29	$	1.14	$	0.60

Earnings per share - diluted	$	0.29	$	0.61	$	0.60	$	1.12	$	0.66	$	0.29	$	1.14	$	0.60

The carrying value of cash, ~~and cash equivalents,~~ accounts receivable and accounts payable ~~and long term debt~~ approximated fair value as of June 30, ~~2017~~2018 and December 31, ~~2016 due~~2017. At June 30, 2018 and December 31, 2017 the fair value of the Company’s fixed-rate borrowings was $3.6 million and $2.4 million less than the historical carrying value of $266.2 million and $247.1 million. The fair value of the fixed-rate borrowings was estimated using an income approach based on current interest rates available to ~~their short-term nature.~~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 June 30, ~~2017~~2018 and December 31, ~~2016,~~2017, our cash and temporary investments were with high quality financial institutions in Demand Deposit Accounts (DDAs) and Savings Accounts.

Restricted investments, as of June 30, ~~2017~~2018 of ~~$23.3~~$24.1 million and December 31, ~~2016~~2017 of ~~$20.9~~$24.2 million, consisted of mutual funds which are reported at fair value and are related to the liabilities of our nonqualified deferred compensation plan.

The fair value of the contingent consideration related to the 2017 acquisition of Estenson was $1.1 million at June 30, 2018. This valuation was based on significant inputs that are not observable in the market, which are referred to as Level 3 inputs. Key assumptions include the likelihood of the acquired business achieving target levels of EBITDA using a probability-weighted expected return method (“PWERM”). The following table sets forth a reconciliation of changes in the fair value of the contingent consideration:

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 and accounts payable are defined as “Level 1”, ~~while~~ long term debt is defined as “Level 2”, and the Estenson contingent consideration is defined as “Level 3” of the fair value hierarchy in the Fair Value Measurements and Disclosures Topic of the Codification.

At June 30, 2018, we were authorized to borrow up to $350 million under a revolving line of credit. As of June 30, 2018, we had no borrowings under our bank revolving line of credit and our unused and available borrowings were $327.0 million. As of December 31, 2017, we had $45.0 million of borrowings under our bank revolving line of credit and our unused and available borrowings were $284.9 million. We were in compliance with our debt covenants as of June 30, 2018.

We have standby letters of credit that expire at various dates in ~~2017~~2018 and ~~2018.~~2019. As of June 30, ~~2017,~~2018, our letters of credit were ~~$13.5~~$23.0 million.

Our unused and available borrowings under our variable rate bank revolving line of credit were $36.5 million as of June 30, 2017 and $38.2 million as of December 31, 2016. We were in compliance with our debt covenants as of June 30, 2017.

~~On July 1, 2017, we entered into a new $350 million Credit Agreement. The Credit Agreement replaces the Restated Credit Agreement dated December 12, 2013. See Note 9 for further discussion.~~

We have entered into various Equipment Notes (“Notes”) for the purchase of tractors, trailers and containers. The Notes are secured by the underlying equipment financed in the agreements.

Period Ended

June 30,

December 31,

2017

2016

(in thousands)

Secured Equipment Notes due in June 2022 with monthly principal and interest payments between $0.03 million and $0.3 million commencing in July 2017; interest is paid monthly at a fixed annual rate of 2.62%
$
16,149

$
-

Secured Equipment Notes due on various dates in 2021 with monthly principal and interest payments between $0.01 million and $0.3 million commencing on various dates in 2016; interest is paid monthly at a fixed annual rate between 2.04% and 2.96%

53,635

59,836

Secured Equipment Notes due on various dates in 2020 with monthly principal and interest payments between $0.04 million and $0.4 million commencing on various dates in 2015 and 2016; interest is paid monthly at a fixed annual rate between 1.72% and 2.26%

42,333

48,633

Secured Equipment Notes due on various dates in 2019 with monthly principal and interest payments between $0.08 million and $0.4 million commencing on various dates in 2014; interest is paid monthly at a fixed annual rate between 1.87% and 2.24%

40,374

49,464

Secured Equipment Notes due in June 2018 with quarterly principal and interest payments of $0.5 million commencing in August 2013; interest is paid quarterly at a fixed annual rate between 1.9% and 2.0%

1,232

2,759

153,723

160,692

Less current portion

(47,582
)

(45,163
)
Total long-term debt
$
106,141

$
115,529

	June 30,			December 31,
	2018			2017
	(in thousands except principal and interest payments)


Revolving line of credit	$	-		$	45,000

Secured Equipment Notes due on various dates in 2024 with monthly principal and interest payments between $403 and $83,000 commencing on various dates in 2017; interest is paid monthly at a fixed annual rate between 2.85% and 3.41%		12,691			13,586

Secured Equipment Notes due on various dates in 2023 with monthly principal and interest payments between $669 and $341,341 commencing on various dates in 2016, 2017 and 2018; interest is paid monthly at a fixed annual rate between 2.23% and 3.91%		91,077			36,981

Secured Equipment Notes due on various dates in 2022 with monthly principal and interest payments between $3,030 and $254,190 commencing on various dates from 2015 to 2017; interest is paid monthly at a fixed annual rate of between 2.16% and 2.87%		27,435			30,301

Secured Equipment Notes due on various dates in 2021 with monthly principal and interest payments between $1,940 and $352,655 commencing on various dates from 2014 to 2017; interest is paid monthly at a fixed annual rate between 2.04% and 2.96%		66,863			76,885

Secured Equipment Notes due on various dates in 2020 with monthly principal and interest payments between $3,614 and $398,496 commencing on various dates from 2013 to 2016; interest is paid monthly at a fixed annual rate between 1.72% and 2.78%		42,960			50,737

Secured Equipment Notes due on various dates in 2019 with monthly principal and interest payments between $1,594 and $325,050 commencing on various dates from 2013 to 2015; interest is paid monthly at a fixed annual rate between 1.79% and 2.62%		25,158			36,178

Secured Equipment Notes due on various dates in 2018 with monthly principal and interest payments between $6,480 and $163,428 commencing on various dates in 2013 and 2014; interest is paid monthly at a fixed annual rate between 2.05% and 2.7%		-			2,406

		266,184			292,074

Less current portion		(86,740	)		(77,266	)
Total long-term debt	$	179,444		$	214,808

In November 2016, we committed to acquire 4,000 53’ ~~containers.~~containers, which were received by July 31, 2018. In the second quarter of 2018, we placed an order for 3,670 containers and we expect delivery between July 2018 and November 2018. We expect ~~the total purchase price of~~to finance these ~~containers~~units with debt.

Since January 1, 2018 we have committed to ~~be approximately $40~~acquire 869 tractors for $107.2 million. ~~We are working with our container supplier on deferring a portion of this year’s production to next year if market conditions remain soft.~~ As of June 30, 2018 we received 380 tractors, which are being financed with debt, and we expect to receive the ~~date~~remaining 489 tractors from July to December of ~~this report,~~2018. We expect to finance these tractors with debt.

Since January 1, 2018 we have committed to acquire 760 trailers for $24.2 million. As of June 30, 2018 we received ~~1,500 containers. We~~217 trailers, which will be ~~financing~~financed with debt, and we expect to receive the ~~purchase~~remaining 543 trailers from July to December of ~~this equipment~~2018. We expect to finance these trailers with ~~secured fixed rate~~ debt.

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 ~~Comtrak Logistics, Inc., now known as~~ Hub Group Trucking, ~~Inc. Mr. Robles drove a truck for Hub Group Trucking in California, first as an independent contractor and then as an employee.~~Inc (“HGT”). The action ~~was~~is brought on behalf of a class comprised of present and former California-based truck drivers for ~~Hub Group Trucking~~HGT who were classified as independent contractors, from January 2009 to August 2014. ~~The complaint~~It alleges ~~Hub Group Trucking~~HGT has misclassified such drivers as independent contractors and that such drivers were employees. ~~The complaint~~It asserts various violations of the California Labor Code and claims that ~~Hub Group Trucking~~HGT has engaged in unfair competition practices. The complaint seeks, among other things, declaratory and injunctive relief, ~~compensatory~~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 are only on behalf of Mr. Robles and not a putative class.

The Company believes that the California independent contractor truck drivers were properly classified as independent contractors at all times. Nevertheless, because lawsuits are expensive, time-consuming and could interrupt our business operations, ~~Hub Group Trucking~~HGT decided to make settlement offers to individual drivers with respect to the claims alleged in this lawsuit, without admitting liability. As of June 30, ~~2017, 93%~~2018, 96% of the California drivers have accepted the settlement ~~offers which were paid in 2015 or earlier.~~offers. In late 2014, ~~Hub Group Trucking~~HGT decided to convert its model from independent contractors to employee drivers in ~~California.~~California (the “Conversion”). In early 2016, ~~Hub Group Trucking~~HGT closed its operations in Southern California.

On April 3, 2015, the Robles case was transferred to the U.S. District Court for the Western District of Tennessee (Western Division) in Memphis. In May 2015, the plaintiffs in the Robles case filed a Second Amended Complaint (“SAC”) which names 334 current and former Hub Group Trucking drivers as “interested putative class members.” In addition to reasserting their existing claims, the SAC includes claims ~~post-conversion,~~post-Conversion, added two new plaintiffs and seeks a judicial declaration that the settlement agreements are unenforceable. In June 2015, Hub Group Trucking filed a motion to dismiss the SAC and on July 19, 2016, Hub Group Trucking’s motion to dismiss was granted in part, and denied in part, by the District Court. The motion to dismiss was granted for the claims of all purported class members who have signed settlement agreements and on plaintiffs’ claims based on quantum merit and it was denied with respect to federal preemption and choice of law. On August 11, 2016, Plaintiffs filed a motion to clarify whether the Court’s dismissal of the claims of all purported class members who signed settlement agreements was with or without prejudice and, if the dismissal was with prejudice, Plaintiffs moved the Court to revise and reconsider the order. On July 2, 2018, the Court denied the Plaintiffs’ ~~motion to clarify is fully briefed~~Motion for Clarification or Reconsideration and stated that the ~~parties are awaiting a decision by~~dismissal of the ~~Court.~~claims of all purported class members who signed settlement agreements was with prejudice.

