Hub Group, Inc. Reports Record Second Quarter 2012 Earnings

HUB GROUP, INC.

UNAUDITED CONSOLIDATED STATEMENTS OF INCOME

(in thousands, except per share amounts)

Three Months

Six Months

Ended June 30,

Ended June 30,

2012

2011

2012

2011

Revenue

$778,312

$751,201

$1,518,197

$1,236,580

Transportation costs

690,954

666,472

1,347,097

1,094,544

Gross margin

87,358

84,729

171,100

142,036

Costs and expenses:

Salaries and benefits

31,436

32,722

64,735

59,523

Agent fees and commissions

13,601

13,765

27,296

14,516

General and administrative

12,734

12,852

25,311

24,911

Depreciation and amortization

1,737

1,472

3,397

2,408

Total costs and expenses

59,508

60,811

120,739

101,358

Operating income

27,850

23,918

50,361

40,678

Other income (expense):

Interest expense

(301)

(69)

(608)

(83)

Interest and dividend income

33

45

67

77

Other, net 

(18)

60

(41)

269

Total other (expense) income 

(286)

36

(582)

263

Income before provision for income taxes

27,564

23,954

49,779

40,941

Provision for income taxes

10,612

9,564

19,165

16,053

Net income

$  16,952

$  14,390

$     30,614

$     24,888

Basic earnings per common share

$      0.46

$      0.39

$         0.83

$         0.67

Diluted earnings per common share

$      0.46

$      0.39

$         0.82

$         0.67

Basic weighted average number of shares outstanding

37,070

36,901

37,057

36,893

Diluted weighted average number of shares outstanding

37,190

37,060

37,167

37,041

HUB GROUP, INC.

UNAUDITED FINANCIAL INFORMATION BY SEGMENT

(in thousands)

Three Months

Ended June 30, 2012

Hub

Mode

Inter-Segment Elims

Hub Group Consolidated

Revenue

$595,888

$194,292

$(11,868)

$ 778,312

Transportation costs

531,080

171,742

(11,868)

690,954

Gross margin

64,808

22,550

–

87,358

Costs and expenses:

Salaries and benefits

27,590

3,846

–

31,436

Agent fees and commissions

490

13,111

–

13,601

General and administrative

10,707

2,027

–

12,734

Depreciation and amortization

1,099

638

–

1,737

Total costs and expenses

39,886

19,622

–

59,508

Operating income

24,922

2,928

–

27,850

HUB GROUP, INC.

UNAUDITED FINANCIAL INFORMATION BY SEGMENT

(in thousands)

Three Months

Ended June 30, 2011

Hub

Mode

Inter-Segment Elims

Hub Group Consolidated

Revenue

$560,418

$193,248

$ (2,465)

$  751,201

Transportation costs

497,832

171,105

(2,465)

666,472

Gross margin

62,586

22,143

–

84,729

Costs and expenses:

Salaries and benefits

28,111

4,611

–

32,722

Agent fees and commissions

638

13,127

–

13,765

General and administrative

10,264

2,588

–

12,852

Depreciation and amortization

951

521

–

1,472

Total costs and expenses

39,964

20,847

–

60,811

Operating income

22,622

1,296

–

23,918

HUB GROUP, INC.

UNAUDITED FINANCIAL INFORMATION BY SEGMENT

(in thousands)

Six Months

Ended June 30, 2012

Hub

Mode

Inter-Segment Elims

Hub Group Consolidated

Revenue

$1,159,100

$381,475

$(22,378)

$ 1,518,197

Transportation costs

1,032,773

336,702

(22,378)

1,347,097

Gross margin

126,327

44,773

–

171,100

Costs and expenses:

Salaries and benefits

56,671

8,064

–

64,735

Agent fees and commissions

1,125

26,171

–

27,296

General and administrative

21,438

3,873

–

25,311

Depreciation and amortization

2,221

1,176

–

3,397

Total costs and expenses

81,455

39,284

–

120,739

Operating income

44,872

5,489

–

50,361

HUB GROUP, INC.

UNAUDITED FINANCIAL INFORMATION BY SEGMENT

(in thousands)

Six Months

Ended June 30, 2011

Hub

Mode

Inter-Segment Elims

Hub Group Consolidated

Revenue

$1,045,797

$193,248

$ (2,465)

$   1,236,580

Transportation costs

925,904

171,105

(2,465)

1,094,544

Gross margin

119,893

22,143

–

142,036

Costs and expenses:

Salaries and benefits

54,912

4,611

–

59,523

Agent fees and commissions

1,389

13,127

–

14,516

General and administrative

22,323

2,588

–

24,911

Depreciation and amortization

1,887

521

–

2,408

Total costs and expenses

80,511

20,847

–

101,358

Operating income

39,382

1,296

–

40,678

HUB GROUP, INC.

