Hub Group, Inc. Reports Record Third Quarter 2015 Earnings

HUB GROUP, INC.

UNAUDITED CONSOLIDATED STATEMENTS OF INCOME

(in thousands, except per share amounts)

Three Months

Nine Months

Ended September 30,

Ended September 30,

2015

2014

2015

2014

Revenue

$ 899,869

$ 913,386

$ 2,635,323

$ 2,655,765

Transportation costs

794,805

820,190

2,339,402

2,375,240

Gross margin

105,064

93,196

295,921

280,525

Costs and expenses:

Salaries and benefits

36,357

30,868

114,670

103,516

Agent fees and commissions

17,862

16,592

49,374

45,802

General and administrative

15,461

13,868

44,295

43,981

Depreciation and amortization

1,966

1,967

5,893

5,902

Driver settlements and related costs

–

10,343

–

10,343

Impairment of software

–

11,881

–

11,881

Total costs and expenses

71,646

85,519

214,232

221,425

Operating income

33,418

7,677

81,689

59,100

Other income (expense):

Interest expense

(757)

(361)

(2,218)

(1,166)

Interest and dividend income

22

(4)

47

21

Other, net 

(952)

39

(2,095)

(191)

Total other expense

(1,687)

(326)

(4,266)

(1,336)

Income before provision for income taxes

31,731

7,351

77,423

57,764

Provision for income taxes

11,899

2,860

28,848

22,562

Net income

$   19,832

$     4,491

$      48,575

$      35,202

Basic earnings per common share

$       0.55

$       0.12

$          1.35

$          0.96

Diluted earnings per common share

$       0.55

$       0.12

$          1.35

$          0.96

Basic weighted average number of shares outstanding

35,769

36,676

35,970

36,670

Diluted weighted average number of shares outstanding

35,903

36,858

36,049

36,799

HUB GROUP, INC.

UNAUDITED FINANCIAL INFORMATION BY SEGMENT

(in thousands)

Three Months

Ended September 30, 2015

Hub

Mode

Inter-Segment Elims

Hub Group Total

Revenue

$       680,559

$       239,375

$           (20,065)

$       899,869

Transportation costs

606,081

208,789

(20,065)

794,805

Gross margin

74,478

30,586

–

105,064

Costs and expenses:

Salaries and benefits

32,917

3,440

–

36,357

Agent fees and commissions

14

17,848

–

17,862

General and administrative

13,659

1,802

–

15,461

Depreciation and amortization

1,647

319

–

1,966

Driver settlements and related costs

–

–

–

–

Impairment of software

–

–

–

–

Total costs and expenses

48,237

23,409

–

71,646

Operating income

$        26,241

$          7,177

$                   –

$        33,418

HUB GROUP, INC.

UNAUDITED FINANCIAL INFORMATION BY SEGMENT

(in thousands)

Three Months

Ended September 30, 2014

Hub

Mode

Inter-Segment Elims

Hub Group Total

Revenue

$       691,835

$       245,421

$           (23,870)

$       913,386

Transportation costs

627,752

216,308

(23,870)

820,190

Gross margin

64,083

29,113

–

93,196

Costs and expenses:

Salaries and benefits

27,428

3,440

–

30,868

Agent fees and commissions

15

16,577

–

16,592

General and administrative

12,144

1,724

–

13,868

Depreciation and amortization

1,627

340

–

1,967

Driver settlements and related costs

10,343

–

–

10,343

Impairment of software

11,881

–

–

11,881

Total costs and expenses

63,438

22,081

–

85,519

Operating income

$             645

$          7,032

$                   –

$          7,677

HUB GROUP, INC.

UNAUDITED FINANCIAL INFORMATION BY SEGMENT

(in thousands)

Nine Months

Ended September 30, 2015

Hub

Mode

Inter-Segment Elims

Hub Group Total

Revenue

$    2,010,453

$       686,744

$          (61,874)

$    2,635,323

Transportation costs

1,800,628

600,648

(61,874)

2,339,402

Gross margin

209,825

86,096

–

295,921

Costs and expenses:

Salaries and benefits

103,865

10,805

–

114,670

Agent fees and commissions

43

49,331

–

49,374

General and administrative

39,051

5,244

–

44,295

Depreciation and amortization

4,912

981

–

5,893

Driver settlements and related costs

–

–

–

–

Impairment of software

–

–

–

–

Total costs and expenses

147,871

66,361

–

214,232

Operating income

$        61,954

$        19,735

$                  –

$        81,689

HUB GROUP, INC.

UNAUDITED FINANCIAL INFORMATION BY SEGMENT

(in thousands)

Nine Months

Ended September 30, 2014

Hub

Mode

Inter-Segment Elims

Hub Group Total

Revenue

$    2,027,293

$       685,865

$          (57,393)

$    2,655,765

Transportation costs

1,828,014

604,619

(57,393)

2,375,240

Gross margin

199,279

81,246

–

280,525

Costs and expenses:

Salaries and benefits

92,812

10,704

–

103,516

Agent fees and commissions

31

45,771

–

45,802

General and administrative

38,701

5,280

–

43,981

Depreciation and amortization

4,682

1,220

–

5,902

Driver settlements and related costs

10,343

–

–

10,343

Impairment of software

11,881

–

–

11,881

Total costs and expenses

158,450

62,975

–

221,425

Operating income

$        40,829

$        18,271

$                  –

$        59,100

HUB GROUP, INC.