On August 5, 2015, the Plaintiffs’ law firm in the Robles case filed a lawsuit in state court in San Bernardino County, California on behalf of 63 named Plaintiffs against Hub Group Trucking and five Company employees. The lawsuit alleges claims similar to those being made in Robles and seeks monetary penalties under the Private Attorneys General Act. Of the 63 named Plaintiffs, at least 58 of them previously accepted the settlement offers referenced above.

On October 29, 2015, Defendants filed a notice of removal to ~~remove~~move the case from state court in San Bernardino to federal court in the Central District of California. On November 19, 2015, Defendants filed a motion to transfer the case to federal court in Memphis, Tennessee and also filed a motion to dismiss the case pursuant to a clause in the independent contractor agreement stating that Tennessee law applies. Also on November 19, 2015, Plaintiffs filed a motion to remand the case back to state court, claiming that the federal court lacks jurisdiction over the ~~case.~~case because there is not complete diversity of citizenship between the parties and the amount in controversy threshold is not satisfied. The court granted Plaintiffs’ motion to remand to the state court in San Bernardino County on April 7, ~~2016, mooting Defendants’ motions to transfer and dismiss.~~2016.

On July 11, 2016, Defendants filed ~~several motions~~dismissal papers in state court, asking the court to dismiss ~~and/or stay the~~ Plaintiffs’ suit for various ~~reasons.~~reasons, including that the agreement between HGT and its former California owner operators requires that this action be brought in Memphis, Tennessee, or stay the action pending the outcome of Robles. Defendants also asked the court to dismiss the individual defendants because PAGA’s language does not allow for individual liability. During a hearing on October 5, 2016, the judge issued an oral tentative ruling stating that the choice of forum provision was unenforceable. On Defendants’ motion to dismiss the individual defendants, the court allowed for supplemental briefing for additional arguments regarding individual liability under PAGA. The court did not reach a decision regarding the motion to stay pending the outcome in Robles. Plaintiffs filed their supplemental brief on November 9, 2016 to which Defendants responded on December 6, 2016.

On February 17, 2017, with the stipulation of the parties, the Court entered an ~~Order~~order dismissing, without prejudice, all of the individual Defendants and accepting the parties’ agreement that jurisdiction and venue are proper in the San Bernardino Superior Court and that Defendants will not seek to remove the case to federal district court. On April 12, 2017, the Court denied ~~Defendants’~~Defendant’s motion to dismiss based on insufficiency of the PAGA letter notice.

On September 12, 2014, a complaint was filed in the U.S. District Court for the Northern District of Illinois (Eastern Division) by Christian Lubinski against Hub Group Trucking. The action was brought on behalf of a class comprised of present and former owner-operators providing delivery services in Illinois for Hub Group Trucking. The complaint alleged Hub Group Trucking misclassified such drivers as independent contractors and that such drivers were employees. The complaint also alleged that Hub Group Trucking made illegal deductions from the drivers’ pay and failed to properly compensate the drivers for all hours worked, reimburse business expenses, pay employment taxes, and provide workers’ compensation and other employment benefits. The complaint asserted various violations of the Illinois Wage Payment and Collections Act and claimed that Hub Group Trucking was unjustly enriched. The complaint sought, among other things, monetary damages for the relevant statutory period and attorneys’ fees.

On October ~~24, 2014,~~19, 2017, Plaintiffs filed an amended complaint, dismissing the ~~Lubinski case was transferred~~previously named individuals as Defendants. On December 4, 2017, Defendants filed an Answer to ~~the U.S. District Court~~Plaintiffs’ First Amended Complaint and a Memorandum of Points and Authorities in Support of their Motion for the Western District of Tennessee (Western Division), in Memphis. On September 22, 2015, the court granted Hub Group Trucking’s motion to dismiss Lubinski’s Illinois law claims with prejudice basedJudgment on the ~~contractual choice of law provision, which provided~~Pleadings arguing that ~~Tennessee law governed. The court denied as moot Hub Group Trucking’s motion to dismiss based~~judgement should be entered for Defendants because Plaintiffs’ claims are preempted by the Federal Truth-In-Leasing regulations. On January 31, 2018, a hearing was held on ~~federal preemption. On October 2, 2015, Lubinski appealed this order to the United States Court of Appeals for the Sixth Circuit in Cincinnati.~~

~~On December 17, 2015, Lubinski filed his brief in support of his appeal of~~ the motion to dismiss, asserting for the first time that the federal court did not have jurisdiction over the case due to a lack of diversity of citizenship. Hub Group Trucking filed its response brief on January 19, 2016, in part arguing that Lubinski had himself alleged diversity of citizenship in his complaint. Lubinski filed his reply briefand on February ~~5, 2016.~~1, 2018, the motion was denied. On ~~April 1, 2016,~~March 27, 2018, Defendants filed a petition for a writ of mandate with the ~~Sixth Circuit remanded~~Court of Appeals. On June 12, 2018, the ~~case to~~Court of Appeals denied the ~~district court—~~petition. On June 21, 2018, Defendants filed a petition for review with the California Supreme Court. There is no timetable for when the Supreme Court will decide if it will review the petition.

For the quarter ending June 30, 2018, the provision for income taxes increased to $7.5 million from $6.2 million in 2017, while the effective tax rate decreased to 25.5% in 2018 from 39.4% in 2017. For the six months ending June 30, 2018, the provision for income taxes increased to $12.4 million from $12.3 million in 2017, while the effective tax rate decreased to 24.5% from 38.2%. The provision for income taxes increased primarily due to higher pre-tax income in 2018, while the 2018 effective tax rate was lower primarily due to the enactment of the U.S. Tax Cuts and Jobs Act (the “Act”) on December 22, 2017, which reduced the U.S. federal corporate tax rate from 35% to 21%. We expect our effective tax rate for 2018 will range from 24.5% to 25.5%.

Due to the complexities involved in accounting for the enactment of the Act, the SEC Staff Accounting Bulletin No. 118 (“SAB No. 118”) allows for a one-year period, from the date of enactment, to complete the related income tax accounting for the Act and allows for the use of provisional amounts until that accounting is complete.

The Company recorded provisional amounts in earnings for the year ended December 31, 2017 as certain deferred tax assets and liabilities were remeasured based on the ~~merits—for~~rates at which they are expected to reverse in the ~~district court “to consider the argument and admit the evidence necessary to determine the question of federal subject-matter jurisdiction.”~~

~~On July 11, 2016, with his federal district court case~~future, which is generally 21%. However, we are still pending, Lubinski filed an additional putative class action Complaint, with the same claims, in Illinois state court. On the same day, Hub Group Trucking filed a declaratory judgment complaint in Tennessee state court, seeking a declaration that Lubinski’s claims must be heard in Tennessee (based on the contractual choice-of-forum provision) and that the claims must be dismissed because Tennessee law controls and Lubinski’s claims are preempted by federal law.

On October 26, 2016, Lubinski filed a motion to dismiss for lack of federal subject-matter jurisdiction and a motion for leave to file an amended complaint, attempting to “clarify” the putative class definition and arguing that the Class Action Fairness Act’s exceptions to jurisdiction apply. In early 2017, Plaintiff’s counsel advised Hub Group Trucking that Lubinski would no longer challenge federal jurisdiction. On February 15, 2017, the District Court adopted the parties’ stipulation and found that there is federal subject-matter jurisdiction. On March 22, 2017, the U.S. Court of Appeals for the Sixth Circuit granted Plaintiff’s motion to recall the mandate and reinstate Lubinski’s appealanalyzing aspects of the ~~district court’s order dismissing~~Act and refining our calculations, which could potentially affect the ~~case. On June 8,~~measurement of these balances or potentially give rise to new deferred tax amounts until the federal income tax return for 2017 ~~the Sixth Circuit issued an Opinion affirming the District Court’s dismissal of Plantiff’s claims. On June 30, 2017, the Sixth Circuit issued the Mandate in the case, which terminates the 6~~^th ~~Circuit appeal proceedings.~~

~~We cannot reasonably estimate at~~is filed later this ~~time the possible loss or range of loss, if any, that may arise from the remaining unresolved claims in the above mentioned lawsuits.~~

We are a party to other litigation incident to our business, including claims for personal injury and/or property damage, bankruptcy preference claims, and claims regarding freight lost or damaged in transit, improperly shipped or improperly billed. Some of the lawsuits to which we are party are covered by insurance and are being defended by our insurance carriers. Some of the lawsuits are not covered by insurance and we defend those ourselves. We do not believe that the outcome of this litigation will have a materially adverse effect on our financial position or results of operations.

In May 2014, the FASB issued Update No. 2014-09—Revenue from Contracts with Customers (Topic 606). This Standard provides guidance on how to recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. In addition, the standard requires disclosure of the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers. The FASB has recently issued several amendments to the standard, including clarification on accounting for principal vs agent and identifying performance obligations.

The guidance permits two methods of adoption: retrospectively to each prior reporting period presented (full retrospective method), or retrospectively with the cumulative effect of initially applying the guidance recognized at the date of initial application (the cumulative catch-up transition method). We currently anticipate adopting the standard using the full retrospective method to restate each prior reporting period presented.

