DOWNERS GROVE, Ill., Feb 08, 2005 /PRNewswire-FirstCall via COMTEX/ — Hub Group, Inc.
(Nasdaq: HUBG) today reported record net income for the quarter ended December
31, 2004 of $7.0 million. This represents a 164% increase in fourth quarter
net income versus the fourth quarter of 2003. Hub Group’s diluted earnings
per share of $0.66 for the quarter ended December 31, 2004 represents an
increase of 100% compared to last year’s fourth quarter diluted earnings per
share of $0.33 on 31% higher average diluted shares outstanding in the 2004
period. Hub’s gross margin grew 10.4% to $46.1 million as compared to
$41.7 million in the fourth quarter of 2003. As a percentage of revenue,
gross margin increased to 11.9% this quarter from 11.6% in 2003 due to more
effective yield management. Costs and expenses decreased 2.7% in the fourth
quarter of 2004 to $34.0 million compared to $34.9 million in the fourth
quarter of 2003, reflecting the benefits from the Company’s improved operating
efficiencies and cost reduction efforts.
Hub’s revenue grew by 7.9% to $387.4 million as compared to $359.2 million
in the fourth quarter of 2003 due primarily to price increases, mix and fuel
surcharges. Fourth quarter intermodal revenue increased 3.2% to
$270.3 million. Truckload brokerage revenue increased 15.5% to $61.6 million
this quarter. Fourth quarter logistics revenue increased 32.4% to
$39.0 million. Hub Group Distribution Services (HGDS) revenue increased to
$16.5 million in the fourth quarter 2004 from $14.4 million in the same period
last year.
FULL YEAR 2004
Revenue for the year was $1,426.8 million compared to $1,359.6 million in
2003, or an increase of 4.9%. Gross margin grew 5.2% to $179.5 million
compared to 2003. Gross margin as a percentage of sales remained constant at
12.6% of sales.
Costs and expenses decreased 5.1% in 2004 to $139.0 million compared to
$146.4 million in 2003, decreasing to 9.7% of revenue versus 10.8% in 2003.
In addition, debt extinguishment costs of $7.3 million were recorded in the
third quarter of 2004 due primarily to the $6.8 million in pre-payment
penalties associated with the early extinguishment of debt as well as the
write-off of deferred financing costs. Interest expense decreased to
$4.3 million compared to $7.7 million in 2003 due to the lower average debt
balance in 2004 as compared to 2003.
Net income was $17.3 million for 2004 or $1.84 diluted earnings per share
compared to last year’s net income of $8.4 million or $1.07 diluted earnings
per share. Adjusted net income, excluding the effect of the prepayment
penalty and the write off of the deferred financing costs associated with the
repayment of debt, was $21.5 million for 2004 or $2.29 diluted earnings per
share compared to last year’s net income of $8.4 million or $1.07 diluted
earnings per share.
As of December 31, 2004, the Company had $16.8 million of cash compared to
zero at December 31, 2003. Debt was zero at year end 2004 versus
$75.0 million at 2003 year end.
Note: A tabular reconciliation of the differences between the adjusted
financial results for the twelve-month period ended December 31, 2004 and the
Company’s financial results determined in accordance with generally accepted
accounting principles in the United States of America (“GAAP”) are contained
in the summary financial statements attached to this press release.
Commenting on the results, David P. Yeager, Vice-Chairman and Chief
Executive Officer of Hub Group stated, “We are very pleased and proud of our
results in 2004. Our disciplined focus on yield management, operating
efficiency improvements and cost management has translated into record results
in a challenging environment.”
STOCK BUY-BACK PLAN AND STOCK SPLIT
The Board of Directors has authorized the purchase of up to $30.0 million
of Class A common stock. Hub intends to make repurchases from time to time as
market and business conditions warrant. Repurchases may be made in the open
market or in privately negotiated transactions. Hub intends to hold the
repurchased shares in treasury for future use. This program replaces Hub’s
previous plan to repurchase up to 500,000 shares of Class A common stock
originally announced in November 2003 pursuant to which 116,700 shares had
been repurchased.
In addition, the Board approved a 2 for 1 stock split. This split is
subject to the approval by Hub’s shareholders of an increase in the authorized
number of shares of Class A common stock. Hub intends to seek shareholder
approval at its annual shareholders’ meeting which is scheduled for May 4,
2005. If approved by Hub’s shareholders, the stock split will be in the form
of a 100 percent stock dividend, which will be tax-free to shareholders. The
Board of Directors intends to set a record date and a payment date for the
stock dividend following receipt of shareholder approval.
FULL YEAR 2005
Given the current operating environment, we are comfortable that the
earnings for 2005 will be within the analysts’ range of $2.50 to $2.67 per
diluted share. These estimates do not reflect the impact of a stock buy-back
or stock split.
