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Acquisition | 9 Months Ended
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Sep. 30, 2022
Business Combinations [Abstract] |
Acquisition | NOTE 2. Acquisitions TAGG Logistics Acquisition On August 22, 2022, we acquired 100% of the equity interests of TAGG Logistics, LLC (“TAGG”), a provider of e-commerce, B2B and omnichannel fulfillment solutions, including warehousing and transportation services. Total consideration for the transaction was $103.5 million in cash. TAGG is a nationwide provider with over 4 million square feet of warehousing space throughout the United States allowing for responsive e-commerce and B2B fulfillment services. The acquisition improves our presence in the consolidation and fulfillment space and adds a complementary e-commerce offering to serve our customers' multimodal transportation and logistics needs. The acquisition adds scale to our logistics service line and is expected to result in complementary cross-selling opportunities. The initial accounting for the acquisition of TAGG is incomplete as we, with the support of our valuation specialist, are in the process of finalizing the fair market value calculations of the acquired net assets. In addition, we are in the preparation and review process of the applicable future cash flows used in determining the purchase accounting. Finally, certain post-closing activities outlined in the acquisition agreement remain incomplete. As a result, the amounts recorded in the consolidated financial statements related to the TAGG acquisition are preliminary and the measurement period remains open. The following table summarizes the preliminary allocation of the total purchase consideration to the net assets acquired and liabilities assumed as of the date of the acquisition (in thousands):
| August 22, 2022 |
Cash and cash equivalents | $ | 839 |
Accounts receivable trade |  | 24,841 |
Prepaid expenses and other current assets |  | 1,685 |
Property and equipment |  | 6,893 |
Right of use assets - operating leases |  | 56,689 |
Other intangibles |  | 27,300 |
Goodwill |  | 50,754 |
Other assets |  | 1,705 |
Total assets acquired | $ | 170,706 |
Accounts payable trade | $ | 9,193 |
Accrued payroll |  | 2,536 |
Accrued other |  | 758 |
Lease liability - operating leases short-term |  | 14,465 |
Lease liability - operating leases long-term |  | 40,254 |
Total liabilities assumed | $ | 67,206 |
Total consideration | $ | 103,500 |
Cash paid, net | $ | 102,661 |
The TAGG acquisition was accounted for as a purchase business combination in accordance with ASC 805 “Business Combinations.” Assets acquired and liabilities assumed were recorded in the accompanying consolidated balance sheet at their estimated fair values as of August 22, 2022 with the remaining unallocated purchase price recorded as goodwill. The goodwill recognized in the TAGG acquisition was primarily attributable to potential expansion and future development of the acquired business. Tax history and attributes are not inherited in an equity purchase of this kind, however, the goodwill and other intangibles recognized in this purchase will be fully tax deductible over a period of 15 years. We incurred approximately $0.6 million and $3.1 million of transaction costs associated with this transaction prior to the closing date that are reflected in general and administrative expense in the accompanying Consolidated Statements of Income for the three and nine months ended September 30, 2022, respectively. The components of “Other intangibles” listed in the above table as of the acquisition date are summarized as follows (in thousands):
|  |  |  | Accumulated |  |  | Balance at |  |  | Estimated Useful
| Amount |  |  | Amortization |  |  | September 30, 2022 |  |  | Life
Customer relationships | $ | 22,600 |  |  | $ | 249 |  |  | $ | 22,351 |  |  | 10 years
Developed technology | $ | 4,000 |  |  | $ | 88 |  |  | $ | 3,912 |  |  | 5 years
Trade name | $ | 700 |  |  | $ | 52 |  |  | $ | 648 |  |  | 18 months
The above intangible assets are amortized using the straight-line method. Amortization expense related to this acquisition for both the three and nine months ended September 30, 2022 was $0.4 million. The intangible assets have a weighted average useful life of approximately 9.0 years. Amortization expense related to TAGG for the next five years is as follows (in thousands):
|  | Total |
Remainder of 2022 |  | $ | 882 |
2023 |  |  | 3,527 |
2024 |  |  | 3,125 |
2025 |  |  | 3,060 |
2026 |  |  | 3,060 |
From the date of the acquisition through September 30, 2022, TAGG's revenue was $19.3 million and operating income was $0.7 million. Choptank Transport, LLC Acquisition On October 19, 2021, we acquired 100% of the equity interests of Choptank Transport, LLC (“Choptank”). Total consideration for the transaction was $127.6 million in cash and the settlement of accounts receivable due from Choptank of $0.3 million. In connection with the acquisition, we granted approximately $22 million of restricted stock to Choptank's owners and senior management team, which is subject to certain vesting conditions. The grants of restricted stock were made pursuant to award agreements and issued under our 2017 Long Term Incentive Plan. The acquisition of Choptank enhanced our refrigerated trucking transportation solutions offering and complemented our growing fleet of refrigerated intermodal containers. Choptank has developed a proprietary technology platform that we will leverage to enhance our truck brokerage service line. The following table summarizes the total purchase consideration to the net assets acquired and liabilities assumed as of the date of the acquisition (in thousands):