~~Early application is permitted for annual reporting periods beginning after December 15, 2016. We plan to adopt this standard~~ January ~~1, 2018, as required.~~

While we are continuing to assess all potential impacts of the standard, other than additional disclosures, we do not anticipate that this standard will have a material impact on our consolidated financial statements. We have identified and analyzed our revenue stream and continue to analyze our current contracts.

~~In February 2016,~~2017, the FASB issued ASU No. ~~2016-02, Leases, which requires lessees to recognize~~2017-01, Business Combinations (Topic 805) Clarifying the Definition of a ~~right-to-use asset and~~Business. This ASU clarifies the definition of a ~~lease obligation~~business when evaluating whether transactions should be accounted for ~~all leases. Lessees are permitted to make an accounting policy election to not recognize an asset and liability for leases with a term~~as acquisitions (or disposals) of ~~twelve months~~assets or ~~less.~~businesses. The new standard ~~will become~~is effective for fiscal years, and interim periods within those fiscal years, beginning ~~with the first quarter of 2019. Early adoption of the~~after December 15, 2017. This standard ~~is permitted. We plan to adopt this standard~~was adopted on January 1, ~~2019, as required. We are currently evaluating the impacts the adoption of this accounting guidance will have on the consolidated financial statements.~~

~~In March 2016, the FASB issued ASU 2016-09, Improvements~~2018. Any impact would apply to ~~Employee Share-Based Payment Accounting~~, which simplifies several aspects of the accounting for employee share-based payment transactions including the accounting for income taxes, forfeitures, and statutory tax withholding requirements, as well as classification of related amounts within the statement of cash flows. The new standard became effective beginning with the first quarter of 2017. We adopted ASU 2016-09 in the first quarter of 2017

and the adoption did not have a material impact on our consolidated financial statements. We have applied the reclassification of excess tax benefits prospectively and therefore the prior period has not been adjusted.future acquisitions.

In 2016, the FASB issued new guidance that requires credit losses on financial assets measured at amortized cost basis to be presented at the net amount expected to be collected, not based on incurred losses. The new standard is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. Early adoption for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018 is permitted. We are evaluating the impact of adopting this new accounting guidance on our consolidated financial statements.

In February 2016, the FASB issued ~~new guidance~~ASU No. 2016-02, Leases, which ~~clarifies the classification of certain cash receipts~~requires lessees to recognize a right-to-use asset and ~~cash payments in the statement of cash flows, including debt prepayment or extinguishment costs, settlement of contingent consideration arising from~~ a ~~business combination, insurance settlement proceeds, and distributions from certain equity method investees.~~lease obligation for all leases. The new standard iswill become effective ~~for fiscal years, and interim periods within those fiscal years,~~ beginning ~~after December 15, 2017. Early~~with the first quarter of 2019, but early adoption is permitted. We plan to adopt this standard January 1, 2019, as required. The standard also provides an additional transition method to assist entities with the implementation. Entities that elect this option would adopt the new standard using a modified retrospective transition method, but they would recognize a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption rather than in the earliest period presented. We will elect to apply a package of practical expedients and will not reassess at the date of initial adoption (1) whether any expired or existing contracts are or contain leases, (2) the lease classification for any expired or existing leases, or (3) initial direct costs for existing leases. Lessees can also make an accounting policy election to not recognize an asset and liability for leases with a term of twelve months or less. We will elect this short-term lease policy. We are currently reviewing our leases and evaluating the impact the adoption of ~~adopting~~ this ~~new~~ accounting guidance will have on ~~our~~the consolidated financial statements.

On July 1, 2017 (the “Closing Date”), Hub Group Trucking (HGT), a wholly owned subsidiary of Hub Group, Inc., acquired the membership interest of Estenson Logistics, LLC (“Estenson”). As a result of the Estenson Acquisition, HGT acquired substantially all of the assets of Estenson, which include tractors and trailers.

The purchase price for Estenson was approximately $286 million, including contingent consideration related to an earn-out provision included in the Purchase Agreement, which will not exceed $6 million and is based on Estenson’s EBITDA results in 2017 and 2018. We assumed $114 million of Estenson debt, paid $111 million in cash, and borrowed $55 million under our new line of credit to facilitate the acquisition.

Due to limitations on access to Estenson information prior to the Closing Date and the limited time since the Closing Date, the initial accounting for the business combination is incomplete at this time. As a result, we are unable to provide the amounts recognized as of the Closing Date for the major classes of assets acquired, liabilities assumed, pre-acquisition contingencies and goodwill.

We incurred approximately $1.5 million of acquisition costs associated with this transaction prior to the Closing Date that are reflected in general and administrative in the Unaudited Consolidated Statements of Income for the six months ended June 30, 2017.

~~On July 1, 2017, we entered into a new $350 million Credit Agreement. The Credit Agreement replaces the Restated Credit Agreement dated December 12, 2013.~~

Borrowings under the Credit Agreement generally bear interest at a variable rate equal to (i) LIBOR plus a specified margin based upon the Borrowers' total net leverage ratio (as defined in the Credit Agreement) (the "Total Net Leverage Ratio"), or (ii) the base rate (which is the highest of (a) the administrative agent's prime rate, (b) the federal funds rate plus 0.50% or (c) the sum of 1% plus one-month LIBOR) plus a specified margin based upon the Total Net Leverage Ratio. The specified margin for Eurodollar loans varies from 100.0 to 200.0 basis points per annum. The specified margin for base rate loans varies from 0.0 to 100.0 basis points per annum. The Borrowers must also pay (1) a commitment fee ranging from 10.0 to 25.0 basis points per annum (based upon the Total Net Leverage Ratio) on the aggregate unused commitments and (2) a letter of credit fee ranging from 100.0 to 200.0 basis points per annum (based upon the Total Net Leverage Ratio) on the undrawn amount of letters of credit.

The Credit Agreement contains various restrictions and covenants, including negative covenants that limit or restrict dividends, indebtedness of subsidiaries, mergers and fundamental changes, asset sales, acquisitions, liens and encumbrances, transactions with affiliates, changes in fiscal year and other matters customarily restricted in such agreements. The Company must maintain a Total Net Leverage Ratio of (a) total funded debt as of such date, minus up to $50,000,000 in unrestricted cash and cash equivalents (each as defined in the Credit Agreement) to (b) consolidated EBITDA (as defined in the credit agreement) of not more than 3.00 to 1.00; provided that as of the close of each of the four fiscal quarters occurring after the consummation of a permitted acquisition (as defined in the Credit Agreement) with an aggregate consideration of $150,000,000 or more, such ratio shall not be more than 3.25 to 1.00. The Company must maintain an interest coverage ratio of consolidated EBITDA to consolidated cash interest expense of not less than 3.00 to 1.00.

We incurred $1.3 million of financing costs related to the Credit Agreement during the third quarter of 2017, which will be capitalized and amortized to interest expense over the term of the agreement.

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 inherently uncertain and subject to risks. Such statements should be viewed with caution. 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. Actual results or experience could differ materially from the forward-looking statements as a result of many factors. All forward-looking statements are based upon information available to us on the date of this report. Except as required by law, we expressly disclaim any obligations to publicly release any revisions to forward-looking statements to reflect events after the date of this report. Factors that could cause our actual results to differ materially include:

Hub Group, Inc. (“we”, “us” or “our”) reports two distinct business segments. The first segment is “Mode,” which includes the acquired Mode LLC business only. The second segment is “Hub,” which is all business other than Mode. Hub Group (as opposed to just Hub), refers to the consolidated results for the whole company, including both the Mode and Hub segments. For the segment financial results, refer to Note 23 to the unaudited consolidated financial statements.

We are ~~one~~a world class provider of ~~the largest intermodal marketing companies (“IMC”) in the United States and a full service transportation provider offering~~multimodal logistics solutions. We offer comprehensive intermodal, truck brokerage, dedicated and logistics services. We operate through a nationwide network of operating centers and independent business owners.

~~As an IMC,~~Through our network, we arrange for the movement of our customers’ freight in containers and trailers over long distances. We contract with railroads to provide transportation for the long-haul portion of the shipment and with local trucking companies, known as “drayage companies,” for local pickup and delivery. As part of ~~the~~our intermodal services, we negotiate rail and drayage rates, electronically track shipments in transit, consolidate billing and handle claims for freight loss or damage on behalf of our customers.

~~For the quarter ended~~As of June 30, ~~2017, approximately 55%~~2018, our subsidiary HGT accounted for 54% of Hub’s drayage needs ~~were met~~ by ~~our subsidiary, Hub Group Trucking, Inc., which assists~~assisting us in providing reliable, cost effective intermodal services to our customers. Hub Group Trucking has terminals in Atlanta, Birmingham, Charlotte, Chattanooga, Chicago, Dallas, Harrisburg, Huntsville, Indianapolis, Jacksonville, Kalamazoo, Kansas City, Milwaukee, Memphis, Nashville, Newark, Philadelphia, Portland (OR), Salt Lake City, Seattle, St. Louis, Stockton and Wilmington (IL) metro areas. As of June 30, ~~2017, Hub Group Trucking~~2018, HGT leased or owned ~~915~~approximately 1,000 tractors ~~leased or owned 345~~and 300 trailers, employed ~~977~~approximately 1,200 drivers and contracted with ~~1,613 owner-operators for their services and equipment.~~approximately 1,300 owner-operators.

We also arrange for the transportation of freight by truck, providing customers with another option for their transportation needs. We match the customers’ needs with carriers’ capacity to provide the most effective service and price combinations. 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.

