Hub Group, Inc. Reports Record Second Quarter 2013 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,

2013

2012

2013

2012

Revenue

$ 836,685

$ 778,312

$ 1,605,665

$ 1,518,197

Transportation costs

741,212

690,954

1,422,854

1,347,097

Gross margin

95,473

87,358

182,811

171,100

Costs and expenses:

Salaries and benefits

35,002

31,436

69,585

64,735

Agent fees and commissions

13,686

13,601

26,960

27,296

General and administrative

14,728

12,734

27,919

25,311

Depreciation and amortization

1,593

1,737

3,146

3,397

Total costs and expenses

65,009

59,508

127,610

120,739

Operating income

30,464

27,850

55,201

50,361

Other income (expense):

Interest expense

(305)

(301)

(595)

(608)

Interest and dividend income

15

33

44

67

Other, net 

23

(18)

12

(41)

Total other (expense) income 

(267)

(286)

(539)

(582)

Income before provision for income taxes

30,197

27,564

54,662

49,779

Provision for income taxes

11,587

10,612

20,688

19,165

Net income

$   18,610

$   16,952

$      33,974

$      30,614

Basic earnings per common share

$       0.50

$       0.46

$         0.92

$         0.83

Diluted earnings per common share

$       0.50

$       0.46

$         0.92

$         0.82

Basic weighted average number of shares outstanding

36,870

37,070

36,863

37,057

Diluted weighted average number of shares outstanding

36,989

37,190

36,969

37,167

HUB GROUP, INC.

UNAUDITED FINANCIAL INFORMATION BY SEGMENT

(in thousands)

Three Months

Ended June 30, 2013

Hub

Mode

Inter-Segment Elims

Hub Group Consolidated

Revenue

$       644,924

$       203,918

$           (12,157)

$       836,685

Transportation costs

573,498

179,871

(12,157)

741,212

Gross margin

71,426

24,047

–

95,473

Costs and expenses:

Salaries and benefits

31,208

3,794

–

35,002

Agent fees and commissions

350

13,336

–

13,686

General and administrative

13,338

1,390

–

14,728

Depreciation and amortization

1,061

532

–

1,593

Total costs and expenses

45,957

19,052

–

65,009

Operating income

$        25,469

$          4,995

$        30,464

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)

Six Months

Ended June 30, 2013

Hub

Mode

Inter-Segment Elims

Hub Group Consolidated

Revenue

$    1,237,575

$       391,378

$          (23,288)

$    1,605,665

Transportation costs

1,100,969

345,173

(23,288)

1,422,854

Gross margin

136,606

46,205

–

182,811

Costs and expenses:

Salaries and benefits

61,985

7,600

–

69,585

Agent fees and commissions

799

26,161

–

26,960

General and administrative

25,036

2,883

–

27,919

Depreciation and amortization

2,081

1,065

–

3,146

Total costs and expenses

89,901

37,709

–

127,610

Operating income

$        46,705

$          8,496

$                  –

$        55,201

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 CONSOLIDATED BALANCE SHEETS

(in thousands, except share amounts)

June 30,

December 31,

2013

2012

ASSETS

CURRENT ASSETS:

Cash and cash equivalents

$           72,000

$           70,760

Accounts receivable trade, net

395,387

346,917

Accounts receivable other

22,955

25,945

Prepaid taxes

173

139

Deferred taxes

5,432

4,965

Prepaid expenses and other current assets

11,033

10,619

TOTAL CURRENT ASSETS

506,980

459,345

Restricted investments

17,759

17,218

Property and equipment, net

189,396

157,584

Other intangibles, net

19,319

20,068

Goodwill, net

263,142

263,251

Other assets

2,504

2,387

TOTAL ASSETS

$         999,100

$         919,853

LIABILITIES AND STOCKHOLDERS’ EQUITY

CURRENT LIABILITIES:

Accounts payable trade

$         234,224

$         206,497

Accounts payable other

25,875

22,925

Accrued payroll

14,822

17,210

Accrued other

30,309

28,633

Current portion of capital lease

2,367

2,120

Current portion of long term debt

1,755

–

TOTAL CURRENT LIABILITIES

309,352

277,385

Long term debt

7,365

–

Non-current liabilities

19,847

20,041

Long term capital lease

19,709

21,099

Deferred taxes

107,510

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; 36,984,705 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

163,104

167,765

Purchase price in excess of predecessor basis, net of tax

 benefit of $10,306

(15,458)

(15,458)

Retained earnings

503,115

469,141

Other comprehensive (loss) income

(32)

1

Treasury stock; at cost, 4,240,087 shares in 2013

and 4,457,307 shares in 2012

(115,831)

(120,971)

TOTAL STOCKHOLDERS’ EQUITY

535,317

500,897

     TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY

$         999,100

$         919,853

HUB GROUP, INC.

UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

Six Months Ended

June 30,

2013

2012

Cash flows from operating activities:

Net income

$        33,974

$        30,614

Adjustments to reconcile net income

to net cash provided by operating activities:

Depreciation and amortization 

9,954

11,004

Deferred taxes

6,548

4,432

Compensation expense related to share-based compensation plans

3,757

3,229

Gain on sale of assets

(287)

(48)

Excess tax benefits from share-based compensation

(8)

(83)

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

Restricted investments

(541)

(1,113)

Accounts receivable, net

(45,558)

(29,883)

Prepaid taxes

(48)

1,389

Prepaid expenses and other current assets

(417)

(3,329)

Other assets

(120)

589

Accounts payable

30,685

9,877

Accrued expenses

(3,680)

(741)

Non-current liabilities

118

200

Net cash provided by operating activities

34,377

26,137

Cash flows from investing activities:

Proceeds from sale of equipment

1,358

643

Purchases of property and equipment

(39,202)

(21,043)

Cash used in acquisitions, net of cash acquired

–

(300)

Net cash used in investing activities

(37,844)

(20,700)

Cash flows from financing activities:

Proceeds from issuance of debt

9,120

–

Proceeds from stock options exercised

41

45

Stock tendered for payments of withholding taxes

(2,585)

(1,770)

Purchase of treasury stock

(903)

–

Capital lease payments

(1,143)

(1,107)

Excess tax benefits from share-based compensation

177

492

Net cash provided by (used in) financing activities

4,707

(2,340)

Effect of exchange rate changes on cash and cash equivalents

–

(3)

Net increase in cash and cash equivalents

1,240

3,094

Cash and cash equivalents beginning of period

70,760

49,091

Cash and cash equivalents end of period

$        72,000

$        52,185