September 16, 2020

Securities and Exchange Commission

Division of Corporation Finance

100 F Street, N.E.

Washington, DC  20549-3628

Ethan Horowitz

Form 10-K for the Fiscal Year Ended December 31, 2019

Form 8-K filed February 6, 2020

File No. 000-27754

Dear Ms. Lu and Mr. Horowitz:

Hub Group, Inc. (“we” or the “Company”) is writing in response to your comment letter dated September 2, 2020, setting forth comments of the staff of the Division of Corporation Finance (the “Staff”) in regard to the Company’s Form 10-K for the fiscal year ended December 31, 2019 and Form 8-K filed February 6, 2020. We have addressed your letter by reproducing each comment below, in italicized type, and providing the Company’s response immediately following each comment.

Response:

The Company respectfully advises the Staff that it does not consider its four business lines to be operating segments pursuant to FASB ASC 280-10-50.  We view the four business lines as the services we offer our customers rather than operating segments. The revenue information presented is to comply with the entity-wide disclosure requirements in ASC 280-10-05-5.

We have concluded we have one operating and reportable segment which is the consolidated business. Our strategy is to offer our customers multi-modal supply chain management solutions to provide an integrated, cost-effective and high service solution.  Our services are complementary to one another, allowing us to provide our customers with comprehensive supply chain management solutions designed to maximize consolidated customer revenue rather than focus on any one business line.  In order to achieve the Company’s vision of being the industry’s premier customer-centric supply chain solutions provider, resource allocation decisions are made by the CODM based on consolidated performance, as we offer all four business lines to our customers.

To further demonstrate our integrated strategy, the Company’s sales and marketing, account management (customer service), customer solutions, pricing, operations, and procurement organizations, together with other support functions, including legal, information technology, accounting and human resources are not specific to its business lines.  The strategic focus of our sales, marketing, and account management organizations is to foster long-term customer relationships, which allow us to better understand our customers’ needs and specifically tailor our services to them.  Our customer solutions group works with pricing, account management and operations teams to enhance customer margins across all lines of business. Examples of such margin enhancement projects include network optimization, matching of inbound and outbound loads, reducing empty miles, improving our recovery of accessorial charges, enhancing asset utilization, reducing repositioning costs, providing holistic solutions and improving low profit shipments.  These margin enhancement initiatives are focused on maximizing consolidated margin rather than that of any individual business lines.  Consideration of the four business lines as operating segments would be contrary to this integrated strategy.

The Company’s CODM is Dave Yeager, Chairman of the Board of Directors and Chief Executive Officer.  Mr. Yeager is responsible for setting the Company’s strategies and initiatives, establishing policies, allocating resources and assessing performance.  The individuals listed below, including title and role, report to the Company’s CODM:

As demonstrated above, the Company does not have specific individuals who are solely responsible for each of the four business lines that report to the CODM.

Financial information is provided to the CODM on a monthly basis.  This information consists of a monthly comparison of consolidated net income, diluted EPS and consolidated income statement results to the prior year and budget, employee headcount changes, an analysis of consolidated costs and expenses, and a comparison of the current consolidated balance sheet to recent months.  In addition, weekly and monthly operating financial data and statistics, including sales, volume and gross margin trends, on time performance, number of truck drivers hired and lost, empty miles and percentage of drayage loads covered with Hub assets, are provided. The Company’s Chief Financial Officer meets one-on-one with the CODM on a monthly basis to discuss these financial results. The CODM also reviews a monthly “vital signs” report which focuses on consolidated results, together with the accompanying narrative that is sent to the Board.

The business line operating results reviewed by the CODM are limited to loads, revenue and gross margin (which primarily consists of transportation costs and ancillary charges directly attributable to a given transaction). The financial information used by the CODM to make decisions related to the allocation of resources and the investment in capital expenditures includes other operating expenses, such as salaries and related expenses, and the balance sheet which are prepared on a consolidated basis. Key metrics used by the CODM to make decisions that are included in the monthly CODM package are Return on Invested Capital, EBITDA and EBITDA as a % of Gross Margin, all of which are presented only on a consolidated basis.

