Hub Group, Inc. Reports Fourth Quarter Earnings per Share of $0.50 Excluding Non-Cash Impairment Charge

HUB GROUP, INC.

UNAUDITED CONSOLIDATED STATEMENTS OF INCOME

(in thousands, except per share amounts)

Three Months

Twelve Months

Ended December 31,

Ended December 31,

2013

2012

2013

2012

Revenue

$ 885,252

$ 801,023

$ 3,373,898

$ 3,124,108

Transportation costs

790,164

707,644

3,002,875

2,768,042

Gross margin

95,088

93,379

371,023

356,066

Costs and expenses:

Salaries and benefits

33,868

33,023

135,341

129,143

Agent fees and commissions

14,272

14,006

55,789

55,112

General and administrative

15,096

13,091

56,772

52,832

Depreciation and amortization

1,697

1,611

6,470

6,619

Impairment of trade name

2,904

–

2,904

–

Total costs and expenses

67,837

61,731

257,276

243,706

Operating income

27,251

31,648

113,747

112,360

Other income (expense):

Interest expense

(328)

(299)

(1,246)

(1,207)

Interest and dividend income

13

30

82

134

Other, net 

(5)

28

(28)

(30)

Total other expense

(320)

(241)

(1,192)

(1,103)

Income before provision for income taxes

26,931

31,407

112,555

111,257

Provision for income taxes

10,395

12,563

43,445

43,304

Net income

$  16,536

$  18,844

$      69,110

$      67,953

Basic earnings per common share

$      0.45

$      0.51

$           1.88

$           1.83

Diluted earnings per common share

$      0.45

$      0.51

$           1.87

$           1.83

Basic weighted average number of shares outstanding

36,719

37,021

36,829

37,053

Diluted weighted average number of shares outstanding

36,942

37,199

36,982

37,185

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)

Three Months

Ended December 31, 2012

Hub

Mode

Inter-Segment
Elims

Hub Group
Consolidated

Revenue

$ 613,853

$ 198,550

$         (11,380)

$      801,023

Transportation costs

544,098

174,926

(11,380)

707,644

Gross margin

69,755

23,624

–

93,379

Costs and expenses:

Salaries and benefits

29,332

3,691

–

33,023

Agent fees and commissions

374

13,632

–

14,006

General and administrative

11,407

1,684

–

13,091

Depreciation and amortization

1,110

501

–

1,611

Total costs and expenses

42,223

19,508

–

61,731

Operating income

27,532

4,116

–

31,648

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

HUB GROUP, INC.

UNAUDITED FINANCIAL INFORMATION BY SEGMENT

(in thousands)

Twelve Months

Ended December 31, 2012

Hub

Mode

Inter-Segment
Elims

Hub Group
Consolidated

Revenue

$    2,392,289

$       779,928

$          (48,109)

$    3,124,108

Transportation costs

2,128,942

687,209

(48,109)

2,768,042

Gross margin

263,347

92,719

–

356,066

Costs and expenses:

Salaries and benefits

113,855

15,288

–

129,143

Agent fees and commissions

1,900

53,212

–

55,112

General and administrative

45,411

7,421

–

52,832

Depreciation and amortization

4,448

2,171

–

6,619

Total costs and expenses

165,614

78,092

–

243,706

Operating income

97,733

14,627

–

112,360

HUB GROUP, INC.

UNAUDITED NON-GAAP TO GAAP RECONCILIATION

(earnings per share)

Three Months

Twelve Months

Ended, Dec. 31,

Ended, Dec. 31,

Change

Change

Change

Change

2013

2012

$

%

2013

2012

$

%

Diluted GAAP EPS

$  0.45

$  0.51

$ (0.06)

-11.8%

$  1.87

$  1.83

$  0.04

2.2%

Impairment of trade name, net of tax

$  0.05

$     –

$  0.05

$  0.05

$     –

$  0.05

Diluted NON-GAAP EPS (adjusted)

$  0.50

$  0.51

$ (0.01)

-2.0%

$  1.92

$  1.83

$  0.09

4.9%

Diluted Shares

36,942

37,199

36,982

37,185

HUB GROUP, INC

UNAUDITED CONSOLIDATED BALANCE SHEETS

(in thousands, except share amounts)