CONFERENCE CALL
Hub will hold a conference call at 10:00 a.m. Eastern Time (9:00 a.m.
Central Time) on Wednesday, February 9, 2005 to discuss its fourth quarter and
full year 2004 results.
Hosting the conference call will be David P. Yeager, Vice-Chairman and CEO
and Thomas M. White, Senior Vice-President, Chief Financial Officer and
Treasurer.
This call is being webcast by Thomson/CCBN and can be accessed through the
Investor Relations link at Hub Group’s Web site at https://www.hubgroup.com or
individual investors can access the audio webcast at
http://www.fulldisclosure.com and institutional investors can access the
webcast at http://www.streetevents.com . The webcast is listen-only. Those
interested in participating in the question and answer session should follow
the telephone dial-in instructions below. To participate in the conference
call by telephone, please call ten minutes early by dialing (800) 237-9752.
The conference call participant code is 72380302. The call will be limited to
60 minutes, including questions and answers. An audio replay will be
available through the Investor Relations link on the Company’s Web site at
https://www.hubgroup.com . This replay will be available for 30 days.
ABOUT HUB GROUP: Hub Group, Inc. is a leading non-asset based freight
transportation management company providing comprehensive intermodal,
truckload brokerage and logistics and distribution services. The Company
operates through a network of over 30 offices throughout the United States,
Canada and Mexico.
Certain prior year amounts have been reclassified to conform to the
current year presentation.
CERTAIN FORWARD-LOOKING STATEMENTS: Statements in this press release that
are not historical, including statements about Hub Group’s or management’s
2005 earnings guidance, intentions, beliefs, expectations, representations,
projections, plans or predictions of the future, are forward-looking
statements within the meaning of the Private Securities Litigation Reform Act
of 1995. Forward-looking statements are inherently uncertain and subject to
risks. Such statements should be viewed with caution. Actual results or
experience could differ materially from the forward-looking statements as a
result of many factors. Factors that could cause actual results to differ
materially include the factors listed from time to time in Hub Group’s SEC
reports including, but not limited to, the annual report on Form 10-K for the
year ended December 31, 2003, our reports on Form 10-Q for the periods ended
March 31, 2004, June 30, 2004 and September 30, 2004 as well as our Prospectus
dated June 28, 2004. Hub Group assumes no liability to update any such
forward-looking statements.
HUB GROUP, INC. UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands, except per share amounts) Unaudited Three Months Years Ended Ended December 31, December 31, 2004 2003 2004 2003 Revenue $387,428 $359,196 $1,426,806 $1,359,614 Transportation costs 341,377 317,485 1,247,258 1,188,932 Gross margin 46,051 41,711 179,548 170,682 Costs and expenses: Salaries and benefits 21,623 21,291 88,193 89,980 Selling, general and administrative 9,599 10,718 39,218 45,650 Depreciation and amortization of property and equipment 2,752 2,892 11,539 10,757 Total costs and expenses 33,974 34,901 138,950 146,387 Operating income 12,077 6,810 40,598 24,295 Other income (expense): Interest expense (308) (1,711) (4,276) (7,691) Interest income 95 43 260 160 Debt extinguishment expenses - - (7,296) - Other, net 128 72 712 131 Total other expense (85) (1,596) (10,600) (7,400) Income before provision for income taxes 11,992 5,214 29,998 16,895 Provision for income taxes 5,037 2,576 12,719 8,465 Net Income $6,955 $2,638 $17,279 $8,430 Basic earnings per common share $0.70 $0.34 $1.96 $1.09 Diluted earnings per common share $0.66 $0.33 $1.84 $1.07 Basic weighted average number of shares outstanding 9,895 7,723 8,800 7,712 Diluted weighted average number of shares outstanding 10,471 8,019 9,389 7,865 HUB GROUP, INC. UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS (in thousands, except share amounts) December 31, December 31, 2004 2003 ASSETS CURRENT ASSETS: Cash and cash equivalents $16,806 $- Accounts receivable Trade, net 141,078 125,754 Other 7,996 9,472 Deferred taxes 4,226 4,676 Prepaid expenses and other current assets 4,747 4,578 TOTAL CURRENT ASSETS 174,853 144,480 PROPERTY AND EQUIPMENT, net 19,487 27,855 GOODWILL, net 215,175 215,175 OTHER ASSETS 889 1,017 TOTAL ASSETS $410,404 $388,527 LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES: Accounts payable Trade $115,819 $117,790 Other 1,660 