Skip to content

Hub Group, Inc. Reports Record Second Quarter 2004 Results and Revised 2004 Guidance

DOWNERS GROVE, Ill., July 21 /PRNewswire-FirstCall/ — Hub Group, Inc.
(Nasdaq: HUBG) today reported a 162.4% increase in second quarter net income
versus the second quarter of 2003. Hub Group earned net income of $4.1 million
or $0.48 diluted earnings per share for the quarter ended June 30, 2004
compared to last year’s second quarter net income of $1.5 million or
$0.20 diluted earnings per share on 8.2% higher average diluted shares
outstanding in the 2004 period.

Transportation-related revenue, generated by the Company’s intermodal,
truckload brokerage and logistics business units, increased 7.2% to
$338.5 million in the second quarter of 2004 compared to the second quarter of
2003. Second quarter intermodal revenue increased 5.7% to $242.3 million due
to an increase in volume. Truckload brokerage revenue increased 7.3% to
$56.8 million this quarter due primarily to an increase in revenue per load.
Second quarter logistics revenue increased 17.1% to $39.4 million due
primarily to an increase in volume. Hub Group Distribution Services (HGDS)
revenue decreased 34.0% to $10.5 million in the second quarter 2004 from
$15.9 million in the same period last year due primarily to lower installation
business. Total revenue in the second quarter 2004 was $349.0 million, an
increase of 5.2% compared with the $331.7 million reported for the second
quarter of 2003. Second quarter gross margin increased 0.5% to $43.7 million
in 2004 from $43.5 million in 2003. As a percentage of revenue, gross margin
decreased to 12.5% this quarter from 13.1% in 2003. Transportation-related
gross margin dollar increases were offset by decreases in gross margin at
HGDS. The change in gross margin as a percentage of revenue is primarily
attributable to a decrease in the higher margin business of HGDS.

Costs and expenses decreased 5.7% in the second quarter of 2004 to
$35.4 million compared to $37.5 million in the second quarter of 2003,
reflecting the benefits from the Company’s cost reduction efforts. Other
expense, which primarily includes interest expense, decreased to $1.3 million
in the second quarter of 2004 compared to $1.9 million in the same period of
2003 due to lower debt levels. The Company paid down $8.0 million of debt
during the second quarter of 2004.

Commenting on the results, David P. Yeager, Vice-Chairman and Chief
Executive Officer of Hub Group, stated, “We are very pleased with the strong
growth in our net income which produced another record quarter. Our recent
organizational realignment has reinvigorated our sales effort and as a result
all three main business lines are growing again. We will continue to focus on
improving our operations and profitably growing our business.”


Hub’s public offering of Class A common stock priced at $33.00 per share,
before underwriting discounts and commissions, and closed on July 2, 2004.
Net proceeds to the Company of $56.1 million from the sale of 1,800,000 shares
were used to prepay $50.0 million of 9.14% debt and the related pre-payment
penalty on July 6, 2004. As a result of the pre-payment, the Company will
record a charge of $7.3 million (after-tax of approximately $4.2 million),
consisting of $6.8 million in pre-payment penalties and a $0.5 million write-
off of deferred financing costs, during the third quarter of 2004.


Excluding the $4.2 million one-time after-tax charge in connection with
Hub’s public offering described above, (pre-payment penalty and deferred
financing costs) Hub projects its full year 2004 adjusted earnings to be in
the range of $1.65 to $1.71 diluted earnings per share. This guidance assumes
9.466 million diluted weighted average shares outstanding for the year.

A tabular reconciliation of the differences between the adjusted full year
2004 guidance, which excludes the $4.2 million one time charge, and projected
financial results determined in accordance with accounting principles
generally accepted in the United States of America (“GAAP”) is below.

     Projected GAAP EPS                              Adjusted Projected EPS
         Results             EPS Adjustments               Results
     $1.25 to $1.31              .40                   $1.65 to $1.71

The adjustment represents the pre-tax $6.8 million prepayment penalty and
the pre-tax $0.5 million write off of deferred financing costs less the
related tax benefit of $3.1 million divided by 10,500,000 estimated diluted
weighted average shares outstanding for the quarter ended September 30, 2004.

CONFERENCE CALL: Hub Group, Inc. will hold a conference call for investors
and other interested parties at 10:00am EDT on Thursday July 22, 2004. To
participate, please call five minutes early by dialing 1-888-296-1938 and
entering participant code 846607. International callers can dial
1-304-345-7506. For those unable to participate, a replay will be available
after 1:00pm EDT on July 22, 2004. For the replay, dial 1-877-471-6581 and
enter access code 726468. International callers should dial 1-402-970-2661.

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
projections regarding 2004 earnings, 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 report on Form 10-Q for
the period ended March 31, 2004 and our Prospectus dated June 28, 2004. Hub
Group assumes no liability to update any such forward-looking statements.

