DOWNERS GROVE, Ill., Oct. 20 /PRNewswire-FirstCall/ — Hub Group, Inc.
(Nasdaq: HUBG) today reported adjusted net income for the quarter ended
September 30, 2004 of $7.8 million. This excludes $4.2 million of after-tax
costs ($7.3 million pre-tax) related to the Company’s early extinguishment of
9.14% debt following the successful offering of 1,800,000 shares of common
stock. This represents a 170% increase in third quarter adjusted net income
versus the third quarter of 2003. Hub Group’s adjusted diluted earnings per
share of $0.75 for the quarter ended September 30, 2004 represents an increase
of 103% compared to last year’s third quarter diluted earnings per share of
$0.37 on 31% higher average diluted shares outstanding in the 2004 period.
Hub’s gross margin (net revenue) grew 10.5% to $48.0 million as compared to
$43.5 million in the third quarter of 2003. As a percentage of revenue, gross
margin increased to 13.3% this quarter from 12.8% in 2003 due to more
effective yield management. The Company paid off $62 million in debt during
the quarter and is now debt-free.
Note: A tabular reconciliation of the differences between the adjusted
financial results for the three-month and nine-month periods ended September
30, 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.
On an as-reported basis, net income for the third quarter of 2004
increased to $3.6 million from $2.9 million in the same quarter last year. As
reported diluted earnings per share decreased to $0.34 compared to last year’s
third quarter of $0.37 on 31% 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 5.6% to $350.1
million in the third quarter of 2004 compared to the third quarter of 2003 due
primarily to price increases and fuel surcharges. Third quarter intermodal
revenue increased 5.9% to $254.4 million. Truckload brokerage revenue
increased 4.5% to $56.1 million this quarter. Third quarter logistics revenue
increased 5.4% to $39.6 million. Hub Group Distribution Services (HGDS)
revenue increased to $12.0 million in the third quarter 2004 from $8.0 million
in the same period last year due to an increase in installation business
offset partially by a decrease in pharmaceutical revenue which was transferred
to our logistics unit. Hub’s total revenue grew 6.7% to $362.1 million as
compared to $339.5 million in the third quarter of 2003.
Costs and expenses decreased 6% in the third quarter of 2004 to $34.1
million compared to $36.3 million in the third quarter of 2003, reflecting the
benefits from the Company’s cost reduction efforts. Debt extinguishment
costs were $7.3 million in the third quarter of 2004 due primarily to the $6.8
million in pre-payment penalties associated with the early extinguishment of
debt. Interest expense decreased to $0.6 million compared to $1.9 million in
the third quarter of 2003 due to the lower average debt balance in 2004 as
compared to 2003.
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 the third quarter. Despite the fact that our intermodal
volume declined 2%, our top line and bottom line have improved and our
balance sheet is stronger than ever. This demonstrates that our focus on
yield management is delivering results.”
FOURTH QUARTER EARNINGS GUIDANCE
Given the current operating environment, we are comfortable that the
earnings for the fourth quarter will be within the analysts’ range of $0.52 to
$.55 per diluted share.
PUBLIC OFFERING
As previously announced, 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 $55.9 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 recorded a pre-tax 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 related deferred financing costs.
CONFERENCE CALL: Hub Group, Inc. (Nasdaq: HUBG) will hold a conference
call at 10:00 a.m. Eastern Time (9:00 a.m. Central Time) on Thursday,
October 21, 2004, to discuss its third quarter 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) 510-0146. The conference call participant code
is 34545895. 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
fourth quarter 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 report on Form 10-Q for
the period ended March 31, 2004, our Prospectus dated June 28, 2004 and our
report on Form 10-Q for the period ended June 30, 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)
Three Months Nine Months
Ended September 30, Ended September 30,
2004 2003 2004 2003
Revenue $362,105 $339,484 $1,039,377 $1,000,418
Transportation costs 314,077 296,023 905,881 871,447
Gross margin 48,028 43,461 133,496 128,971
Costs and expenses:
Salaries and
benefits 21,995 22,508 66,570 68,689
Selling, general
and administrative 9,023 11,041 29,618 34,932
Depreciation and
amortization of
property and
equipment 3,052 2,716 8,786 7,865
Total costs and
expenses 34,070 36,265 104,974 111,486
Operating income 13,958 7,196 28,522 17,485
Other income (expense):
Interest expense (571) (1,885) (3,968) (5,981)
Interest income 56 43 165 118
Debt extinguishment
expenses (7,296) - (7,296) -
Other, net 180 46 583 59
Total other expense (7,631) (1,796) (10,516) (5,804)
Income before provision
for income taxes 6,327 5,400 18,006 11,681
Provision for income
taxes 2,775 2,514 7,682 5,889
Net Income $3,552 $2,886 $10,324 $5,792
Basic earnings per
common share $0.37 $0.37 $1.22 $0.75
Diluted earnings per
common share $0.34 $0.37 $1.14 $0.74
Basic weighted average
number of shares
outstanding 9,707 7,709 8,435 7,709
Diluted weighted average
number of shares
outstanding 10,324 7,897 9,029 7,814
HUB GROUP, INC.