The CODM’s resource allocation decisions are focused on the consolidated business and results as evidenced by, among other things:  (i) the CODM’s decision to invest in a transportation management operating platform and accounting system that are utilized across all business lines, (ii) the Company’s strategy to pursue acquisitions that broaden and enhance its customer service offerings, (iii) the Company’s investments in capital expenditures to purchase operating equipment that is shared amongst multiple business lines and (iv) the construction of a corporate campus that fosters top notch customer-centric operating teams that assist customers who are serviced by all of our lines of business. Accordingly, the CODM’s resource allocation decisions are intended to drive consolidated revenue and income growth, not growth for a specific business line. Financial information used by the CODM to make decisions related to the allocation of resources and the investment in capital expenditures is prepared on a consolidated basis, which further supports that we have only one operating and reporting segment.

The CODM holds a weekly meeting with all of his direct reports (noted above) together with several of the Chief Operating Officer’s direct reports, including:

At such weekly meetings, the group reviews many topics, including but not limited to strategic initiatives, technology programs, potential strategic and commercial transactions, capital and resource allocation, debt and capital management activities, employee development and financial performance.  The broad attendance at these regular meetings demonstrates the importance of each executive to the overall integrated strategy.  The Chief Solutions Officer presents weekly sales, volume and gross margin trends, along with several operating statistics, including on-time performance, number of truck drivers hired and lost, empty miles and percentage of drayage loads covered with Hub assets.  The attendees also discuss key positive and negative factors impacting the business the prior week. The Chief Financial Officer also discusses monthly financial results with this group.

The responsibilities of our key executives are based on the needs of the consolidated business which relate to multiple lines of business. The Company does not have specific individuals who are solely responsible for each of the four business lines that report to the CODM. To support our integrated strategy, we have consolidated responsibility to one key executive in each of the following areas for all lines of business: customer pricing, procurement of transportation and other services, account management, sales, marketing, equipment maintenance and repair, operations for which we use drivers, bid strategy, maximizing overall margin, performance of our business lines for an outsourced transportation solutions customer, legal, human resources, technology and accounting.  For example, the Executive Vice President, President of Hub Group Trucking is responsible for drivers. Drivers provide transportation services to customers in connection with a number of the services that we offer across the business lines. The Executive Vice President of Account Management is responsible for customer support for all customers, and each individual customer may receive services in multiple business lines customized to meet their supply chain needs. In keeping with this structure, the vast majority of each executive’s compensation is based on consolidated results. To a small degree, certain incentives are based on  operational metrics relevant to the individual’s responsibilities described above.  For example, cost savings goals for the Executive Vice President, President of Hub Group Trucking include improving driver turnover, driver productivity and driver hiring metrics.

In summary, our CODM makes key resource allocation decisions and assesses performance based on the Company’s consolidated results. In addition, the Company does not have segment managers solely focused on our four business lines reporting to the CODM. The responsibilities of the key executives are to address the needs of the consolidated business and are not specific to the business lines. Based on these considerations, we have concluded that our four business lines are not operating segments and that we have one operating and reportable segment which is the consolidated business.

Response:

The Company respectfully advises the Staff that the comments from the Company’s second quarter 2020 earnings conference call relating to a new operating structure referred to a further integration of the Company’s transportation management system and individual customer account management teams to service customers.  The Company continues to further develop its customer-centric structure, such that a customer utilizing multiple service lines would have a single account management representative allowing the account management team to better anticipate a customer’s needs and offer a holistic solution. This change further supports our integrated strategy and conclusion that we have one operating and reportable segment.

Response:

The Company acknowledges the Staff’s comment and respectfully advises the Staff that the Company has discontinued the practice of providing reconciliations of non-GAAP financial measures in this manner.  Please refer to Exhibit 99.1 to the Forms 8-K filed April 30, 2020 and July 30, 2020 in connection with the earnings releases for the first and second quarters of 2020, respectively.  In addition, in future earnings releases reporting non-GAAP earnings per share, the Company will provide a reconciliation of such measure to GAAP earnings per share.

Response:

The Company acknowledges the Staff’s comment. In future earnings releases that present free cash flow, the Company will describe the Company’s calculation of free cash flow as net cash provided by operating activities, plus proceeds from sales of equipment, less amounts used to purchase property and equipment.

Please contact the undersigned at (630) 271-3623 if you have any questions or require additional information.

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