Hub Group, Inc. Reports Fourth Quarter Earnings per Share of $0.41 Excluding One-Time Benefit for Effective Tax Rate

HUB GROUP, INC.

UNAUDITED CONSOLIDATED STATEMENTS OF INCOME

(in thousands, except per share amounts)

Three Months

Twelve Months

Ended December 31,

Ended December 31,

2014

2013

2014

2013

Revenue

$ 915,361

$ 885,252

$ 3,571,126

$ 3,373,898

Transportation costs

825,451

790,164

3,200,691

3,002,875

Gross margin

89,910

95,088

370,435

371,023

Costs and expenses:

Salaries and benefits

32,964

33,868

136,480

135,341

Agent fees and commissions

16,239

14,272

62,041

55,789

General and administrative

14,033

15,096

58,014

56,772

Depreciation and amortization

1,897

1,697

7,799

6,470

Driver settlements and related costs

–

–

10,343

–

Impairment of software

–

–

11,881

–

Impairment of trade name

–

2,904

–

2,904

Total costs and expenses

65,133

67,837

286,558

257,276

Operating income

24,777

27,251

83,877

113,747

Other income (expense):

Interest expense

(619)

(328)

(1,785)

(1,246)

Interest and dividend income

11

13

32

82

Other, net 

(66)

(5)

(257)

(28)

Total other expense

(674)

(320)

(2,010)

(1,192)

Income before provision for income taxes

24,103

26,931

81,867

112,555

Provision for income taxes

7,747

10,395

30,309

43,445

Net income

$  16,356

$  16,536

$     51,558

$     69,110

Basic earnings per common share

$      0.45

$      0.45

$         1.41

$         1.88

Diluted earnings per common share

$      0.45

$      0.45

$         1.40

$         1.87

Basic weighted average number of shares outstanding

36,350

36,719

36,590

36,829

Diluted weighted average number of shares outstanding

36,533

36,942

36,732

36,982

HUB GROUP, INC.

UNAUDITED FINANCIAL INFORMATION BY SEGMENT

(in thousands)

Three Months

Ended December 31, 2014

Hub

Mode

Inter-Segment
Elims

Hub Group
Consolidated

Revenue

$ 695,507

$ 245,266

$         (25,412)

$      915,361

Transportation costs

633,131

217,732

(25,412)

825,451

Gross margin

62,376

27,534

–

89,910

Costs and expenses:

Salaries and benefits

29,285

3,679

–

32,964

Agent fees and commissions

14

16,225

–

16,239

General and administrative

12,408

1,625

–

14,033

Depreciation and amortization

1,556

341

–

1,897

Total costs and expenses

43,263

21,870

–

65,133

Operating income

19,113

5,664

–

24,777

HUB GROUP, INC.

UNAUDITED FINANCIAL INFORMATION BY SEGMENT

(in thousands)

Three Months

Ended December 31, 2013

Hub

Mode

Inter-Segment
Elims

Hub Group
Consolidated

Revenue

$ 683,614

$ 214,357

$         (12,719)

$      885,252

Transportation costs

613,198

189,685

(12,719)

790,164

Gross margin

70,416

24,672

–

95,088

Costs and expenses:

Salaries and benefits

30,219

3,649

–

33,868

Agent fees and commissions

148

14,124

–

14,272

General and administrative

13,383

1,713

–

15,096

Depreciation and amortization

1,157

540

–

1,697

Impairment of trade name

2,904

–

–

2,904

Total costs and expenses

47,811

20,026

–

67,837

Operating income

22,605

4,646

–

27,251

HUB GROUP, INC.

UNAUDITED FINANCIAL INFORMATION BY SEGMENT

(in thousands)

Twelve Months

Ended December 31, 2014

Hub

Mode

Inter-Segment
Elims

Hub Group
Consolidated

Revenue

$ 2,722,799

$ 931,131

$         (82,804)

$   3,571,126

Transportation costs

2,461,144

822,351

(82,804)

3,200,691

Gross margin

261,655

108,780

–

370,435

Costs and expenses:

Salaries and benefits

122,097

14,383

–

136,480

Agent fees and commissions

45

61,996

–

62,041

General and administrative

51,108

6,906

–

58,014

Depreciation and amortization

6,238

1,561

–

7,799

Driver settlements and related costs

10,343

10,343

Impairment of software

11,881

–

–

11,881

Total costs and expenses

201,712

84,846

–

286,558

Operating income

59,943

23,934

–

83,877

HUB GROUP, INC.