December 31,

December 31,

2013

2012

ASSETS

CURRENT ASSETS:

Cash and cash equivalents

$          68,964

$          70,760

Accounts receivable trade, net

371,528

346,917

Accounts receivable other

26,569

25,945

Prepaid taxes

409

139

Deferred taxes

5,826

4,965

Prepaid expenses and other current assets

12,738

10,619

TOTAL CURRENT ASSETS

486,034

459,345

Restricted investments

20,754

17,218

Property and equipment, net

260,400

157,584

Other intangibles, net

15,729

20,068

Goodwill, net

263,032

263,251

Other assets

1,994

2,387

TOTAL ASSETS

$ 1,047,943

$ 919,853

LIABILITIES AND STOCKHOLDERS’ EQUITY

CURRENT LIABILITIES:

Accounts payable trade

$        232,350

$        206,497

Accounts payable other

24,957

22,925

Accrued payroll

17,000

17,210

Accrued other

42,834

28,633

Current portion of capital lease

2,413

2,120

Current portion of long term debt

1,771

–

TOTAL CURRENT LIABILITIES

321,325

277,385

Non-current liabilities

22,304

20,041

Non-current portion of capital lease

18,477

21,099

Long term debt

6,475

–

Deferred taxes

117,835

100,431

STOCKHOLDERS’ EQUITY:

Preferred stock, $.01 par value; 2,000,000 shares authorized;

no shares issued or outstanding in 2013 and 2012

–

–

Common stock

Class A: $.01 par value; 97,337,700 shares authorized and

41,224,792 shares issued in 2013 and 2012; 36,626,384 shares outstanding in 2013 and 36,767,485 shares outstanding in 2012

412

412

Class B:  $.01 par value; 662,300 shares authorized;

662,296 shares issued and outstanding in 2013 and 2012

7

7

Additional paid-in capital

167,357

167,765

Purchase price in excess of predecessor basis, net of tax

 benefit of $10,306

(15,458)

(15,458)

Retained earnings

538,251

469,141

Accumulated other comprehensive (loss) income

(85)

1

Treasury stock; at cost, 4,598,408 shares in 2013

and 4,457,307 shares in 2012

(128,957)

(120,971)

TOTAL STOCKHOLDERS’ EQUITY

561,527

500,897

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY

$     1,047,943

$        919,853

HUB GROUP, INC.

UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

Twelve Months Ended

December 31,

2013

2012

Cash flows from operating activities:

Net income

$  69,110

$ 67,953

Adjustments to reconcile net income

to net cash provided by operating activities:

Depreciation and amortization 

21,302

21,575

Impairment of trade name

2,904

–

Deferred taxes

16,438

8,786

Compensation expense related to share-based compensation plans

7,667

6,539

(Gain) loss on sale of assets

(167)

108

Excess tax benefits from share based compensation

(13)

(29)

Changes in operating assets and liabilities:

Restricted investments

(3,536)

(2,895)

Accounts receivable, net

(25,420)

(22,429)

Prepaid taxes

(308)

2,253

Prepaid expenses and other current assets

(2,137)

(1,562)

Other assets

(682)

459

Accounts payable

27,635

7,438

Accrued expenses

1,736

2,779

Non-current liabilities

2,888

1,942

Net cash provided by operating activities

117,417

92,917

Cash flows from investing activities:

Proceeds from sale of equipment

1,837

1,071

Purchases of property and equipment

(110,917)

(56,882)

Cash used in acquisitions

–

(550)

Net cash used in investing activities

(109,080)

(56,361)

Cash flows from financing activities:

Proceeds from issuance of debt

9,120

–

Repayments of long term debt

(874)

–

Proceeds from stock options exercised

41

69

Stock tendered for payments of withholding taxes

(2,634)

(1,812)

Purchase of treasury stock

(13,791)

(11,208)

Capital lease payments

(2,329)

(2,454)

Excess tax benefits from share-based compensation

336

523

Net cash used in financing activities

(10,131)

(14,882)

Effect of exchange rate changes on cash and cash equivalents

(2)

(5)

Net (decrease) increase in cash and cash equivalents

(1,796)

21,669

Cash and cash equivalents beginning of the year

70,760

49,091

Cash and cash equivalents end of the year

$  68,964

$ 70,760