Our logistics service consists of complex transportation management services, including load consolidation, mode optimization and carrier management. These service offerings are designed to take advantage of the increasing trend for shippers to outsource all or a greater portion of their transportation needs.

Our dedicated service line, HGD, contracts with customers looking to outsource a portion of their 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. As of June 30, 2018, HGD has an operating fleet of approximately 1,500 tractors and 5,100 trailers.

Hub has 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 services to them.

Hub’s ~~business intelligence~~yield management group works with pricing, account management and operations to enhance Hub’s customer margins. We are working on margin enhancement projects including matching up inbound and outbound loads, reducing empty miles, improving our recovery of accessorial costs, ~~reducing~~optimizing our drayage costs, reducing repositioning costs and reviewing and improving low contribution freight.

Hub’s top 50 customers represent approximately ~~65%~~68% of the Hub segment revenue for the six months ended June 30, ~~2017.~~2018. We use various performance indicators to manage our business. We closely monitor margin and gains and losses for our top 50 customers. We also evaluate on-time performance, cost per load and daily sales outstanding by customer account. Vendor cost changes and vendor service issues are also monitored closely.

Mode has approximately ~~177~~170 agents, consisting of ~~103~~101 sales/operating agents, known as Independent Business Owners (“IBOs”), who sell and operate the business throughout North America and 7469 sales only agents. Mode also has a ~~company managed~~

~~operation and~~ corporate ~~offices~~office in Dallas, a temperature protected services division, Temstar, located in Oak Brook, IL and a corporate ~~offices~~office in Memphis. Mode’s top 20 customers represent approximately ~~40%~~39% of the Mode segment revenue for the six months ended June 30, ~~2017.~~2018. We closely monitor revenue and margin for these customers. ~~We believe Mode brings us highly complementary service offerings, more scale and a talented sales channel that allows us to better reach small and midsize customers.~~

Estenson, is a dedicated contract carrier with approximately 1,500 employees. Estenson has over 1,000 trucks and over 4,500 trailers at approximately 120 customer locations throughout North America. Estenson is managed out of a corporate office in Mesa, AZ. For additional information on the Estenson acquisition, refer to Note 9 to the unaudited consolidated financial statements.

Three Months Ended June 30, ~~2017~~2018 Compared to the Three Months Ended June 30, ~~2016~~2017

The following table summarizes our revenue by segment and business line (in thousands) for the three months ended June 30:

	Three Months									Three Months									Three Months									Three Months
	Ended June 30, 2017									Ended June 30, 2016									Ended June 30, 2018									Ended June 30, 2017
					Inter-			Hub						Inter-			Hub						Inter-			Hub						Inter-			Hub
					Segment			Group						Segment			Group						Segment			Group						Segment			Group
	Hub		Mode		Elims			Total		Hub		Mode		Elims			Total		Hub		Mode		Elims			Total		Hub		Mode		Elims			Total
Intermodal	$	451,593	$	112,119	$	(12,866	)	$	550,846	$	438,133	$	116,963	$	(22,168	)	$	532,928	$	526,028	$	141,221	$	(6,559	)	$	660,690	$	451,420	$	112,089	$	(12,866	)	$	550,643
Truck brokerage		104,980		82,891		(310	)		187,561		83,140		81,374		(475	)		164,039		114,936		103,168		(84	)		218,020		104,289		82,869		(310	)		186,848
Logistics		148,635		48,041		(10,570	)		186,106		127,250		33,587		(2,247	)		158,590		173,421		69,689		(16,580	)		226,530		148,635		48,040		(10,570	)		186,105
Dedicated																				73,853		-		-			73,853		-		-		-			-
Total revenue	$	705,208	$	243,051	$	(23,746	)	$	924,513	$	648,523	$	231,924	$	(24,890	)	$	855,557	$	888,238	$	314,078	$	(23,223	)	$	1,179,093	$	704,344	$	242,998	$	(23,746	)	$	923,596

Hub Group’s revenue increased ~~8.1%~~27.7% to ~~$924.5~~$1,179.1 million in ~~2017~~2018 from ~~$855.6~~$923.6 million in ~~2016.~~2017.

The Hub segment revenue increased ~~8.7%~~26.1% to ~~$705.2~~$888.2 million. Intermodal revenue increased 3%16.5% to ~~$451.6~~$526.0 million due to a 1%4.4% increase in volume, an increase in fuel revenue and ~~more favorable mix. This increase was partially offset by declines in customer prices.~~improved pricing. Truck brokerage revenue increased ~~26%~~10.2% to ~~$105.0~~$114.9 million. Truck brokerage handled ~~14% more~~5.4% fewer loads, while fuel, mix and price combined were up ~~12%~~15.6%. Logistics revenue increased ~~17%~~16.7% to ~~$148.6~~$173.4 million due primarily to ~~new customers on-boarded in the second half of last year and in the first half of this year.~~ growth with existing customers. Dedicated revenue was $73.9 million.

Mode’s revenue increased ~~4.8%~~29.3% to ~~$243.1~~$314.1 million in ~~2017~~2018 from ~~$231.9~~$243.0 million in ~~2016.~~2017. Mode’s intermodal revenue ~~decreased 4% while~~increased 26.0% to $141.2 million, truck brokerage ~~revenue~~ increased 2%24.5% to $103.2 million, and logistics ~~revenue~~ increased ~~43% due~~45.1% to ~~a new customer on-boarded in the second half of last year.~~$69.7 million.

The following is a summary of operating results for our business segments (in thousands):

	Three Months									Three Months									Three Months									Three Months
	Ended June 30, 2017									Ended June 30, 2016									Ended June 30, 2018									Ended June 30, 2017
					Inter-			Hub						Inter-			Hub						Inter-			Hub						Inter-			Hub
					Segment			Group						Segment			Group						Segment			Group						Segment			Group
	Hub		Mode		Elims			Total		Hub		Mode		Elims			Total		Hub		Mode		Elims			Total		Hub		Mode		Elims			Total
Revenue	$	705,208	$	243,051	$	(23,746	)	$	924,513	$	648,523	$	231,924	$	(24,890	)	$	855,557	$	888,238	$	314,078	$	(23,223	)	$	1,179,093	$	704,344	$	242,998	$	(23,746	)	$	923,596
Transportation costs		632,651		214,291		(23,746	)		823,196		565,448		200,509		(24,890	)		741,067		788,087		278,039		(23,223	)		1,042,903		631,787		214,238		(23,746	)		822,279
Gross margin		72,557		28,760		-			101,317		83,075		31,415		-			114,490		100,151		36,039		-			136,190		72,557		28,760		-			101,317

Costs and expenses:
Salaries and benefits		41,569		3,469		-			45,038		39,787		3,815		-			43,602		53,839		4,253		-			58,092		41,569		3,469		-			45,038
Agent fees and commissions		14		17,024		-			17,038		13		18,347		-			18,360		11		21,958		-			21,969		14		17,024		-			17,038
General and administrative		18,331		1,783		-			20,114		14,226		1,857		-			16,083		17,768		2,448		-			20,216		18,331		1,783		-			20,114
Depreciation and amortization		2,249		300		-			2,549		1,830		318		-			2,148		3,719		241		-			3,960		2,249		300		-			2,549
Total costs and expenses		62,163		22,576		-			84,739		55,856		24,337		-			80,193		75,337		28,900		-			104,237		62,163		22,576		-			84,739

Operating income	$	10,394	$	6,184	$	-		$	16,578	$	27,219	$	7,078	$	-		$	34,297	$	24,814	$	7,139	$	-		$	31,953	$	10,395	$	6,184	$	-		$	16,578

Hub Group’s transportation costs increased ~~11.1%~~26.8% to ~~$823.2~~$1,042.9 million in ~~2017~~2018 from ~~$741.1~~$822.3 million in ~~2016.~~2017. Transportation costs in ~~2017~~2018 consisted of purchased transportation costs of ~~$731.8~~$888.9 million and equipment and driver related costs of $154.0 million compared to 2017 costs of purchased transportation of $730.9 million and equipment and driver related costs of $91.4 ~~million compared to 2016 costs of purchased transportation of $651.1 million and equipment and driver related costs of $90.0~~ million.

The Hub segment transportation costs increased ~~11.9%~~24.7% to ~~$632.7~~$788.1 million in ~~2017~~2018 from ~~$565.4~~$631.8 million in ~~2016.~~2017. Hub segment transportation costs in ~~2017~~2018 included ~~$542.0~~$635.1 million in purchased transportation, up from ~~$476.2~~$541.2 million in ~~2016.~~2017. The ~~13.8%~~17.4% increase in purchased transportation costs was due primarily to rail cost increases, an increase in fuel costs, higher third party carrier costs, and higher volumes. Equipment and driver related costs increased ~~1.6%~~68.9% to $153.0 million in 2018 from $90.6 million in 2017 ~~from $89.2 million in 2016~~ due primarily to the equipment and driver related costs of HGD, including start-up costs and an increase in ~~fuel costs and depreciation.~~driver pay.

The Mode segment transportation costs increased ~~6.9%~~29.8% to ~~$214.3~~$278.0 million in ~~2017~~2018 from ~~$200.5~~$214.2 million in ~~2016.~~2017. Mode segment transportation costs are primarily purchased transportation costs which increased due to higher rail costs, fuel costs, carrier costs and increased business levels in ~~logistics.~~logistics and intermodal.

Hub Group’s gross margin ~~decreased 11.5%~~increased 34.4% to $136.2 million in 2018 from $101.3 million in ~~2017 from $114.5 million in 2016.~~2017. Hub Group’s gross margin as a percentage of sales ~~decreased~~increased to ~~11.0%~~11.6% as compared to last year’s ~~13.4%~~11.0% margin.