UNAUDITED NON-GAAP TO GAAP RECONCILIATION

(earnings per share)

Three Months

Six Months

Ended June 30,

Ended June 30,

Change

Change

Change

Change

2012

2011

$

%

2012

2011

$

%

Diluted GAAP EPS

$  0.46

$  0.39

$  0.07

17.9%

$  0.82

$  0.67

$  0.15

22.4%

Integration expenses and

restructuring costs

$     –

$  0.01

$(0.01)

$     –

$  0.04

$(0.04)

Diluted NON-GAAP EPS (adjusted)

$  0.46

$  0.40

$  0.06

15.0%

$  0.82

$  0.71

$  0.11

15.5%

Diluted Shares

37,190

37,060

37,167

37,041

HUB GROUP, INC.

UNAUDITED CONSOLIDATED BALANCE SHEETS

(in thousands, except share amounts)

June 30,

December 31,

2012

2011

ASSETS

CURRENT ASSETS:

Cash and cash equivalents

$  52,185

$       49,091

Accounts receivable trade, net

357,645

326,537

Accounts receivable other

22,658

23,878

Prepaid taxes

1,003

2,392

Deferred taxes

5,523

4,838

Prepaid expenses and other current assets

12,386

9,056

TOTAL CURRENT ASSETS

451,400

415,792

Restricted investments

15,436

14,323

Property and equipment, net

131,988

124,587

Other intangibles, net

20,842

21,667

Goodwill, net

263,361

263,470

Other assets

2,257

2,845

TOTAL ASSETS 

$885,284

$     842,684

LIABILITIES AND STOCKHOLDERS’ EQUITY

CURRENT LIABILITIES:

Accounts payable trade

$211,067

$     204,693

Accounts payable other

20,792

17,289

Accrued payroll

12,465

16,721

Accrued other

30,094

29,962

Current portion of capital lease

2,271

2,237

TOTAL CURRENT LIABILITIES

276,689

270,902

Non-current liabilities

18,169

17,717

Deferred taxes

96,757

91,764

Non-current portion of capital lease

22,279

23,436

STOCKHOLDERS’ EQUITY:

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

no shares issued or outstanding in 2012 and 2011

–

–

Common stock

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

41,224,792 shares issued in 2012 and 2011; 37,111,252 shares outstanding in 2012 and 36,860,260 shares outstanding in 2011

412

412

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

662,296 shares issued and outstanding in 2012 and 2011

7

7

Additional paid-in capital

164,459

168,800

Purchase price in excess of predecessor basis, net of tax

 benefit of $10,306

(15,458)

(15,458)

Retained earnings

431,802

401,188

Other comprehensive income

2

4

Treasury stock; at cost, 4,113,540 shares in 2012

and 4,364,532 shares in 2011

(109,834)

(116,088)

TOTAL STOCKHOLDERS’ EQUITY

471,390

438,865

     TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY

$885,284

$     842,684

HUB GROUP, INC.

UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

Six Months Ended

June 30,

2012

2011

Cash flows from operating activities:

Net income

$30,614

$  24,888

Adjustments to reconcile net income

to net cash provided by operating activities:

Depreciation and amortization 

11,004

6,292

Deferred taxes

4,432

2,733

Compensation expense related to share-based compensation plans

3,229

2,433

Gain on sale of assets

(48)

(8)

Excess tax benefits from share-based compensation

(83)

–

Changes in operating assets and liabilities, net of effects of acquisition:

Restricted investments

(1,113)

(1,043)

Accounts receivable, net

(29,883)

(62,743)

Prepaid taxes

1,389

169

Prepaid expenses and other current assets

(3,329)

(3,976)

Other assets

589

305

Accounts payable

9,877

31,079

Accrued expenses

(741)

8,445

Non-current liabilities

200

1,400

Net cash provided by operating activities

26,137

9,974

Cash flows from investing activities:

Proceeds from sale of equipment

643

214

Purchases of property and equipment

(21,043)

(15,281)

Cash used in acquisitions, net of cash acquired

(300)

(90,909)

Net cash used in investing activities

(20,700)

(105,976)

Cash flows from financing activities:

Proceeds from stock options exercised

45

26

Stock tendered for payments of withholding taxes

(1,770)

(1,477)

Capital lease payments

(1,107)

–

Excess tax benefits from share-based compensation

492

584

Net cash used in financing activities

(2,340)

(867)

Effect of exchange rate changes on cash and cash equivalents

(3)

4

Net decrease in cash and cash equivalents

3,094

(96,865)

Cash and cash equivalents beginning of period

49,091

115,144

Cash and cash equivalents end of period

$52,185

$  18,279