                               HUB GROUP, INC.
                   (in thousands, except per share amounts)

                                    Three Months             Six Months
                                   Ended June 30,          Ended June 30,
                                  2004         2003       2004      2003

    Revenue                    $348,971     $331,651   $677,273  $660,934

    Transportation costs        305,306      288,191    591,805   575,424
      Gross margin               43,665       43,460     85,468    85,510

    Costs and expenses:
      Salaries and benefits      22,233       22,853     44,575    46,181
      Selling, general and
        administrative           10,315       12,105     20,596    23,891
      Depreciation and
        amortization of
        property and equipment    2,851        2,588      5,734     5,149
          Total costs and
            expenses             35,399       37,546     70,905    75,221

            Operating income      8,266        5,914     14,563    10,289

    Other income (expense):
      Interest expense           (1,684)      (2,010)    (3,397)   (4,096)
      Interest income                56           25        109        75
      Other, net                    363           49        404        13
        Total other expense      (1,265)      (1,936)    (2,884)   (4,008)

    Income before provision
      for income taxes            7,001        3,978     11,679     6,281

    Provision for income taxes    2,942        2,431      4,907     3,375

    Net Income                   $4,059       $1,547     $6,772    $2,906

    Basic earnings per
      common share                $0.52        $0.20      $0.87     $0.38
    Diluted earnings per
      common share                $0.48        $0.20      $0.81     $0.37

    Basic weighted average
      number of shares
      outstanding                 7,851        7,709      7,799     7,709
    Diluted weighted average
      number of shares
      outstanding                 8,469        7,824      8,381     7,773

                                 HUB GROUP, INC.
               (in thousands, except share and per share amounts)

                                                June 30,         December 31,
                                                  2004               2003
      Cash and cash equivalents                      $-                 $-
      Accounts receivable
       Trade, net                                 122,572            125,754
       Other                                       14,201              9,472
      Deferred taxes                                4,789              4,676
      Prepaid expenses and other
       current assets                               4,679              4,578
        TOTAL CURRENT ASSETS                      146,241            144,480

     PROPERTY AND EQUIPMENT, net                   23,887             27,855
     GOODWILL, net                                215,175            215,175
     OTHER ASSETS                                     320              1,017
         TOTAL ASSETS                            $385,623           $388,527

      Accounts payable
       Trade                                     $112,228           $117,790
       Other                                        3,303              2,555
      Accrued expenses
       Payroll                                     14,538             14,157
       Other                                       12,878             11,592
      Current portion of long-term debt             8,010              8,017
        TOTAL CURRENT LIABILITIES                 150,957            154,111

     LONG-TERM DEBT, EXCLUDING CURRENT PORTION     54,011             67,017
     DEFERRED TAXES                                27,961             24,364
      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;
        7,554,977 shares issued and
        7,529,582 outstanding in 2004;
        7,410,700 issued and 7,390,500
        outstanding in 2003                            75                 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                  118,608            115,820
      Purchase price in excess of
       predecessor basis, net of tax
       benefit of $10,306                         (15,458)           (15,458)
      Retained earnings                            54,104             47,332
      Unearned compensation                        (4,018)            (4,448)
      Treasury stock, at cost (25,395
       shares in 2004 and 20,200
       shares in 2003)                               (624)              (292)
       TOTAL STOCKHOLDERS' EQUITY                 152,694            143,035
         STOCKHOLDERS' EQUITY                    $385,623           $388,527

                                 HUB GROUP, INC.
                                 (in thousands)

                                                  Six Months Ended June 30,
                                                   2004               2003
    Cash flows from operating activities:
      Net income                                   $6,772             $2,906
      Adjustments to reconcile net income to
        net cash provided by operating activities:
        Depreciation and amortization of
          property and equipment                    5,812              5,174
        Deferred taxes                              4,735              3,375
        Compensation expense related to
         restricted stock                           1,044                -
        (Gain) Loss on sale of assets                (162)                 8
        Other assets                                  697               (243)
        Changes in working capital:
          Accounts receivable, net                 (1,547)             3,851
          Prepaid expenses and other
            current assets                           (101)               488
          Accounts payable                         (4,814)            (7,063)
          Accrued expenses                          1,667              2,933
            Net cash provided by operating
              activities                           14,103             11,429

    Cash flows from investing activities:
      Purchases of property and equipment, net     (1,682)            (1,395)
        Net cash used in investing activities      (1,682)            (1,395)

    Cash flows from financing activities:
      Proceeds from stock options exercised         3,359                -
      Purchase of treasury stock                   (2,767)               -
      Net payments on revolver                     (6,000)            (6,000)
      Payments on long-term debt                   (7,013)            (4,034)
        Net cash used in financing activities     (12,421)           (10,034)

    Net increase (decrease) in cash and cash
      equivalents                                     -                  -
    Cash and cash equivalents beginning
      of period                                       -                  -
    Cash and cash equivalents end of period          $-                 $-

    Supplemental disclosures of cash flow information

     Cash paid for:
      Interest                                     $2,360             $3,415
      Income Taxes                                   $368               $-

SOURCE Hub Group, Inc.

CONTACT: Erin Koops of Hub Group, Inc., +1-630-271-3656/
Web site:

Subscribe for More Hub Group News