The Hub segment gross margin ~~decreased 12.7%~~increased 38.0% to ~~$72.6~~$100.2 million. ~~The~~ Hub segment margin ~~decrease~~increase of ~~$10.5~~$27.6 million resulted from the addition of HGD and growth in intermodal and truck brokerage, partially offset by a decrease in ~~margin in all three business lines.~~logistics. Intermodal gross margin ~~decreased primarily because of~~increased due to improved pricing and higher volume. Partially offsetting margin growth were higher rail ~~cost increases~~ and ~~lower customer prices than last year partially offset by improving loaded miles and more favorable mix.~~drayage costs. Truck brokerage ~~gross~~margin increased as a result of more spot business. Logistics margin decreased ~~primarily because of~~due to changes in customer mix, higher purchased transportation costs ~~due to tight capacity~~ and ~~changes in customer mix. Logistics gross margin declined due primarily to start-up costs related to new business on-boarded this quarter.~~ headwinds from the liquidation of a customer.

As a percentage of revenue, ~~the~~ Hub segment gross margin ~~decreased~~increased to 11.3% in 2018 from 10.3% in ~~2017 from 12.8%~~2017. Intermodal gross margin increased due to improved prices, partially offset by rail and drayage cost increases. Second quarter average rail transits were up 0.7 days which negatively impacted our results. All of these factors combined drove a 170 basis point improvement in ~~2016. Intermodal~~intermodal gross margin as a ~~percentage~~percent of ~~sales decreased 250 basis points because of rail cost increases and lower customer prices than last year partially offset by improving loaded miles and more favorable mix.~~sales. Truck brokerage gross margin as a percentage of sales ~~decreased 390 basis points due~~was flat compared to ~~lower customer contract rates, increased costs, and a change in customer mix.~~the prior year. Logistics gross margin as a percentage of sales was down ~~210~~160 basis points due ~~primarily~~ to ~~start-up~~higher purchased transportation costs ~~related to new business on boarded this quarter.~~and changes in customer mix.

Mode’s gross margin ~~decreased~~increased to $36.0 million in 2018 from $28.8 million in 2017 ~~from $31.4 million~~due to increases in ~~2016 due primarily to a decrease~~margin in ~~truck brokerage and intermodal margin, partially offset by an increase in logistics gross margin.~~all three business lines. Mode’s gross margin as a percentage of revenue decreased to 11.5% in 2018 from 11.8% in 2017 ~~from 13.5% in 2016~~ due to a ~~300~~130 basis point decline in logistics yields, a ~~280 basis point decline in truck brokerage yields and a 100~~50 basis point decline in intermodal yields partially offset by a 30 basis point improvement in truck brokerage yields.

The following table includes certain items in the consolidated statements of income as a percentage of revenue:

	Three Months Ended				Three Months Ended
	June 30,				June 30,
	2017		2016		2018		2017

Revenue		100.0%		100.0%	100.0%			100.0%

Transportation costs		89.0		86.6		88.4		89.0

Gross margin		11.0		13.4		11.6		11.0

Costs and expenses:
Salaries and benefits		4.9		5.1		5.0		4.9
Agent fees and commissions		1.8		2.1		1.9		1.8
General and administrative		2.2		1.9		1.7		2.2
Depreciation and amortization		0.3		0.3		0.3		0.3
Total costs and expenses		9.2		9.4		8.9		9.2

Operating income		1.8		4.0		2.7		1.8

Hub Group’s salaries and benefits increased to $58.1 million in 2018 from $45.0 million in ~~2017 from $43.6 million in 2016.~~2017. As a percentage of revenue, Hub Group’s salaries and benefits ~~decreased~~increased to 5.0% in 2018 from 4.9% in ~~2017 from 5.1% in 2016.~~2017.

The Hub segment salaries and benefits increase of ~~$1.8~~$12.3 million was primarily due to ~~increases in~~the addition of HGD employees, higher employee bonus of $6.0 million, restricted stock compensation of $1.0 million, commissions sales expense of $0.6 million, payroll taxes of $0.5 million partially offset by lower severance expense of $2.8 million, $1.9 million related to higher headcount and annual merit increases, $0.3 million of compensation expense related to restricted stock, employee benefits and commissions of $0.1 million each. These increases were offset by a decrease in employee bonus expense of $3.4$2.4 million.

Mode’s salaries and benefits expense ~~decreased~~increased to $4.3 million in 2018 from $3.5 million in 2017 ~~from $3.8 million in 2016~~ due primarily to ~~a decrease~~an increase in employee bonus expense.

Hub Group’s headcount as of June 30, 2018 and 2017 was 2,077 and 1,726 respectively, which excludes drivers, as driver costs are included in transportation costs. The increase in Hub’s headcount is due to the acquisition of HGD, which has 342 employees excluding drivers at June 30, 2018. As of June 30, 2018 and 2017, Mode had 123 and 115 ~~employees.~~employees, respectively.

Hub Group’s agent fees and commissions ~~decreased~~increased to $22.0 million in 2018 from $17.0 million in ~~2017 from $18.4 million in 2016.~~2017. As a percentage of revenue, these expenses ~~decreased~~increased to 1.9% in 2018 from 1.8% in ~~2017 from 2.1% in 2016.~~2017.

The Mode segment agent fees and commissions ~~decrease of $1.3~~increased $4.9 million ~~was~~ due primarily to the ~~decrease~~increase in Mode’s gross margin.

Hub Group’s general and administrative expenses increased to $20.2 million in 2018 from $20.1 million in ~~2017 from $16.1 million in 2016.~~2017. These expenses, as a percentage of revenue, ~~increased~~decreased to 1.7% in 2018 from 2.2% in ~~2017 from 1.9% in 2016.~~2017.

~~The~~ Hub segment ~~increase of $4.1 million~~general and administrative expenses decreased $0.6 million. This was due primarily to ~~increases in expenses~~the $3.6 million fair value adjustment related to ~~due diligence~~the Estenson Logistics, LLC acquisition (see Note 5 “Fair Value Measurement”), decreases in travel and ~~acquisition costs~~entertainment of ~~$1.4~~$0.6 million, ~~IT consulting and professional service expense of $1.4 million, an~~ increase ~~in losses~~ on the gain on sale of equipment of ~~$0.5 million, IT maintenance expense of~~ $0.4 million, and ~~rent~~a decrease in insurance expense of $0.3 million. These declines were partially offset by the general and administrative expenses of HGD and an increase in professional services of $0.5 million.

Mode’s general and administrative expenses ~~decreased~~increased to $2.4 million 2018 from $1.8 million in 2017 ~~from $1.9~~due to increases in professional services of $0.6 million and increases in ~~2016 due primarily to a decrease~~IT maintenance expense of $0.3 million. These increases were partially offset by decreases in ~~bad debt expense.~~gross receipt taxes of $0.3 million.

Hub Group’s depreciation and amortization increased to $4.0 million in 2018 from $2.5 million in ~~2017 from $2.1 million in 2016.~~2017. This expense as a percentage of revenue remained consistent at 0.3% in both ~~2017~~2018 and ~~2016.~~2017.

The Hub segment depreciation expense increased to $3.7 million in 2018 from $2.2 million in ~~2017 from $1.8 million in 2016.~~2017. This increase was related primarily to ~~more~~addition of depreciation ~~related~~and amortization due to ~~additional computer software.~~the addition of HGD.

Mode’s depreciation expense ~~remained consistent at~~decreased to $0.2 million in 2018 from $0.3 million in ~~both 2017 and 2016.~~2017.

Total other expense increased to $2.4 million in 2018 from $0.8 million ~~of expense~~ in 2017 ~~from $0.5 million of expense in 2016~~ due to ~~less foreign currency translation gains in 2017 and~~ an increase in interest expense related to our tractor, trailer and container ~~debt.~~debt including the acquisition of HGD.

The provision for income taxes ~~decreased~~increased to $7.5 million in 2018 from $6.2 million in 2017, while the effective tax rate decreased to 25.5% in 2018 from ~~$13.1 million~~39.4% in ~~2016. This decrease~~2017. The provision for income taxes increased primarily due to higher pre-tax income in 2018, while the 2018 effective tax rate was lower primarily due to the ~~decrease in pretax income.~~enactment of the U.S. Tax Cuts and Jobs Act (the “Act”) on December 22, 2017, which reduced the U.S. federal corporate tax rate from 35% to 21%. We ~~provided for income taxes using an effective rate of 39.4% in 2017 and an effective rate of 38.8% in 2016. The 2017~~expect our effective tax rate ~~was higher due~~for the remainder of 2018 will range from 24.5% to ~~state taxes net of federal benefit being concentrated in states with higher apportionment percentages.~~

Net income ~~decreased~~increased to $22.1 million in 2018 from $9.5 million in 2017 ~~from $20.7 million in 2016~~ due primarily to ~~decreased~~increased margin partially offset by higher operating expenses, ~~and~~ higher interest expense, ~~partially offset by lower~~and higher income tax ~~expense in 2017.~~expense.