UNAUDITED NON-GAAP TO GAAP RECONCILIATION

(earnings per share)

Three Months

Nine Months

Ended, September 30,

Ended, September 30,

Change

Change

Change

Change

2015

2014

$

%

2015

2014

$

%

Diluted GAAP EPS

$   0.55

$     0.12

$   0.43

358.3%

$   1.35

$   0.96

$   0.39

40.6%

Driver settlements and related costs, net of tax

$         –

$     0.17

$ (0.17)

$         –

$   0.17

$ (0.17)

Impairment of Software, net of tax

$         –

$     0.20

$ (0.20)

$         –

$   0.20

$ (0.20)

Canadian currency loss, net of tax

$         –

$           –

$         –

$   0.02

$        –

$   0.02

Severance Cost, net of tax

$         –

$           –

$         –

$   0.02

$        –

$   0.02

Diluted NON-GAAP EPS (adjusted)

$   0.55

$     0.49

$   0.06

12.2%

$   1.39

$   1.33

$   0.06

4.5%

Diluted Shares

35,903

36,858

36,049

36,799

HUB GROUP, INC.

CONSOLIDATED BALANCE SHEETS

(in thousands, except share amounts)

September 30,

December 31,

2015

2014

(unaudited)

ASSETS

CURRENT ASSETS:

Cash and cash equivalents

$         183,547

$         109,769

Accounts receivable trade, net

411,849

401,803

Accounts receivable other

9,206

24,886

Prepaid taxes

1,358

14,937

Deferred taxes

7,712

4,816

Prepaid expenses and other current assets

15,797

14,355

TOTAL CURRENT ASSETS

629,469

570,566

Restricted investments

20,555

21,944

Property and equipment, net

350,726

338,327

Other intangibles, net

13,463

14,434

Goodwill, net

262,649

262,813

Other assets

4,099

4,043

TOTAL ASSETS

$      1,280,961

$      1,212,127

LIABILITIES AND STOCKHOLDERS’ EQUITY

CURRENT LIABILITIES:

Accounts payable trade

$         273,284

$         256,345

Accounts payable other

25,726

21,333

Accrued payroll

21,037

16,192

Accrued other

45,920

43,523

Current portion of capital lease

2,584

2,504

Current portion of long term debt

25,929

19,619

TOTAL CURRENT LIABILITIES

394,480

359,516

Long term debt

80,690

72,460

Non-current liabilities

19,562

22,929

Long term capital lease

13,974

15,937

Deferred taxes

148,754

140,501

STOCKHOLDERS’ EQUITY:

Preferred stock, $.01 par value; 2,000,000 shares authorized; no shares issued or outstanding in 2015 and 2014

–

–

Common stock

Class A: $.01 par value; 97,337,700 shares authorized and 41,224,792 shares issued in 2015 and 2014; 35,698,057 shares outstanding in 2015 and 36,247,324 shares outstanding in 2014

412

412

Class B:  $.01 par value; 662,300 shares authorized; 662,296 shares issued and outstanding in 2015 and 2014

7

7

Additional paid-in capital

169,979

171,235

Purchase price in excess of predecessor basis, net of tax benefit of $10,306

(15,458)

(15,458)

Retained earnings

638,384

589,809

Accumulated other comprehensive loss

(177)

(77)

Treasury stock; at cost, 5,526,735 shares in 2015 and 4,977,468 shares in 2014

(169,646)

(145,144)

TOTAL STOCKHOLDERS’ EQUITY

623,501

600,784

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY

$      1,280,961

$      1,212,127

HUB GROUP, INC.

UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

Nine Months Ended

September 30,

2015

2014

Cash flows from operating activities:

Net income

$        48,575

$        35,202

Adjustments to reconcile net income

to net cash provided by operating activities:

Depreciation and amortization 

26,662

21,165

Impairment of software

–

11,881

Deferred taxes

5,757

8,288

Compensation expense related to share-based compensation plans

5,843

6,238

Gain on sale of assets

(116)

(20)

Excess tax benefits from share-based compensation

(40)

–

Changes in operating assets and liabilities:

Restricted investments

1,389

(875)

Accounts receivable, net

6,540

(49,102)

Prepaid taxes

13,579

(5,794)

Prepaid expenses and other current assets

(1,442)

(7,104)

Other assets

(56)

(1,572)

Accounts payable

21,308

38,281

Accrued expenses

8,337

2,581

Non-current liabilities

(3,505)

(534)

Net cash provided by operating activities

132,831

58,635

Cash flows from investing activities:

Proceeds from sale of equipment

922

420

Purchases of property and equipment

(40,951)

(75,881)

Net cash used in investing activities

(40,029)

(75,461)

Cash flows from financing activities:

Proceeds from issuance of debt

31,376

49,268

Repayments of long term debt

(16,836)

(4,198)

Stock tendered for payments of withholding taxes

(2,902)

(3,184)

Purchase of treasury stock

(28,823)

–

Capital lease payments

(1,883)

(1,632)

Excess tax benefits from share-based compensation

166

434

Net cash (used in) provided by financing activities

(18,902)

40,688

Effect of exchange rate changes on cash and cash equivalents

(122)

1

Net increase in cash and cash equivalents

73,778

23,863

Cash and cash equivalents beginning of period

109,769

68,964

Cash and cash equivalents end of period

$      183,547

$        92,827