UNAUDITED FINANCIAL INFORMATION BY SEGMENT

(in thousands)

Twelve Months

Ended December 31, 2013

Hub

Mode

Inter-Segment
Elims

Hub Group
Consolidated

Revenue

$ 2,599,763

$ 823,159

$         (49,024)

$   3,373,898

Transportation costs

2,325,512

726,387

(49,024)

3,002,875

Gross margin

274,251

96,772

–

371,023

Costs and expenses:

Salaries and benefits

120,478

14,863

–

135,341

Agent fees and commissions

1,372

54,417

–

55,789

General and administrative

50,484

6,288

–

56,772

Depreciation and amortization

4,326

2,144

–

6,470

Impairment of trade name

2,904

–

–

2,904

Total costs and expenses

179,564

77,712

–

257,276

Operating income

94,687

19,060

–

113,747

UNAUDITED NON-GAAP TO GAAP RECONCILIATION

(earnings per share)

Three Months

Twelve Months

Ended, December 31,

Ended, December 31,

Change

Change

Change

Change

2014

2013

$

%

2014

2013

$

%

Diluted GAAP EPS

$  0.45

$  0.45

$     –

0.0%

$  1.40

$  1.87

$ (0.47)

-25.1%

Impairment of trade name, net of tax

–

0.05

(0.05)

–

0.05

(0.05)

Driver settlements & related costs, net of tax

–

–

–

0.17

–

0.17

Impairment of software, net of tax

–

–

–

0.20

–

0.20

Benefit related to changes in state tax apportionment 

(0.04)

–

(0.04)

(0.04)

–

(0.04)

Diluted NON-GAAP EPS (adjusted)

$  0.41

$  0.50

$ (0.09)

-18.0%

$  1.73

$  1.92

$ (0.19)

-9.9%

Diluted shares

36,533

36,942

36,732

36,982

HUB GROUP, INC.

UNAUDITED CONSOLIDATED BALANCE SHEETS

(in thousands, except share amounts)

December 31,

December 31,

2014

2013

ASSETS

CURRENT ASSETS:

Cash and cash equivalents

$       109,769

$         68,964

Accounts receivable trade, net

401,803

371,528

Accounts receivable other

24,886

26,569

Prepaid taxes

14,937

409

Deferred taxes

4,816

5,826

Prepaid expenses and other current assets

14,355

12,738

TOTAL CURRENT ASSETS

570,566

486,034

Restricted investments

21,944

20,754

Property and equipment, net

338,327

260,400

Other intangibles, net

14,434

15,729

Goodwill, net

262,813

263,032

Other assets

4,043

1,994

   TOTAL ASSETS

$    1,212,127

$    1,047,943

LIABILITIES AND STOCKHOLDERS’ EQUITY

CURRENT LIABILITIES:

Accounts payable trade

$       256,345

$       232,350

Accounts payable other

21,333

24,957

Accrued payroll

16,192

17,000

Accrued other

43,523

42,834

Current portion of capital lease

2,504

2,413

Current portion of long term debt

19,619

1,771

TOTAL CURRENT LIABILITIES

359,516

321,325

Long term debt

72,460

6,475

Non-current liabilities

22,929

22,304

Long term portion of capital lease

15,937

18,477

Deferred taxes

140,501

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; 36,247,324 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

171,235

167,357

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

(15,458)

(15,458)

Retained earnings

589,809

538,251

Accumulated other comprehensive loss

(77)

(85)

Treasury stock; at cost, 4,977,468 shares in 2014 and 4,598,408 shares in 2013

(145,144)

(128,957)

TOTAL STOCKHOLDERS’ EQUITY

600,784

561,527

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY

$    1,212,127

$    1,047,943

HUB GROUP, INC.

UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

Twelve Months Ended

December 31,

2014

2013

Cash flows from operating activities:

Net income

$   51,558

$   69,110

Adjustments to reconcile net income to net cash provided by operating activities:

Depreciation and amortization 

29,380

21,302

Impairment of software

11,881

–

Impairment of trade name

–

2,904

Deferred taxes

24,501

16,438

Compensation expense related to share-based compensation plans

8,258

7,667

Gain on sale of assets

(46)

(167)

Excess tax benefits from share based compensation

–

(13)

Changes in operating assets and liabilities:

Restricted investments

(1,190)

(3,536)

Accounts receivable, net

(28,621)

(25,420)

Prepaid taxes

(14,533)

(308)

Prepaid expenses and other current assets

(1,621)

(2,137)

Other assets

(2,047)

(682)

Accounts payable

20,370

27,635

Accrued expenses

367

1,736

Non-current liabilities

284

2,888

Net cash provided by operating activities

98,541

117,417

Cash flows from investing activities:

Proceeds from sale of equipment

612

1,837

Purchases of property and equipment

(119,171)

(110,917)

Net cash used in investing activities

(118,559)

(109,080)

Cash flows from financing activities:

Proceeds from issuance of debt

91,084

9,120

Repayments of long term debt

(7,251)

(874)

Proceeds from stock options exercised

–

41

Stock tendered for payments of withholding taxes

(3,195)

(2,634)

Purchase of treasury stock

(18,024)

(13,791)

Capital lease payments

(2,449)

(2,329)

Excess tax benefits from share-based compensation

652

336

Net cash provided by (used in) financing activities

60,817

(10,131)

Effect of exchange rate changes on cash and cash equivalents

6

(2)

Net increase (decrease) in cash and cash equivalents

40,805

(1,796)

Cash and cash equivalents beginning of the year

68,964

70,760

Cash and cash equivalents end of the year

$ 109,769

$   68,964