Six Months Ended June 30, ~~2017~~2018 Compared to the Six Months Ended June 30, ~~2016~~2017

The following table summarizes our revenue by segment and business line (in thousands) for the six months ended June 30:

	Six Months									Six Months									Six Months									Six Months
	Ended June 30, 2017									Ended June 30, 2016									Ended June 30, 2018									Ended June 30, 2017
					Inter-			Hub						Inter-			Hub						Inter-			Hub						Inter-			Hub
					Segment			Group						Segment			Group						Segment			Group						Segment			Group
	Hub		Mode		Elims			Total		Hub		Mode		Elims			Total		Hub		Mode		Elims			Total		Hub		Mode		Elims			Total
Intermodal	$	876,189	$	234,322	$	(28,103	)	$	1,082,408	$	851,940	$	229,329	$	(40,117	)	$	1,041,152	$	1,008,522	$	270,995	$	(17,829	)	$	1,261,688	$	875,843	$	234,269	$	(28,103	)	$	1,082,009
Truck brokerage		211,644		161,069		(695	)		372,018		164,550		148,722		(502	)		312,770		234,955		203,889		(442	)		438,402		210,473		161,031		(695	)		370,809
Logistics		294,507		89,534		(20,506	)		363,535		247,261		62,704		(2,471	)		307,494		342,098		127,093		(28,450	)		440,741		294,508		89,532		(20,506	)		363,534
Dedicated																				134,248		-		(15	)		134,233		-		-		-			-
Total revenue	$	1,382,340	$	484,925	$	(49,304	)	$	1,817,961	$	1,263,751	$	440,755	$	(43,090	)	$	1,661,416	$	1,719,823	$	601,977	$	(46,736	)	$	2,275,064	$	1,380,824	$	484,832	$	(49,304	)	$	1,816,352

Hub Group’s revenue increased to $2.3 billion in 2018 from $1.8 billion in ~~2017 from $1.7 billion in 2016.~~2017.

The Hub segment revenue increased ~~9.4%~~24.6% to ~~$1.4~~$1.7 billion. Intermodal revenue increased 3%15.1% to ~~$876.2 million~~$1.0 billion primarily due to ~~higher~~a 4.9% increase in volume, an increase in fuel revenue, and ~~1% higher volume~~improved pricing. ~~This increase was partially offset by a decrease in price.~~Truck brokerage revenue increased ~~29%~~11.6% to ~~$211.6 due to a 16% volume increase and~~$235.0 million. Truck brokerage handled 3.1% fewer loads, while fuel, mix and price combined were up ~~13%~~14.7%. Logistics revenue increased ~~19%~~16.2% to ~~$294.5~~$342.1 million ~~and related primarily~~due to growth ~~of new customers on-boarded in the second half of 2016 and in the first half of 2017.~~with existing customers.

Mode’s revenue increased ~~10.0%~~24.2% to ~~$484.9~~$602.0 million in ~~2017~~2018 from ~~$440.8~~$484.8 million in ~~2016.~~2017. Mode’s intermodal revenue increased 2%15.7%, truck brokerage revenue increased 8%26.6% and logistics revenue increased ~~43% primarily due to a new customer on-boarded in the second half of last year.~~42.0%.

The following is a summary of operating results for our business segments (in thousands):

	Six Months									Six Months									Six Months									Six Months
	Ended June 30, 2017									Ended June 30, 2016									Ended June 30, 2018									Ended June 30, 2017
					Inter-			Hub						Inter-			Hub						Inter-			Hub						Inter-			Hub
					Segment			Group						Segment			Group						Segment			Group						Segment			Group
	Hub		Mode		Elims			Total		Hub		Mode		Elims			Total		Hub		Mode		Elims			Total		Hub		Mode		Elims			Total
Revenue	$	1,382,340	$	484,925	$	(49,304	)	$	1,817,961	$	1,263,751	$	440,755	$	(43,090	)	$	1,661,416	$	1,719,823	$	601,977	$	(46,736	)	$	2,275,064	$	1,380,824	$	484,832	$	(49,304	)	$	1,816,352
Transportation costs		1,237,978		426,385		(49,304	)		1,615,059		1,101,522		380,107		(43,090	)		1,438,539		1,529,297		533,522		(46,736	)		2,016,083		1,236,462		426,292		(49,304	)		1,613,450
Gross margin		144,362		58,540		-			202,902		162,229		60,648		-			222,877		190,526		68,455		-			258,981		144,362		58,540		-			202,902

Costs and expenses:
Salaries and benefits		81,164		7,053		-			88,217		79,883		7,582		-			87,465		105,909		8,190		-			114,099		81,164		7,053		-			88,217
Agent fees and commissions		31		35,000		-			35,031		27		35,235		-			35,262		25		41,086		-			41,111		31		35,000		-			35,031
General and administrative		36,810		4,128		-			40,938		28,948		3,779		-			32,727		36,170		4,550		-			40,720		36,810		4,128		-			40,938
Depreciation and amortization		4,357		604		-			4,961		3,644		639		-			4,283		7,478		487		-			7,965		4,357		604		-			4,961
Total costs and expenses		122,362		46,785		-			169,147		112,502		47,235		-			159,737		149,582		54,313		-			203,895		122,362		46,785		-			169,147

Operating income	$	22,000	$	11,755	$	-		$	33,755	$	49,727	$	13,413	$	-		$	63,140	$	40,944	$	14,142	$	-		$	55,086	$	22,000	$	11,755	$	-		$	33,755

Hub Group’s transportation costs increased ~~12.3%~~25.0% to $2.0 billion in 2018 from $1.6 billion in ~~2017 from $1.4 billion in 2016.~~2017. Transportation costs in ~~2017~~2018 consisted of purchased transportation costs of ~~$1.43~~$1.7 billion and equipment and driver related costs of $292.1 million compared to 2017 costs of purchased transportation of $1.4 billion and equipment and driver related costs of $182.2 ~~million compared to 2016 costs of purchased transportation of $1.26 billion and equipment and driver related costs of $178.8~~ million.

The Hub segment transportation cost increased by ~~12.4%~~23.7% to $1.5 billion in 2018 from $1.2 billion in ~~2017 from $1.1 billion in 2016.~~2017. Hub segment transportation costs in ~~2017~~2018 included ~~$1.1~~$1.2 billion in purchased transportation, up from ~~$924.1 million~~$1.0 billion in ~~2016.~~2017. The ~~14.4%~~17.4% increase in purchased transportation costs was due primarily to rail cost increases, an increase in fuel costs, higher third party carrier costs, and higher volumes. Equipment and driver related costs increased ~~1.8%~~60.7% to $290.2 million in 2018 from $180.6 million in 2017 ~~from $177.4 million in 2016~~ due primarily to the equipment and driver related costs of HGD, including start-up costs and an increase in ~~fuel costs and depreciation.~~driver pay.

The Mode segment transportation costs increased ~~12.2%~~25.2% to ~~$426.4~~$533.5 million in ~~2017~~2018 from ~~$380.1~~$426.3 million in ~~2016.~~2017. Mode segment transportation costs are primarily purchased transportation costs which increased due to higher rail costs, fuel costs, carrier costs and increased business levels in ~~logistics.~~logistics and intermodal.

Hub Group’s gross margin ~~decreased 9.0%~~increased 27.6% to $259.0 million in 2018 from $202.9 million in ~~2017 from $222.9 million in 2016.~~

The Hub segment gross margin ~~decreased 11.0%~~increased 32.0% to ~~$144.4~~$190.5 million. ~~Hub’s $17.9~~Hub segment margin increase of $46.2 million ~~gross margin decrease~~ resulted from the addition of HGD and growth in intermodal and truck brokerage, partially offset by a decrease in ~~margin in intermodal partially offset by an increase in margin for truck brokerage and~~ logistics. Intermodal gross margin ~~decreased primarily because of lower customer prices than last year~~increased due to improved pricing and higher volume. Partially offsetting margin growth were higher rail ~~cost increases partially offset by improving loaded miles~~ and ~~more favorable mix.~~drayage costs. Truck brokerage margin increased ~~because~~as a result of more spot business and growth with targeted customer accounts. Logistics ~~gross~~ margin ~~increased~~decreased due to ~~growth with new~~changes in customer mix, higher purchased transportation costs and ~~existing customers.~~headwinds from the liquidation of a customer.

As a percentage of revenue, Hub segment ~~revenue,~~ gross margin ~~decreased~~increased to ~~10.4%~~11.1% in ~~2017~~2018 from ~~12.8%~~10.5% in ~~2016~~.2017. Intermodal gross margin increased due to mproved prices partially offset by rail cost and drayage cost increases. Average rail transits were up 0.7 days which negatively impacted our results. All of these factors combined drove a 110 basis point improvement in intermodal gross margin as a ~~percentage~~percent of ~~sales decreased 260 basis points because of lower customer prices than last year and rail cost increases partially offset by improving loaded miles and more favorable mix.~~sales. Truck brokerage gross margin as a percentage of sales ~~was down 360~~increased 20 basis points compared to the prior year due primarily to ~~lower customer contract rates, increased costs, and a change~~increases in ~~customer mix.~~spot market opportunities. Logistics gross margin as a percentage of sales was down ~~130~~220 basis points due to higher purchased transportation costs and changes in customer ~~mix and start-up costs associated with new customer on-boardings.~~mix.

Mode’s gross margin ~~decreased 3.5%~~increased 16.9% to $68.5 million in 2018 from $58.5 million in 2017 ~~from $60.6 million~~due to increases in ~~2016 due primarily to decreases~~margin in ~~intermodal and truck brokerage offset by an increase in logistics.~~all three business lines. Mode’s gross margin as a percentage of revenue decreased to 11.4% in 2018 from 12.1% in 2017 ~~from 13.8%~~due to a 160 basis point decline in ~~2016.~~logistics yields, a 70 basis point decline in intermodal yields and a 50 basis point decline in truck brokerage yields.

