Hub Group expands its fulfillment solutions offering through the acquisition of TAGG Logistics

Rhea-AI Summary

Hub Group has acquired TAGG Logistics, enhancing its fulfillment solutions and expanding its footprint to 9 million square feet. The acquisition drives diversification into non-asset based logistics, contributing over 40% of total revenue. With a cash consideration of $103 million, Hub anticipates generating around $200 million in annual revenue from TAGG in 2022. This strategic move aligns with Hub Group’s target of achieving $5.5-$6.5 billion in revenue by 2025.

Positive

• Acquisition expands fulfillment solutions to 9 million square feet.
• Diversifies into non-asset based logistics, now over 40% of total revenue.
• Significant cross-selling opportunities for both companies.
• TAGG contributes approximately $200 million in annual revenue.

Negative

• None.

Hub Group expands its fulfillment solutions offering through the acquisition of e-commerce, B2B and omnichannel logistics services provider, TAGG Logistics

Transaction Highlights:

• Expands Hub Group’s consolidation and fulfillment solutions offering, growing footprint to 9 million square feet
• Drives continued diversification into non-asset based logistics and brokerage, which now represents over 40% of total revenue
• Significant cross-selling synergies for both TAGG’s and Hub’s customers
• TAGG’s experienced management team will remain with the business

OAK BROOK, Ill., Aug. 22, 2022 (GLOBE NEWSWIRE) -- Hub Group (Nasdaq: HUBG) announced today that it acquired TAGG Logistics (“TAGG”), an industry-leading provider of e-commerce, B2B and omnichannel fulfillment solutions, including warehousing and transportation services. Since its founding in 2006, TAGG has grown into a nationwide provider with over 4 million square feet of warehousing space throughout the US allowing for best-in-class, responsive e-commerce and B2B fulfillment capabilities.

The acquisition bolsters Hub Group’s presence in the consolidation and fulfillment space and adds a complementary e-commerce offering to serve its customers' multimodal transportation and logistics needs. The addition of TAGG is an important strategic milestone toward achieving Hub Group’s goal of $5.5-$6.5 billion of revenue by 2025.

“We are excited to welcome TAGG’s employees, customers and vendors to Hub Group,” said Hub Group Chairman and CEO David Yeager. “This acquisition advances our strategy to provide the industry’s premier supply chain solutions and expands our position in the long term, high growth e-commerce fulfillment sector.”

The acquisition adds scale to Hub’s logistics service line and is expected to result in numerous complementary cross-selling opportunities for both Hub’s and TAGG’s customer bases.

“Our team is excited to join Hub Group,” said TAGG founder and CEO Tod Yazdi. “We share similar values of service, integrity and innovation. We believe Hub Group’s capabilities and reputation for excellence, combined with our nationwide facility footprint and delivery capabilities, will unlock significant value for our customers.”

Cash consideration for the transaction of $103 million was funded with cash on hand. In connection with the acquisition Hub Group granted contingent compensation to the TAGG senior management team to incentivize their retention and drive continued growth of the business. TAGG expects to generate approximately $200 million of annual revenue in 2022. TAGG has approximately 800 employees at its 18 facilities.

Update on Return of Capital activities.

On August 8, 2022 Hub Group completed a privately negotiated, approximately $35 million repurchase of Class A and Class B common stock at the Class A common stock closing price of $80.83 per share. In connection with this repurchase the Hub Group Board of Directors approved an increase to the Company’s repurchase authorization so that $75 million remained under the program. Since that time the Company has purchased an additional $15 million of Class A common stock through open market transactions, bringing our total repurchase to approximately $50 million this quarter, and intends to continue to execute on its repurchase program.

Winston & Strawn LLP and Stephens Inc. served as lead legal counsel and financial advisor, respectively, to Hub Group on the TAGG transaction.

CERTAIN FORWARD-LOOKING STATEMENTS: Statements in this press release that are not historical may express or imply projections of revenues or expenditures, statements of plans and objectives or future operations or statements of future economic performance. Forward-looking statements are inherently uncertain and subject to risks, uncertainties and other factors that might cause the actual performance of Hub Group, Inc. to differ materially from those expressed or implied by this discussion and, therefore, should be viewed with caution. All forward-looking statements and information are provided pursuant to the safe harbor established under the Private Securities Litigation Reform Act of 1995 and should be evaluated in the context of these factors. Forward-looking statements generally may be identified by the use of forward-looking terminology such as “trends”, “assumptions”, “target”, “guidance”, “outlook”, “opportunity”, “future”, “plans”, “goals”, “objectives”, “expects”, “anticipate”, “expected”, “may”, “will”, “would”, “could”, “intend”, “believe”, “potential”, “projected”, “estimate” (or the negative or derivative of each of these terms), or similar words, and include our statements regarding our outlook, profit improvement initiatives and capital expenditures. These forward-looking statements are based on management's experience and perception of trends, current conditions, and anticipated future developments, as well as other factors believed to be appropriate. We believe these statements and the assumptions and estimates contained in this release are reasonable based on information that is currently available to us. Factors that could cause actual results to differ materially include general or regional economic conditions and health concerns; the effect of the ongoing COVID-19 pandemic, including any spikes, outbreaks or variants of the virus, as well as any future government actions taken in response to the pandemic, including on our business operations, as well as its impact on general economic and financial market conditions and on our customers, counterparties, employees and third-party service providers; our ability to sustain or the effects of plans intended to improve operational execution and performance; changes in or implementation of governmental or regulatory rules and interpretations affecting tax, wage and hour matters, health and safety, labor and employment, insurance or other undeterminable areas; intermodal costs and prices, the integration of TAGG, Choptank or NSD and any other acquisitions and expenses relating thereto; the future performance of Hub’s Intermodal and Transportation Solutions, Truck Brokerage and Logistics business lines; driver shortages; the amount and timing of strategic investments or divestitures by Hub; the failure to implement and integrate critical information technology systems; cyber security incidents; retail and other customers encountering adverse economic conditions and other factors described from time to time in Hub Group's SEC reports, press releases and other communications. Hub Group assumes no obligation to update any such forward-looking statements.

About Hub Group: Hub Group offers comprehensive transportation and logistics management solutions. Keeping our customers’ needs in focus, Hub Group designs, continually optimizes, and applies industry-leading technology to our customers’ supply chains for better service, greater efficiency, and total visibility. As an award-winning, publicly traded company (Nasdaq: HUBG) with over $5 billion in revenue, our 6,000 employees and drivers across the globe are always in pursuit of “The Way Ahead” – a commitment to service, integrity and innovation. For more information, visit hubgroup.com.

Source: Hub Group, Inc.

Contact:
Maralee Volchko
630-271-3745

FAQ

What is the purpose of Hub Group's acquisition of TAGG Logistics?

The acquisition aims to enhance Hub Group's fulfillment solutions and expand its logistics capabilities.

How much did Hub Group pay for TAGG Logistics?

Hub Group acquired TAGG Logistics for $103 million in cash.

What are the expected financial impacts of TAGG Logistics on Hub Group?

TAGG is expected to generate approximately $200 million in annual revenue for Hub Group in 2022.

How will the acquisition affect Hub Group's revenue goals?

The acquisition is a strategic milestone toward achieving Hub Group’s revenue target of $5.5-$6.5 billion by 2025.

What synergies are expected from the acquisition of TAGG Logistics?

The acquisition is expected to create significant cross-selling opportunities for both Hub Group and TAGG's customers.