Hub Group, Inc. Reports Record Second Quarter 2014 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,

2014

2013

2014

2013

Revenue

$ 893,930

$ 836,685

$ 1,742,379

$ 1,605,665

Transportation costs

795,345

741,212

1,555,050

1,422,854

Gross margin

98,585

95,473

187,329

182,811

Costs and expenses:

Salaries and benefits

35,556

35,002

72,648

69,585

Agent fees and commissions

15,544

13,686

29,210

26,960

General and administrative

14,681

14,728

30,113

27,919

Depreciation and amortization

1,877

1,593

3,935

3,146

Total costs and expenses

67,658

65,009

135,906

127,610

Operating income

30,927

30,464

51,423

55,201

Other income (expense):

Interest expense

(398)

(305)

(805)

(595)

Interest and dividend income

11

15

25

44

Other, net 

(25)

23

(230)

12

Total other expense

(412)

(267)

(1,010)

(539)

Income before provision for income taxes

30,515

30,197

50,413

54,662

Provision for income taxes

11,839

11,587

19,702

20,688

Net income

$  18,676

$  18,610

$     30,711

$     33,974

Basic earnings per common share

$      0.51

$      0.50

$         0.84

$         0.92

Diluted earnings per common share

$      0.51

$      0.50

$         0.84

$         0.92

Basic weighted average number of shares outstanding

36,674

36,870

36,667

36,863

Diluted weighted average number of shares outstanding

36,814

36,989

36,769

36,969

HUB GROUP, INC.

UNAUDITED FINANCIAL INFORMATION BY SEGMENT

(in thousands)

Three Months

Ended June 30, 2014

Hub

Mode

Inter-Segment Elims

Hub Group Total

Revenue

$ 682,049

$ 231,538

$                 (19,657)

$           893,930

Transportation costs

611,351

203,651

(19,657)

795,345

Gross margin

70,698

27,887

–

98,585

Costs and expenses:

Salaries and benefits

32,047

3,509

–

35,556

Agent fees and commissions

5

15,539

–

15,544

General and administrative

12,817

1,864

–

14,681

Depreciation and amortization

1,538

339

–

1,877

Total costs and expenses

46,407

21,251

–

67,658

Operating income

$  24,291

$    6,636

$                         –

$             30,927

HUB GROUP, INC.

UNAUDITED FINANCIAL INFORMATION BY SEGMENT

(in thousands)

Three Months

Ended June 30, 2013

Hub

Mode

Inter-Segment Elims

Hub Group Total

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)

Six Months

Ended June 30, 2014

Hub

Mode

Inter-Segment Elims

Hub Group Total

Revenue

$ 1,335,458

$ 440,444

$         (33,523)

$        1,742,379

Transportation costs

1,200,262

388,311

(33,523)

1,555,050

Gross margin

135,196

52,133

–

187,329

Costs and expenses:

Salaries and benefits

65,384

7,264

–

72,648

Agent fees and commissions

16

29,194

–

29,210

General and administrative

26,557

3,556

–

30,113

Depreciation and amortization

3,055

880

–

3,935

Total costs and expenses

95,012

40,894

–

135,906

Operating income

$     40,184

$  11,239

$                 –

$             51,423

HUB GROUP, INC.

UNAUDITED FINANCIAL INFORMATION BY SEGMENT

(in thousands)

Six Months

Ended June 30, 2013

Hub

Mode

Inter-Segment Elims

Hub Group Total

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 CONSOLIDATED BALANCE SHEETS

(in thousands, except share amounts)

June 30,

December 31,

2014

2013

ASSETS

CURRENT ASSETS:

Cash and cash equivalents

$      73,164

$          68,964

Accounts receivable trade, net

417,880

371,528

Accounts receivable other

20,871

26,569

Prepaid taxes

574

409

Deferred taxes

7,432

5,826

Prepaid expenses and other current assets

14,801

12,738

     TOTAL CURRENT ASSETS

534,722

486,034

Restricted investments

21,960

20,754

Property and equipment, net

286,133

260,400

Other intangibles, net

15,081

15,729

Goodwill, net

262,923

263,032

Other assets

2,595

1,994

TOTAL ASSETS

$ 1,123,414

$     1,047,943

LIABILITIES AND STOCKHOLDERS’ EQUITY

CURRENT LIABILITIES:

Accounts payable trade

$    255,782

$        232,350

Accounts payable other

23,279

24,957

Accrued payroll

15,816

17,000

Accrued other

37,739

42,834

Current portion of capital lease

2,456

2,413

Current portion of long term debt

6,712

1,771

     TOTAL CURRENT LIABILITIES

341,784

321,325

Long term debt

24,360

6,475

Non-current liabilities

21,629

22,304

Non-current portion of capital lease

17,215

18,477

Deferred taxes

124,887

117,835

STOCKHOLDERS’ EQUITY:

Preferred stock, $.01 par value; 2,000,000 shares authorized; no shares issued or outstanding in 2014 and 2013

–

–

Common stock

Class A: $.01 par value; 97,337,700 shares authorized and 41,224,792 shares issued in 2014 and 2013; 36,764,442 shares outstanding in 2014 and 36,626,384 shares outstanding in 2013

412

412

Class B:  $.01 par value; 662,300 shares authorized; 662,296 shares issued and outstanding in 2014 and 2013

7

7

Additional paid-in capital

166,113

167,357

Purchase price in excess of predecessor basis, net of tax

 benefit of $10,306

(15,458)

(15,458)

Retained earnings

568,962

538,251

Accumulated other comprehensive loss

(52)

(85)

Treasury stock; at cost, 4,460,350 shares in 2014 and 4,598,408 shares in 2013

(126,445)

(128,957)

TOTAL STOCKHOLDERS’ EQUITY

593,539

561,527

     TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY

$ 1,123,414

$     1,047,943

HUB GROUP, INC.

UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

Six Months Ended

June 30,

2014

2013

Cash flows from operating activities:

Net income

$ 30,711

$ 33,974

Adjustments to reconcile net income to net cash provided by operating activities:

Depreciation and amortization 

13,780

9,954

Deferred taxes

5,557

6,548

Compensation expense related to share-based compensation plans

4,191

3,757

Gain on sale of assets

(10)

(287)

Excess tax benefits from share-based compensation

–

(8)

Changes in operating assets and liabilities:

Restricted investments

(1,206)

(541)

Accounts receivable, net

(40,654)

(45,558)

Prepaid taxes

(165)

(48)

Prepaid expenses and other current assets

(2,063)

(417)

Other assets

(601)

(120)

Accounts payable

21,756

30,685

Accrued expenses

882

(3,680)

Non-current liabilities

(537)

118

  Net cash provided by operating activities

31,641

34,377

Cash flows from investing activities:

Proceeds from sale of equipment

319

1,358

Purchases of property and equipment

(46,443)

(39,202)

Net cash used in investing activities

(46,124)

(37,844)

Cash flows from financing activities:

Proceeds from issuance of debt

25,361

9,120

Repayments of long-term debt

(2,535)

–

Proceeds from stock options exercised

–

41

Stock tendered for payments of withholding taxes

(3,151)

(2,585)

Purchase of treasury stock

–

(903)

Capital lease payments

(1,219)

(1,143)

Excess tax benefits from share-based compensation

228

177

Net cash provided by financing activities

18,684

4,707

Effect of exchange rate changes on cash and cash equivalents

(1)

–

Net increase in cash and cash equivalents

4,200

1,240

Cash and cash equivalents beginning of period

68,964

70,760

Cash and cash equivalents end of period

$ 73,164

$ 72,000