Hub Group, Inc. Reports First Quarter 2014 Earnings

HUB GROUP, INC.

UNAUDITED CONSOLIDATED STATEMENTS OF INCOME

(in thousands, except per share amounts)

Three Months

Ended March 31,

2014

2013

Revenue

$ 848,449

$ 768,980

Transportation costs

759,705

681,642

Gross margin

88,744

87,338

Costs and expenses:

Salaries and benefits

37,092

34,583

Agent fees and commissions

13,666

13,274

General and administrative

15,432

13,191

Depreciation and amortization

2,058

1,553

Total costs and expenses

68,248

62,601

Operating income

20,496

24,737

Other income (expense):

Interest expense

(407)

(290)

Interest and dividend income

14

29

Other, net 

(205)

(11)

Total other (expense) income 

(598)

(272)

Income before provision for income taxes

19,898

24,465

Provision for income taxes

7,863

9,101

Net income

$  12,035

$   15,364

Basic earnings per common share

$      0.33

$      0.42

Diluted earnings per common share

$      0.33

$      0.42

Basic weighted average number of shares outstanding

36,661

36,855

Diluted weighted average number of shares outstanding

36,949

HUB GROUP, INC.

UNAUDITED FINANCIAL INFORMATION BY SEGMENT

(in thousands)

Three Months

Ended March 31, 2014

Hub

Mode

Inter-Segment Elims

Hub Group Consolidated

Revenue

$ 653,409

$ 208,906

$         (13,866)

$      848,449

Transportation costs

588,912

184,659

(13,866)

759,705

Gross margin

64,497

24,247

–

88,744

Costs and expenses:

Salaries and benefits

33,337

3,755

–

37,092

Agent fees and commissions

11

13,655

–

13,666

General and administrative

13,739

1,693

–

15,432

Depreciation and amortization

1,517

541

–

2,058

Total costs and expenses

48,604

19,644

–

68,248

Operating income

15,893

4,603

–

20,496

HUB GROUP, INC.

UNAUDITED FINANCIAL INFORMATION BY SEGMENT

(in thousands)

Three Months

Ended March 31, 2013

Hub

Mode

Inter-Segment Elims

Hub Group Consolidated

Revenue

$ 592,651

$ 187,460

$         (11,131)

$      768,980

Transportation costs

527,471

165,302

(11,131)

681,642

Gross margin

65,180

22,158

–

87,338

Costs and expenses:

Salaries and benefits

30,777

3,806

–

34,583

Agent fees and commissions

449

12,825

–

13,274

General and administrative

11,698

1,493

–

13,191

Depreciation and amortization

1,020

533

–

1,553

Total costs and expenses

43,944

18,657

–

62,601

Operating income

21,236

3,501

–

24,737

HUB GROUP, INC.

UNAUDITED CONSOLIDATED BALANCE SHEETS

(in thousands, except share amounts)

March 31,

December 31,

2014

2013

(Unaudited)

ASSETS

CURRENT ASSETS:

Cash and cash equivalents

$      75,297

$          68,964

Accounts receivable trade, net

413,426

371,528

Accounts receivable other

16,127

26,569

Prepaid taxes

319

409

Deferred taxes

7,227

5,826

Prepaid expenses and other current assets

13,334

12,738

TOTAL CURRENT ASSETS

525,730

486,034

Restricted investments

20,871

20,754

Property and equipment, net

276,743

260,400

Other intangibles, net

15,405

15,729

Goodwill, net

262,978

263,032

Other assets

2,831

1,994

TOTAL ASSETS

$ 1,104,558

LIABILITIES AND STOCKHOLDERS’ EQUITY

CURRENT LIABILITIES:

Accounts payable trade

$    263,697

$        232,350

Accounts payable other

22,589

24,957

Accrued payroll

13,971

17,000

Accrued other

37,201

42,834

Current portion of capital lease

2,433

2,413

Current portion of long term debt

5,974

1,771

TOTAL CURRENT LIABILITIES

345,865

321,325

Long term debt

26,509

6,475

Non-current liabilities

20,399

22,304

Non-current portion of capital lease

17,841

18,477

Deferred taxes

121,171

117,835

STOCKHOLDERS’ EQUITY:

Preferred stock, $.01 par value; 2,000,000 shares authorized; no shares issued or outstanding in 2014 and 2013

–

–

Common stock

     Class A: $.01 par value; 97,337,700 shares authorized and 41,224,792 shares issued in 2014 and 2013; 36,778,746 shares outstanding in 2014 and 36,626,384 shares outstanding in 2013

412

412

     Class B: $.01 par value; 662,300 shares authorized; 662,296 shares issued and outstanding in 2014 and 2013

7

7

Additional paid-in capital

163,481

167,357

Purchase price in excess of predecessor basis, net of tax benefit of $10,306

(15,458)

(15,458)

Retained earnings

550,286

538,251

Other comprehensive income

(98)

(85)

Treasury stock; at cost, 4,446,046 shares in 2014 and 4,598,408 shares in 2013

(125,857)

(128,957)

TOTAL STOCKHOLDERS’ EQUITY

572,773

561,527

 TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY

$ 1,104,558

$ 1,047,943

HUB GROUP, INC.

UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

Three Months Ended

March 31,

2014

2013

Cash flows from operating activities:

Net income

$ 12,035

$ 15,364

Adjustments to reconcile net income

to net cash provided by operating activities:

Depreciation and amortization 

6,779

5,096

Deferred taxes

1,991

2,669

Compensation expense related to share-based compensation plans

2,143

1,882

Gain on sale of assets

(6)

(214)

Excess tax benefits from share-based compensation

–

(3)

Changes in operating assets and liabilities:

Restricted investments

(117)

(181)

Accounts receivable, net

(31,471)

(11,893)

Prepaid taxes

86

(30)

Prepaid expenses and other current assets

(597)

2,227

Other assets

(837)

(146)

Accounts payable

29,286

16,230

Accrued expenses

1,128

(2,801)

Non-current liabilities

(1,839)

(198)

Net cash provided by operating activities

18,581

28,002

Cash flows from investing activities:

Proceeds from sale of equipment

85

734

Purchases of property and equipment

(33,035)

(9,456)

Net cash used in investing activities

(32,950)

(8,722)

Cash flows from financing activities:

Proceeds from issuance of debt

25,361

–

Repayments of long term debt

(1,124)

–

Proceeds from stock options exercised

–

42

Stock tendered for payments of withholding taxes

(3,023)

(2,469)

Purchase of treasury stock

–

(903)

Capital lease payments

(616)

(560)

Excess tax benefits from share-based compensation

104

98

Net cash provided by (used in) financing activities

20,702

(3,792)

Effect of exchange rate changes on cash and cash equivalents

–

3

Net increase in cash and cash equivalents

6,333

15,491

Cash and cash equivalents beginning of period

68,964

70,760

Cash and cash equivalents end of period

$ 75,297

$ 86,251