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except share amounts)
September 30, December 31,
2004 2003
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $- $-
Accounts receivable
Trade, net 134,551 125,754
Other 5,948 9,472
Deferred taxes 4,676 4,676
Prepaid expenses and other current assets 4,359 4,578
TOTAL CURRENT ASSETS 149,534 144,480
PROPERTY AND EQUIPMENT, net 21,544 27,855
GOODWILL, net 215,175 215,175
OTHER ASSETS 321 1,017
TOTAL ASSETS $386,574 $388,527
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable
Trade $110,709 $117,790
Other 2,905 2,555
Accrued expenses
Payroll 16,305 14,157
Other 13,200 11,592
Current portion of long-term debt - 8,017
TOTAL CURRENT LIABILITIES 143,119 154,111
LONG-TERM DEBT, EXCLUDING CURRENT PORTION - 67,017
DEFERRED TAXES 30,594 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; 9,354,977 shares issued and
9,337,687 outstanding in 2004; 7,410,700
issued and 7,390,500 outstanding in 2003 93 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 174,449 115,820
Purchase price in excess of predecessor
basis, net of tax benefit of $10,306 (15,458) (15,458)
Retained earnings 57,656 47,332
Unearned compensation (3,475) (4,448)
Treasury stock, at cost (17,290 shares in 2004
and 20,200 shares in 2003) (411) (292)
TOTAL STOCKHOLDERS' EQUITY 212,861 143,035
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $386,574 $388,527
HUB GROUP, INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
Nine Months
Ended September 30,
2004 2003
Cash flows from operating activities:
Net income $10,324 $5,792
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization of property
and equipment 8,966 7,908
Deferred taxes 7,535 5,739
Compensation expense related to restricted
stock 1,593 -
(Gain) on sale of assets (248) (60)
Other assets 696 (110)
Changes in working capital:
Accounts receivable, net (5,273) 553
Prepamd expenses and other current assets 219 (201)
Accounts payable (6,731) (4,225)
Accrued expenses 3,756 7,799
Net cash provided by operating activities 20,837 23,195
Cash flows from investing activities:
Purchases of property and equipment, net (2,407) (3,173)
Net cash used in investing activities (2,407) (3,173)
Cash flows from financing activities:
Proceeds from sale of stock, net 55,871 -
Proceeds from stock options exercised 3,500 22
Purchase of treasury stock (2,767) -
Net payments on revolver (6,000) (14,000)
Payments of long term debt (69,034) (6,044)
Net cash used in financing activities (18,430) (20,022)
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 $2,995 $4,951
Income Taxes $477 $-
HUB GROUP, INC.
RECONCILIATION OF AS REPORTED FINANCIAL RESULTS
TO AS ADJUSTED FINANCIAL RESULTS
(in thousands, except per share amounts)
Three Months Ended September 30, 2004
As Reported Adjustments As Adjusted
Operating Income $13,958 $- $13,958
Interest (expense) (571) - (571)
Interest income 56 - 56
Debt extinguishment expenses (7,296) (7,296) a -
Other, net 180 - 180
Income before provision
for income taxes 6,327 (7,296) 13,623
Provision for income taxes 2,775 (3,064) b 5,839
Net Income $3,552 $(4,232) $7,784
Basic earnings per
common share $0.37 $(0.43) $0.80
Diluted earnings per
common share $0.34 $(0.41) $0.75
Basic weighted average number
of shares outstanding 9,707 9,707 9,707
Diluted weighted average number
of shares outstanding 10,324 10,324 10,324
Nine Months Ended September 30, 2004
As Reported Adjustments As Adjusted
Operating Income $28,522 $- $28,522
Interest (expense) (3,968) - (3,968)
Interest income 165 - 165
Debt extinguishment expenses (7,296) (7,296) a -
Other, net 583 - 583
Income before provision
for income taxes 18,006 (7,296) 25,302
Provision for income taxes 7,682 (3,064) b 10,746
Net Income $10,324 $(4,232) $14,556
Basic earnings per
common share $1.22 $(0.50) $1.72
Diluted earnings per
common share $1.14 $(0.47) $1.61
Basic weighted average number
of shares outstanding 8,435 8,435 8,435
Diluted weighted average number
of shares outstanding 9,029 9,029 9,029
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%
Note: The purpose of this statement is to reflect as adjusted
earnings excluding the one time costs associated with prepaying our
debt.
SOURCE Hub Group, Inc.
-0- 10/20/2004
/CONTACT: Erin Koops of Hub Group, Inc., +1-630-271-3656/
/Web site: https://www.hubgroup.com /
(HUBG)
CO: Hub Group, Inc.
ST: Illinois
IN: TRN
SU: ERN CCA ERP OFR
JR-SH
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7831 10/20/2004 16:03 EDT http://www.prnewswire.com