Hub Group, Inc. Reports Second Quarter 2015 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,

2015

2014

2015

2014

Revenue

$ 899,513

$ 893,930

$ 1,735,454

$ 1,742,379

Transportation costs

797,784

795,345

1,544,597

1,555,050

Gross margin

101,729

98,585

190,857

187,329

Costs and expenses:

Salaries and benefits

38,837

35,556

78,313

72,648

Agent fees and commissions

16,686

15,544

31,512

29,210

General and administrative

14,763

14,681

28,834

30,113

Depreciation and amortization

1,967

1,877

3,927

3,935

Total costs and expenses

72,253

67,658

142,586

135,906

Operating income

29,476

30,927

48,271

51,423

Other income (expense):

Interest expense

(720)

(398)

(1,461)

(805)

Interest and dividend income

19

11

25

25

Other, net 

261

(25)

(1,143)

(230)

Total other expense

(440)

(412)

(2,579)

(1,010)

Income before provision for income taxes

29,036

30,515

45,692

50,413

Provision for income taxes

10,569

11,839

16,949

19,702

Net income

$   18,467

$   18,676

$      28,743

$      30,711

Basic earnings per common share

$       0.51

$       0.51

$         0.80

$         0.84

Diluted earnings per common share

$       0.51

$       0.51

$         0.80

$         0.84

Basic weighted average number of shares outstanding

35,986

36,674

36,071

36,667

Diluted weighted average number of shares outstanding

36,075

36,814

36,122

36,769

HUB GROUP, INC.

UNAUDITED FINANCIAL INFORMATION BY SEGMENT

(in thousands)

Three Months

Ended June 30, 2015

Hub

Mode

Inter-Segment Elims

Hub Group Total

Revenue

$       686,451

$       233,847

$           (20,785)

$       899,513

Transportation costs

614,289

204,280

(20,785)

797,784

Gross margin

72,162

29,567

–

101,729

Costs and expenses:

Salaries and benefits

35,288

3,549

–

38,837

Agent fees and commissions

14

16,672

–

16,686

General and administrative

13,194

1,569

–

14,763

Depreciation and amortization

1,647

320

–

1,967

Total costs and expenses

50,143

22,110

–

72,253

Operating income

$        22,019

$          7,457

$                   –

$        29,476

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)

Six Months

Ended June 30, 2015

Hub

Mode

Inter-Segment Elims

Hub Group Total

Revenue

$ 1,329,894

$ 447,369

$          (41,809)

$    1,735,454

Transportation costs

1,194,547

391,859

(41,809)

1,544,597

Gross margin

135,347

55,510

–

190,857

Costs and expenses:

Salaries and benefits

70,948

7,365

–

78,313

Agent fees and commissions

29

31,483

–

31,512

General and administrative

25,392

3,442

–

28,834

Depreciation and amortization

3,265

662

–

3,927

Total costs and expenses

99,634

42,952

–

142,586

Operating income

$     35,713

$  12,558

$                  –

$        48,271

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 CONSOLIDATED BALANCE SHEETS

(in thousands, except share amounts)

June 30,

December 31,

2015

2014

ASSETS

CURRENT ASSETS:

Cash and cash equivalents

$         156,780

$         109,769

Accounts receivable trade, net

420,951

401,803

Accounts receivable other

18,022

24,886

Prepaid taxes

1,653

14,937

Deferred taxes

8,229

4,816

Prepaid expenses and other current assets

11,325

14,355

TOTAL CURRENT ASSETS

616,960

570,566

Restricted investments

22,239

21,944

Property and equipment, net

332,532

338,327

Other intangibles, net

13,786

14,434

Goodwill, net

262,704

262,813

Other assets

3,827

4,043

TOTAL ASSETS

$      1,252,048

$      1,212,127

LIABILITIES AND STOCKHOLDERS’ EQUITY

CURRENT LIABILITIES:

Accounts payable trade

$         270,189

$         256,345

Accounts payable other

22,629

21,333

Accrued payroll

19,644

16,192

Accrued other

37,401

43,523

Current portion of capital lease

2,560

2,504

Current portion of long term debt

23,387

19,619

TOTAL CURRENT LIABILITIES

375,810

359,516

Long term debt

76,302

72,460

Non-current liabilities

21,731

22,929

Long term portion of capital lease

14,638

15,937

Deferred taxes

146,188

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; 36,072,126 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

168,785

171,235

Purchase price in excess of predecessor basis, net of tax

 benefit of $10,306

(15,458)

(15,458)

Retained earnings

618,552

589,809

Accumulated other comprehensive loss

(97)

(77)

Treasury stock; at cost, 5,152,666 shares in 2015 and 4,977,468 shares in 2014

(154,822)

(145,144)

TOTAL STOCKHOLDERS’ EQUITY

617,379

600,784

     TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY

$      1,252,048

$      1,212,127

HUB GROUP, INC.

UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

Six Months Ended

June 30,

2015

2014

Cash flows from operating activities:

Net income

$        28,743

$        30,711

Adjustments to reconcile net income

to net cash provided by operating activities:

Depreciation and amortization 

17,526

13,780

Deferred taxes

2,489

5,557

Compensation expense related to share-based compensation plans

4,110

4,191

Gain on sale of assets

(60)

(10)

Excess tax benefits from share-based compensation

(33)

–

Changes in operating assets and liabilities:

Restricted investments

(295)

(1,206)

Accounts receivable, net

(11,407)

(40,654)

Prepaid taxes

13,284

(165)

Prepaid expenses and other current assets

3,030

(2,063)

Other assets

216

(601)

Accounts payable

15,132

21,756

Accrued expenses

8,943

882

Non-current liabilities

(1,226)

(537)

Net cash provided by operating activities

80,452

31,641

Cash flows from investing activities:

Proceeds from sale of equipment

136

319

Purchases of property and equipment

(23,716)

(46,443)

Net cash used in investing activities

(23,580)

(46,124)

Cash flows from financing activities:

Proceeds from issuance of debt

18,548

25,361

Repayments of long term debt

(10,938)

(2,535)

Stock tendered for payments of withholding taxes

(2,877)

(3,151)

Purchase of treasury stock

(13,419)

–

Capital lease payments

(1,243)

(1,219)

Excess tax benefits from share-based compensation

89

228

Net cash (used in) provided by financing activities

(9,840)

18,684

Effect of exchange rate changes on cash and cash equivalents

(21)

(1)

Net increase in cash and cash equivalents

47,011

4,200

Cash and cash equivalents beginning of period

109,769

68,964

Cash and cash equivalents end of period

$      156,780

$        73,164