2,555 Accrued expenses Payroll 19,542 14,157 Other 15,100 11,592 Current portion of long-term debt - 8,017 TOTAL CURRENT LIABILITIES 152,121 154,111 LONG-TERM DEBT, EXCLUDING CURRENT PORTION - 67,017 DEFERRED TAXES 31,347 24,364 STOCKHOLDERS' EQUITY: Preferred stock, $.01 par value, 2,000,000 shares authorized; - - no shares issued or outstanding in 2004 and 2003 Common stock Class A: $.01 par value; 12,337,700 shares authorized; 9,635,657 shares issued and outstanding in 2004; 7,410,700 issued and 7,390,500 outstanding in 2003 96 74 Class B: $.01 par value; 662,300 shares authorized; 662,296 shares issued and outstanding in 2004 and 2003 7 7 Additional paid-in capital 182,365 115,820 Purchase price in excess of predecessor basis, net of tax benefit of $10,306 (15,458) (15,458) Retained earnings 64,611 47,332 Unearned compensation (4,685) (4,448) Treasury stock, at cost (0 shares in 2004 and 20,200 shares in 2003) - (292) TOTAL STOCKHOLDERS' EQUITY 226,936 143,035 TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $410,404 $388,527 HUB GROUP, INC. UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands) Years Ended December 31, 2004 2003 Cash flows from operating activities: Net income $17,279 $8,430 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization of property and equipment 11,828 10,797 Deferred taxes 12,752 7,672 Compensation expense related to restricted stock 2,148 180 Gain on sale of assets (294) (59) Other assets 128 457 Changes in working capital: Accounts receivable, net (13,849) 5,225 Prepaid expenses and other current assets (168) 154 Accounts payable (2,866) (7,861) Accrued expenses 8,893 6,503 Net cash provided by operating activities 35,851 31,498 Cash flows from investing activities: Purchases of property and equipment, net (3,166) (4,384) Net cash used in investing activities (3,166) (4,384) Cash flows from financing activities: Proceeds from stock offering 55,871 - Proceeds from stock options exercised 7,394 232 Purchase of treasury stock (4,110) (292) Net payments on revolver (6,000) (19,000) Payments of long term debt (69,034) (8,054) Net cash used in financing activities (15,879) (27,114) Net increase in cash and cash equivalents 16,806 - Cash and cash equivalents beginning of period - - Cash and cash equivalents end of period $16,806 $- Supplemental disclosures of cash flow information Cash paid for: Interest $2,995 $6,355 HUB GROUP, INC. RECONCILIATION OF AS REPORTED FINANCIAL RESULTS TO AS ADJUSTED FINANCIAL RESULTS (in thousands, except per share amounts) Year Ended December 31, 2004 As Reported Adjustments As Adjusted Operating Income $40,598 $- $40,598 Interest (expense) (4,276) - (4,276) Interest income 260 - 260 Debt extinguishment expenses (7,296) (7,296) a - Other, net 712 - 712 Income before provision for income taxes 29,998 (7,296) 37,294 Provision for income taxes 12,719 (3,064) b 15,783 Net Income $17,279 $(4,232) $21,511 Basic earnings per common share $1.96 $(0.48) $2.44 Diluted earnings per common share $1.84 $(0.45) $2.29 Basic weighted average number of shares outstanding 8,800 8,800 8,800 Diluted weighted average number of shares outstanding 9,389 9,389 9,389 a) Fees and expenses related to our early extinguishment of 9.14% debt 1) Pre-payment penalty of $6,804 2) Write-off of related deferred financing costs of $492 b) Income taxes at 42.0% The purpose of this reconciliation is to reflect as adjusted earnings excluding the one time costs associated with prepaying our debt. HUB GROUP, INC. MODAL REVENUE SUMMARY (in thousands) First Second Third Fourth Quarter Quarter Quarter Quarter Total 2004 2004 2004 2004 2004 Intermodal $236,321 $247,940 $259,958 $270,314 $1,014,533 Brokerage 50,960 56,778 56,124 61,604 225,466 Logistics 33,913 33,786 34,028 38,996 140,723 Total Core 321,194 338,504 350,110 370,914 1,380,722 HGDS 7,108 10,467 11,995 16,514 46,084 Consolidated $328,302 $348,971 $362,105 $387,428 $1,426,806 First Second Third Fourth Quarter Quarter Quarter Quarter Total 2003 2003 2003 2003 2003 Intermodal $233,307 $234,413 $246,990 $262,013 $976,723 Brokerage 50,589 52,899 53,684 53,321 210,493 Logistics 29,917 28,472 30,766 29,446 118,601 Total Core 313,813 315,784 331,440 344,780 1,305,817 HGDS 15,471 15,866 8,044 14,416 53,797 Consolidated $329,284 $331,650 $339,484 $359,196 $1,359,614 NOTE: HGDS transferred its Pharmaceutical business to Logistics in August 2004, resulting in an increase in Logistics revenue of $4,315 for the year ended December 31, 2004.
SOURCE Hub Group, Inc.
Amy Lisek of Hub Group, Inc., +1-630-795-2214
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