The following table includes certain items in the consolidated statements of income as a percentage of revenue:

	Six Months Ended				Six Months Ended
	June 30,				June 30,
	2017		2016		2018		2017

Revenue		100.0%		100.0%	100.0%			100.0%

Transportation costs		88.8		86.6		88.6		88.8

Gross margin		11.2		13.4		11.4		11.2

Costs and expenses:
Salaries and benefits		4.8		5.3		5.0		4.8
Agent fees and commissions		1.9		2.1		1.8		1.9
General and administrative		2.3		2.0		1.8		2.3
Depreciation and amortization		0.3		0.2		0.4		0.3
Total costs and expenses		9.3		9.6		9.0		9.3

Operating income		1.9		3.8		2.4		1.9

Hub Group’s salaries and benefits increased to $114.1 million in 2018 from $88.2 million in ~~2017 from $87.5 million in 2016.~~2017. As a percentage of revenue, salaries and benefits ~~decreased~~increased to 5.0% in 2018 from 4.8% in 2017 ~~from 5.3% in 2016~~.

The Hub segment increase of ~~$1.3~~$24.7 million to $105.9 million in 2018 from $81.2 million in 2017 ~~from $79.9 million in 2016~~ was due primarily to the addition of HGD employees, increases of ~~$4.6~~$9.6 million related to an increase in headcount and annual merit increases, $2.1 million of severance expense, $0.7 million of compensation expense related to restricted stock and $0.2 million of employee benefits. These increases were partially offset by decreases in employee bonus expense, restricted stock compensation of ~~$5.6~~$1.8 million, $1.4 million related to increases in commissions and ~~commission~~payroll taxes of $1.2 million, partially offset by lower severance expense ~~of $0.7~~$2.4 million.

Mode’s salaries and benefits expense ~~decreased~~increased to $8.2 million in 2018 from $7.1 million in ~~2017 from $7.6 million in 2016.~~2017. The ~~decrease~~increase was related primarily to higher employee bonus expense.

Hub Group’s agent fees and commissions expenses ~~decreased~~increased to $41.1 million in 2018 from $35.0 million in ~~2017 from $35.3 million in 2016.~~2017. As a percentage of revenue, these expenses decreased to ~~1.9~~1.8% in ~~2017~~2018 from ~~2.1%~~1.9% in ~~2016.~~2017.

The Mode segment agent fees and commissions ~~decrease~~increase of ~~$0.2~~$6.1 million was due primarily to the ~~decrease~~increase in Mode’s gross margin.

Hub Group’s general and administrative expenses ~~increased~~decreased to $40.7 million in 2018 from $40.9 million in ~~2017 from $32.7 million in 2016.~~2017. As a percentage of revenue, these expenses ~~increased~~decreased to 1.8% in 2018 from 2.3% in ~~2017 from 2.0% in 2016.~~2017.

The Hub segment ~~increase~~decrease in general and administrative expense to $36.2 million in 2018 from $36.8 million in 2017 ~~from $28.9 million in 2016~~ was due primarily to ~~increases in IT consulting and professional service expense of $3.0~~the $3.6 million ~~expenses~~fair value adjustment related to ~~due diligence and~~the Estenson Logistics, LLC acquisition ~~costs~~(see Note 5 “Fair Value Measurement”), decreases in professional services of ~~$2.3~~$1.3 million, ~~IT repairs and maintenance expense~~decreases in travel expenses of ~~$0.8~~$1.2 million, ~~travel and entertainment of $0.6 million, an~~ increase ~~in losses~~ on the gain on sale of equipment ~~of $0.5 million as well as increases in equipment lease expense, bad debt expense~~ and ~~rent~~insurance expense of ~~$0.2~~$0.4 million ~~each.~~each, partially offset by the general and administrative expenses of HGD.

Mode’s general and administrative expenses increased to $4.6 million in 2018 from $4.1 million in ~~2017 from $3.8 million in 2016.~~2017. The increase was primarily due to increases in professional services of $0.8 million and increases in IT maintenance expense of $0.4 million, partially offset by a decrease in bad debt expense of $0.4 million and a decrease in gross receipt taxes of $0.3 million.

Hub Group’s depreciation and amortization increased to $8.0 million in 2018 from $5.0 million in ~~2017 from $4.3 million in 2016.~~2017. This expense as a percentage of revenue increased to 0.4% in 2018 from 0.3% in ~~2017 from 0.2% in 2016.~~

The Hub segment’s depreciation expense increased to $7.5 million in 2018 from $4.4 million in ~~2017 from $3.6 million in 2016.~~2017. This increase was related primarily to addition of depreciation ~~for~~ ~~computer software~~.and amortization due to the addition of HGD.

Mode’s depreciation ~~remained consistent at~~decreased to $0.5 million in 2018 from $0.6 million in ~~both 2017 and 2016.~~2017.

Total other expense increased to $4.5 million in 2018 from $1.6 million in 2017 ~~from $0.4 million in 2016~~ due to ~~less foreign currency translation gains in 2017 and~~ an increase in interest expense related to our tractor, trailer and container ~~debt.~~debt including the acquisition of HGD.

The provision for income taxes ~~decreased~~increased to $12.4 million in 2018 from $12.3 million in 2017, while the effective tax rate decreased to 24.5% from ~~$24.1 million~~38.2%. The provision for income taxes increased primarily due to higher pre-tax income in ~~2016.~~ ~~This decrease~~2018, while the 2018 effective tax rate was lower primarily due to the ~~decrease in pretax income. Our effective rate was 38.2% in~~enactment of the U.S. Tax Cuts and Jobs Act (the “Act”) on December 22, 2017, ~~and 38.4% in 2016. The 2017 effective~~which reduced the U.S. federal corporate tax rate ~~is lower due~~from 35% to the net effect of a decrease related to stock-based compensation and an increase related to unrecognized tax benefits. We expect our effective tax rate for the whole year to range between 38.8% and 39.3%21%.

Net income ~~decreased~~increased to $38.2 million in 2018 from $19.9 million in 2017 ~~from $38.6 million in 2016~~ due primarily to ~~decreased~~increased margin, ~~higher operating expenses and lower other income,~~ partially offset by ~~lower income tax expense in 2017.~~higher operating expenses.

During the first half of ~~2017,~~2018, we funded operations, capital expenditures, capital leases, repayments of debt and stock buy backs related to employee withholding upon vesting of restricted stock through cash flows from operations, proceeds from the issuance of long-term debt and cash on hand. We believe that our cash, cash flows from operations and borrowings available under our Credit Agreement will be sufficient to meet our cash needs for at least the next twelve months.

Cash provided by operating activities for the six months ended June 30, ~~2017~~2018 was approximately ~~$63.1~~$97.6 million, which resulted primarily from income of ~~$19.9~~$38.2 million adjusted for non-cash charges of ~~$38.2~~$53.3 million and a change in operating assets and liabilities of ~~$5.0~~$6.1 million.

Cash provided by operating activities ~~decreased $9.3~~increased $34.5 million in ~~2017~~2018 versus ~~2016.~~2017. The ~~decrease~~increase was due ~~primarily~~ to the ~~decrease~~increase in net income of ~~$18.8~~$18.3 million ~~partially offset by~~and increases in non-cash charges of ~~$5.0~~$15.1 million and operating assets and liabilities of ~~$4.5~~$1.1 million in ~~2017.~~2018.

Net cash used in investing activities for the six months ended June 30, 2018 was $68.0 million. Capital expenditures of $69.3 million related primarily to tractors of $41.7 million, trailers of $12.3 million, other transportation equipment of $0.5 million, technology investments of $11.6 million, containers of $2.9 million and the remainder for leasehold improvements.

In 2018, we placed an order for 3,670 containers and we expect to receive 5,000 containers in 2018 which will be financed with debt. As ofthe date of this report, we had already received approximately 1,246 of the containers. We are also investing in technology projects including transportation management systems and an enterprise resource planning system.

We estimate our capital expenditures will range from $200 million to $220 million for the year.

Net cash used in investing activities for the six months ended June 30, 2017 was $27.2 million. Capital expenditures of $29.6 million related primarily to containers of $14.6 million, technology investments of $8.7 million, transportation equipment of $5.4 million and the remainder for leasehold improvements.

~~In 2017, we expect to purchase 2,100 containers with the possibility of receiving another 1,900 containers based on need which will be financed with debt. As ofthe date of this report, we had already received 1,500 of the containers. We are also investing in technology projects including transportation management systems and satellite tracking.~~

~~We estimate our capital expenditures will range from $85 million to $95 million for the year.~~

~~Net cash used in investing activities for the six months ended June 30, 2016 was $24.1 million.~~ The net cash used in investing activities increased ~~$3.2~~$40.8 million in ~~2017~~2018 from ~~2016~~2017 and was due primarily to tractors and trailers predominantly for our HGD business and technology ~~investments.~~investments, partially offset by lower container purchases in 2018.

The net cash used in financing activities for the six months ended June 30, ~~2017~~2018 was ~~$11.7~~$31.4 million, which resulted from the repayment of long-term debt of ~~$23.1~~$84.1 million, stock tendered for payments of withholding taxes of ~~$3.3~~$4.0 million and capital lease payments of ~~$1.4~~$1.5 million, partially offset by proceeds from the issuance of debt of ~~$16.1~~$58.2 million.

The ~~decrease~~increase in net cash used in financing activities of ~~$80.3~~$19.7 million from ~~2017~~2018 versus ~~2016~~2017 is primarily due to the ~~decrease~~increase in the ~~purchases~~repayments of ~~treasury~~long term debt of $60.9 million, stock tendered for payments of ~~$85.0~~withholding taxes of $0.7 million and capital lease payments of $0.1 million, partially offset by the proceeds from the issuance of debt of $42.0 million.

