Hub Group, Inc. Reports Record First Quarter 2016 Earnings per Share of $0.51

HUB GROUP, INC.

UNAUDITED CONSOLIDATED STATEMENTS OF INCOME

(in thousands, except per share amounts)

Three Months

Ended March 31,

2016

2015

Revenue

$ 805,859

$ 835,941

Transportation costs

697,472

746,813

Gross margin

108,387

89,128

Costs and expenses:

Salaries and benefits

43,863

39,476

Agent fees and commissions

16,901

14,826

General and administrative

16,644

14,071

Depreciation and amortization

2,136

1,960

Total costs and expenses

79,544

70,333

Operating income

28,843

18,795

Other income (expense):

Interest expense

(911)

(741)

Interest and dividend income

61

6

Other, net 

936

(1,404)

Total other income (expense) 

86

(2,139)

Income before provision for income taxes

28,929

16,656

Provision for income taxes

10,964

6,380

Net income

$   17,965

$   10,276

Basic earnings per common share

$       0.51

$       0.28

Diluted earnings per common share

$       0.51

$       0.28

Basic weighted average number of shares outstanding

35,137

36,156

Diluted weighted average number of shares outstanding

35,122

36,169

HUB GROUP, INC.

UNAUDITED FINANCIAL INFORMATION BY SEGMENT

(in thousands)

Three Months

Ended March 31, 2016

Hub

Mode

Inter-Segment

Elims

Hub Group

Consolidated

Revenue

$ 615,227

$ 208,832

$              (18,200)

$              805,859

Transportation costs

536,073

179,599

(18,200)

697,472

Gross margin

79,154

29,233

–

108,387

Costs and expenses:

Salaries and benefits

40,096

3,767

–

43,863

Agent fees and commissions

13

16,888

–

16,901

General and administrative

14,722

1,922

–

16,644

Depreciation and amortization

1,815

321

–

2,136

Total costs and expenses

56,646

22,898

–

79,544

Operating income

22,508

6,335

–

28,843

HUB GROUP, INC.

UNAUDITED FINANCIAL INFORMATION BY SEGMENT

(in thousands)

Three Months

Ended March 31, 2015

Hub

Mode

Inter-Segment

Elims

Hub Group

Consolidated

Revenue

$ 643,443

$ 213,522

$                  (21,024)

$                  835,941

Transportation costs

580,258

187,579

(21,024)

746,813

Gross margin

63,185

25,943

–

89,128

Costs and expenses:

Salaries and benefits

35,660

3,816

–

39,476

Agent fees and commissions

15

14,811

–

14,826

General and administrative

12,198

1,873

–

14,071

Depreciation and amortization

1,618

342

–

1,960

Total costs and expenses

49,491

20,842

–

70,333

Operating income

13,694

5,101

–

18,795

HUB GROUP, INC.

UNAUDITED NON-GAAP TO GAAP RECONCILIATION

(earnings per share)

Three Months

Ended, March 31,

Change

Change

2016

2015

$

%

Diluted GAAP EPS

$  0.51

$  0.28

$  0.23

82.1%

Hub Group Trucking Los Angeles shutdown costs, net of tax

0.05

–

0.05

Severance costs, net of tax

0.02

0.02

–

Canadian currency translation loss, net of tax

–

0.02

(0.02)

Diluted non-GAAP EPS (adjusted)

$  0.58

$  0.32

$  0.26

81.3%

Diluted shares

35,122

36,169

HUB GROUP, INC.

CONSOLIDATED BALANCE SHEETS

(in thousands, except share amounts)

March 31,

December 31,

2016

2015

(unaudited)

ASSETS

CURRENT ASSETS:

Cash and cash equivalents

$    200,256

$       207,749

Accounts receivable trade, net

365,149

379,987

Accounts receivable other

3,848

10,344

Prepaid taxes

336

362

Deferred taxes

–

8,412

Prepaid expenses and other current assets

16,347

17,756

TOTAL CURRENT ASSETS

585,936

624,610

Restricted investments

19,423

21,108

Property and equipment, net

379,484

374,847

Other intangibles, net

12,815

13,139

Goodwill, net

262,540

262,594

Other assets

4,448

4,848

TOTAL ASSETS

$ 1,264,646

$    1,301,146

LIABILITIES AND STOCKHOLDERS’ EQUITY

CURRENT LIABILITIES:

Accounts payable trade

$    234,196

$       230,432

Accounts payable other

23,150

21,495

Accrued payroll

14,355

33,020

Accrued other

54,469

38,733

Current portion of capital lease

2,624

2,608

Current portion of long term debt

32,524

32,409

TOTAL CURRENT LIABILITIES

361,318

358,697

Long term debt

92,648

100,895

Non-current liabilities

20,754

20,233

Long term portion of capital lease

12,640

13,299

Deferred taxes

154,039

160,182

STOCKHOLDERS’ EQUITY:

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

no shares issued or outstanding in 2016 and 2015

–

–

Common stock

Class A: $.01 par value; 97,337,700 shares authorized and 41,224,792 shares issued in 2016 and 2015; 34,675,173 shares outstanding in 2016 and 35,633,961 shares outstanding in 2015

412

412

Class B:  $.01 par value; 662,300 shares authorized; 662,296 shares issued and outstanding in 2016 and 2015

7

7

Additional paid-in capital

166,803

174,285

Purchase price in excess of predecessor basis, net of tax

 benefit of $10,306

(15,458)

(15,458)

Retained earnings

678,723

660,758

Accumulated other comprehensive loss

(177)

(178)

Treasury stock; at cost, 6,549,619 shares in 2016

and 5,590,831 shares in 2015

(207,063)

(171,986)

TOTAL STOCKHOLDERS’ EQUITY

623,247

647,840

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY

$ 1,264,646

$    1,301,146

HUB GROUP, INC.

UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

Three Months Ended

March 31,

2016

2015

Cash flows from operating activities:

Net income

$        17,965

$        10,276

Adjustments to reconcile net income

to net cash provided by operating activities:

Depreciation and amortization 

10,639

8,731

Deferred taxes

2,383

1,593

Compensation expense related to share-based compensation plans

2,181

2,034

Gain on sale of assets

(83)

–

Excess tax benefits from share-based compensation

(30)

(13)

Changes in operating assets and liabilities:

Restricted investments

1,685

98

Accounts receivable, net

21,332

2,874

Prepaid taxes

26

4,557

Prepaid expenses and other current assets

1,409

(3,246)

Other assets

400

330

Accounts payable

5,421

13,414

Accrued expenses

(13,517)

5,733

Non-current liabilities

481

(1,052)

Net cash provided by operating activities

50,292

45,329

Cash flows from investing activities:

Proceeds from sale of equipment

592

26

Purchases of property and equipment

(4,893)

(15,057)

Net cash used in investing activities

(4,301)

(15,031)

Cash flows from financing activities:

Proceeds from issuance of debt

–

11,480

Repayments of long term debt

(8,132)

(5,553)

Stock tendered for payments of withholding taxes

(2,208)

(2,754)

Purchase of treasury stock

(42,368)

(13,419)

Capital lease payments

(643)

(605)

Excess tax benefits from share-based compensation

(134)

42

Net cash used in financing activities

(53,485)

(10,809)

Effect of exchange rate changes on cash and cash equivalents

1

3

Net (decrease) increase in cash and cash equivalents

(7,493)

19,492

Cash and cash equivalents beginning of period

207,749

109,769

Cash and cash equivalents end of period

$      200,256

$      129,261