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A Hub Group last-mile business acquired by Forward Air late last year contributed $64 million to first-quarter revenue, the company said in an earnings report.
The Oak Brook, Illinois-based logistics company’s division, which includes the last mile, he reported on Thursday revenue of $480 million, a 2.4% year-over-year improvement. Total quarterly revenue fell just $1 billion after reaching $1.2 billion a year earlier.
Hub Group got a quick return on its $262 million December acquisition of Forward Air’s last-mile business, and the company is on the hunt for more M&A deals.
President and CEO Phil Yeager told analysts it expects last mile to grow further in the third and fourth quarters as contracts are now being signed under negotiation. He said the division experienced a spring upswing as its brokerage arm leveraged newly acquired last-mile assets to sell other services to customers and generate new business.
“Some of those wins have already started,” Yeager said.
The final mile revenue boosted the Hub Group’s quarterly financial results in an otherwise dismal quarter for the freight market, which was also hampered by January’s severe weather.
The intermodal and The transportation sector reported revenue of $552 million, down from $709 million in the first quarter of last year.
Executives remained upbeat, buoyed by the performance of the last-mile market, and said they are looking for more opportunities to strengthen the company’s position when the market turns. The Hub Group reported cash and equivalents of $195.3 million for the first quarter, giving it flexibility for future acquisitions.
“We’ve done pretty well in the consolidations at this point … and so I think we’re back in the market,” Yeager told analysts on Thursday.
Yeager said future acquisitions will focus on building non-asset-based logistics platforms, including brokerage.
“Now it’s about adding specialties or scale to them and I think that will continue to be a focus for us,” he said. “We have targets that we’re really focused on, but we really have a great pipeline and I’m very pleased with how our team is going about identifying new opportunities and vetting them very quickly.”