| October 19, 2021 |
Cash and cash equivalents | $ | 5,596 |
Accounts receivable trade |  | 70,989 |
Prepaid expenses and other current assets |  | 419 |
Property and equipment |  | 169 |
Right of use assets - operating leases |  | 922 |
Other intangibles |  | 60,500 |
Goodwill |  | 54,980 |
Total assets acquired | $ | 193,575 |
Accounts payable trade | $ | 60,970 |
Accrued payroll |  | 3,458 |
Accrued other |  | 359 |
Lease liability - operating leases short-term |  | 309 |
Lease liability - operating leases long-term |  | 613 |
Total liabilities assumed | $ | 65,709 |
Total consideration | $ | 127,866 |
Cash paid, net | $ | 122,270 |
The Choptank acquisition was accounted for as a purchase business combination in accordance with ASC 805 “Business Combinations.” Assets acquired and liabilities assumed were recorded in the accompanying consolidated balance sheet at their estimated fair values as of October 19, 2021 with the remaining unallocated purchase price recorded as goodwill. The goodwill recognized in the Choptank acquisition was primarily attributable to potential expansion and future development of the acquired business. Tax history and attributes are not inherited in an equity purchase of this kind, however, the goodwill and other intangibles recognized in this purchase will be fully tax deductible over a period of 15 years. The components of “Other intangibles” listed in the above table as of the acquisition date are summarized as follows (in thousands):
|  |  |  | Accumulated |  |  | Balance at |  |  | Estimated Useful
| Amount |  |  | Amortization |  |  | September 30, 2022 |  |  | Life
Customer relationships | $ | 36,300 |  |  | $ | 2,420 |  |  | $ | 33,880 |  |  | 15 years
Carrier network | $ | 14,400 |  |  | $ | 3,600 |  |  | $ | 10,800 |  |  | 4 years
Developed technology | $ | 6,500 |  |  | $ | 929 |  |  | $ | 5,571 |  |  | 7 years
Trade name | $ | 3,300 |  |  | $ | 2,200 |  |  | $ | 1,100 |  |  | 18 months
The above intangible assets are amortized using the straight-line method. Amortization expense related to this acquisition for the three and nine months ended September 30, 2022 was $2.3 million and $6.9 million, respectively. The intangible assets have a weighted average useful life of approximately 10.53 years. Amortization expense related to Choptank for the next five years is as follows (in thousands):
|  | Total |
Remainder of 2022 |  | $ | 2,287 |
2023 |  |  | 7,499 |
2024 |  |  | 6,949 |
2025 |  |  | 6,049 |
2026 |  |  | 3,349 |
The following table presents the total carrying amount of goodwill (in thousands):
| Total |
Balance at December 31, 2021 | $ | 576,913 |
Acquisition |  | 51,180 |
Balance at September 30, 2022 | $ | 628,093 |
The changes noted as "acquisition" in the above table refer to the purchase accounting for the TAGG acquisition and purchase accounting adjustments related to the Choptank acquisition. While TAGG's actual results are included since August 22, 2022 and Choptank's actual results are included since October 19, 2021, the following unaudited pro forma consolidated results of operations present the effects of TAGG and Choptank as though they had been acquired as of January 1, 2021 (in thousands, except for per share amounts):
| Three Months Ended |  |  | Nine Months Ended |
| September 30, 2022 |  |  | September 30, 2022 |
Revenue | $ | 1,397,880 |  |  | $ | 4,185,337 |
Net income | $ | 87,439 |  |  | $ | 278,780 |
Earnings per share |  |  |  |  |
Basic | $ | 2.64 |  |  | $ | 8.33 |
Diluted | $ | 2.61 |  |  | $ | 8.25 |
| Three Months Ended |  |  | Nine Months Ended |
| September 30, 2021 |  |  | September 30, 2021 |
Revenue | $ | 1,251,863 |  |  | $ | 3,452,175 |
Net income | $ | 43,073 |  |  | $ | 86,364 |
Earnings per share |  |  |  |  |
Basic | $ | 1.29 |  |  | $ | 2.58 |
Diluted | $ | 1.27 |  |  | $ | 2.55 |
The unaudited pro forma consolidated results for the periods were prepared using the acquisition method of accounting and are based on the historical financial information of Hub, TAGG and Choptank. 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 TAGG and Choptank acquisitions as of January 1, 2021.

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- Definition The entire disclosure for a business combination (or series of individually immaterial business combinations) completed during the period, including background, timing, and recognized assets and liabilities. The disclosure may include leverage buyout transactions (as applicable). + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -URI https://asc.fasb.org/topic&trid=2303972 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -SubTopic 20 -Section 50 -Paragraph 5 -Subparagraph (b) -URI https://asc.fasb.org/extlink&oid=128092470&loc=d3e4946-128472 + Details
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- References No definition available. + Details
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