In ~~2017,~~2018, we expect our cash paid for taxes to be less than ~~2016~~2017 and ~~closer to~~much lower than our income tax expense because of ~~lower pretax income and smaller~~significant favorable timing differences ~~between~~related to depreciation due to the ~~2017 tax return and financial statement depreciation.~~enactment of the Act on December 22, 2017.

We have standby letters of credit that expire at various dates in ~~2017.~~2018 and 2019. As of June 30, ~~2017,~~2018, our letters of credit were ~~$13.5~~$23.0 million.

Our unused and available borrowings under our bank revolving line of credit were ~~$36.5~~$327.0 million as of June 30, ~~2017~~2018 and ~~$38.2~~$284.9 million as of December 31, ~~2016.~~2017. We were in compliance with our debt covenants as of June 30, ~~2017.~~2018.

On July 1, 2017, we entered into a new $350 million Credit Agreement. The Credit Agreement replaces the Restated Credit Agreement dated December 12, 2013. See Note 9 for further discussion. Based on the new debt agreement, the borrowings to complete the Estenson acquisition, the assumed debt as part of the acquisition, the new debt related to container purchases and amortizing the deferred financing fees, we expect interest expense going forward will be approximately $2.4 million per quarter.

We are exposed to market risk related to changes in interest rates on our bank line of credit which may adversely affect our results of operations and financial condition. Although we conduct business in foreign countries, international operations are not material to our consolidated financial position, results of operations, or cash flows. Additionally, foreign currency transaction gains and losses were not material to our results of operations for the six months ended June 30, ~~2017.~~2018. Accordingly, we are not currently

subject to material foreign currency exchange rate risks from the effects that exchange rate movements of foreign currencies would have on our future costs or on future cash flows we would receive from our foreign investment. To date, we have not entered into any

foreign currency forward exchange contracts or other derivative financial instruments to hedge the effects of adverse fluctuations in foreign currency exchange rates. We do not use financial instruments for trading purposes.

We have both fixed and variable rate debt as described in Note 56 to the unaudited consolidated financial statements. Any material increase in market interest rates would not have a material impact on the results of operations for the six months ended June 30, ~~2017.~~2018.

As of June 30, ~~2017 and December 31, 2016, other than our outstanding letters of credit,~~2018, we had no ~~outstanding obligations~~borrowings under our bank revolving line of credit ~~arrangement.~~

and our unused and available borrowings were $327.0 million. As of December 31, 2017, we had $45.0 million of borrowings under our bank revolving line of credit and our unused and available borrowings were $284.9 million.

As of June 30, ~~2017,~~2018, an evaluation was carried out under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of our disclosure controls and procedures. Based upon this evaluation, the Chief Executive Officer and Chief Financial Officer concluded that these disclosure controls and procedures were effective as of June 30, ~~2017.~~2018. There have been no changes in our internal control over financial reporting identified in connection with such evaluation that occurred during the last fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

On July 1, 2017, we completed the acquisition of HGD. We are currently integrating processes, employees, technologies and operations. Management will continue to evaluate our internal controls over financial reporting as we complete our integration.

During the six months ended June 30, ~~2017,~~2018, there have been no material developments from the legal proceedings disclosed in our Annual Report on Form 10-K for our fiscal year ended December 31, ~~2016,~~2017, except those disclosed in Note 78 to the unaudited consolidated financial statements under “Legal Matters,” which is incorporated herein by reference.

During the six months ended June 30, ~~2017,~~2018, there have been no material changes from the risk factors disclosed in our Annual Report on Form 10-K for our year ended December 31, ~~2016.~~2017, except for the following:

Risks related to potential acquisitions or dispositions may adversely affect our business.

From time to time, we evaluate acquisitions and dispositions of assets, businesses and other investments. These transactions may not result in the anticipated benefits or efficiencies.

If any of these risks materialize, the benefits of such acquisition or disposition may not be fully realized, if at all, and our financial condition, results of operations and cash flows could be negatively impacted.

We do not currently have a share repurchase plan in place. During the second quarter of ~~2017,~~2018, we purchased ~~3,404~~2,775 shares at a weighted average price of ~~$40.54~~$44.36 per share related to employee withholding upon vesting of restricted stock.

The exhibits included as part of the Form 10-Q are set forth in the Exhibit Index immediately preceding such Exhibits and are incorporated herein by reference.

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:
Consolidated Balance Sheets – June 30, ~~2017~~2018 (unaudited) and December 31, ~~2016~~2017	43
Unaudited Consolidated Statements of Income and Comprehensive Income – Three Months and Six Months Ended June 30, ~~2017~~2018 and ~~2016~~2017	54
Unaudited Consolidated Statements of Cash Flows – Six Months Ended June 30, ~~2017~~2018 and ~~2016~~2017	65
Notes to Unaudited Consolidated Financial Statements	76
Management’s Discussion and Analysis of Financial Condition and Results of Operations	1514
Quantitative and Qualitative Disclosures about Market Risk	2322
Controls and Procedures	2423
PART II. Other Information	2423

Balance at December 31, 2017	$	4,703
Change in fair value (1)		(3,571	)
Balance at June 30, 2018	$	1,132


Exhibit No.	Description

~~2.1~~	Purchase Agreement dated May 25, 2017 by and between Estenson Logistics, LLC, Truline Corporation, the equity holders named therein, and Hub Group Trucking, Inc. (incorporated by reference to Exhibit 10.1 to our current report on Form 8-K filed with the SEC on May 26, 2017).

~~2.2~~	Amendment No. 1 to Purchase agreement dated July 1, 2017 by and between Estenson Logistics, LLC, Truline Corporation, the equity holders named therein, and Hub Group Trucking, Inc. (incorporated by reference to Exhibit 10.2 to our current report on Form 8-K filed with the SEC on July 6, 2017).

~~2.3~~	Credit Agreement dated July 1, 2017 among Hub Group, Inc., Hub City Terminals, the Guarantors, the Lenders and Bank of Montreal (incorporated by reference to Exhibit 10.1 to our current report on Form 8-Kfile with the SEC on July 6,2017).

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

10.1	Amendment No. 2 to Purchase Agreement dated July 1, 2017 by and between Estenson Logistics, LLC, Truline Corporation, the equity holders named therein, and Hub Group Trucking, Inc.

14	Hub Group, Inc. Code of Business Conduct and Ethics (incorporated by reference from Exhibit 14 to the Registrant’s report on Form 8-K dated February 17, 2017 and filed February 23, 2017, 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, 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, Chief Executive Officer and Chief Financial Officer, respectively, Pursuant to 18 U.S.C. Section 1350.

101	The following financial statements and footnotes from the Hub Group Quarterly Report on Form 10-Q for the quarter ended June 30, ~~2017~~2018 formatted in XBRL: (i) Consolidated Balance Sheets; (ii) Unaudited Consolidated Statements of Income and Other Comprehensive Income; (iii) Unaudited Consolidated Statements of Cash Flows; and (iv) Notes to Unaudited Consolidated Financial Statements.


		HUB GROUP, INC.

DATE:	~~January 5,~~August 03, 2018	/s/ Terri A. Pizzuto
		Terri A. Pizzuto
		Executive Vice President, Chief Financial
		Officer and Treasurer
		(Principal Financial Officer)

	Three Months		Six Months
	Ended		Ended
	June 30, 2017		June 30, 2017
Revenue	$	983,029	$	1,930,373
Net income	$	12,450	$	24,053
Earnings per share
Basic	$	0.38	$	0.73
Diluted	$	0.38	$	0.72

	As of June 30, 2017									As of December 31, 2016
					Inter-			Hub						Inter-			Hub
					Segment			Group						Segment			Group
	Hub		Mode		Elims			Total		Hub		Mode		Elims			Total
Total assets	$	1,201,733	$	169,700	$	(7,663	)	$	1,363,770	$	1,178,110	$	191,374	$	(9,225	)	$	1,360,259
Goodwill		232,877		29,389		-			262,266		232,987		29,389		-			262,376

	As of June 30, 2018									As of December 31, 2017
					Inter-			Hub						Inter-			Hub
					Segment			Group						Segment			Group
	Hub		Mode		Elims			Total		Hub		Mode		Elims			Total
Total assets	$	1,513,130	$	227,425	$	(7,051	)	$	1,733,504	$	1,470,792	$	210,088	$	(9,939	)	$	1,670,941
Goodwill	$	318,717	$	29,389	$	-		$	348,106	$	319,272	$	29,389	$	-		$	348,661

	Period Ended
	June 30,			December 31,
	2017			2016
	(in thousands)

Secured Equipment Notes due in June 2022 with monthly principal and interest payments between $0.03 million and $0.3 million commencing in July 2017; interest is paid monthly at a fixed annual rate of 2.62%	$	16,149		$	-

Secured Equipment Notes due on various dates in 2021 with monthly principal and interest payments between $0.01 million and $0.3 million commencing on various dates in 2016; interest is paid monthly at a fixed annual rate between 2.04% and 2.96%		53,635			59,836

Secured Equipment Notes due on various dates in 2020 with monthly principal and interest payments between $0.04 million and $0.4 million commencing on various dates in 2015 and 2016; interest is paid monthly at a fixed annual rate between 1.72% and 2.26%		42,333			48,633

Secured Equipment Notes due on various dates in 2019 with monthly principal and interest payments between $0.08 million and $0.4 million commencing on various dates in 2014; interest is paid monthly at a fixed annual rate between 1.87% and 2.24%		40,374			49,464

Secured Equipment Notes due in June 2018 with quarterly principal and interest payments of $0.5 million commencing in August 2013; interest is paid quarterly at a fixed annual rate between 1.9% and 2.0%		1,232			2,759
		153,723			160,692

Less current portion		(47,582	)		(45,163	)
Total long-term debt	$	106,141		$	115,529