Hub Group, Inc. Reports Third Quarter 2013 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,

2013

2012

2013

2012

Revenue

$ 882,981

$ 804,888

$ 2,488,646

$ 2,323,085

Transportation costs

789,857

713,301

2,212,711

2,060,398

Gross margin

93,124

91,587

275,935

262,687

Costs and expenses:

Salaries and benefits

31,888

31,385

101,473

96,120

Agent fees and commissions

14,557

13,810

41,517

41,106

General and administrative

13,757

14,430

41,676

39,741

Depreciation and amortization

1,627

1,611

4,773

5,008

Total costs and expenses

61,829

61,236

189,439

181,975

Operating income

31,295

30,351

86,496

80,712

Other income (expense):

Interest expense

(323)

(300)

(918)

(908)

Interest and dividend income

25

37

69

104

Other, net 

(35)

(17)

(23)

(58)

Total other expense

(333)

(280)

(872)

(862)

Income before provision for income taxes

30,962

30,071

85,624

79,850

Provision for income taxes

12,362

11,576

33,050

30,741

Net income

$  18,600

$  18,495

$     52,574

$     49,109

Basic earnings per common share

$      0.50

$      0.50

$         1.43

$         1.32

Diluted earnings per common share

$      0.50

$      0.50

$         1.42

$         1.32

Basic weighted average number of shares outstanding

36,873

37,079

36,866

37,064

Diluted weighted average number of shares outstanding

37,050

37,206

36,996

37,180

HUB GROUP, INC.

UNAUDITED FINANCIAL INFORMATION BY SEGMENT

(in thousands)

Three Months

Ended September 30, 2013

Hub

Mode

Inter-Segment

 Elims

Hub Group

Total

Revenue

$ 678,573

$ 217,424

$         (13,016)

$  882,981

Transportation costs

611,344

191,529

(13,016)

789,857

Gross margin

67,229

25,895

–

93,124

Costs and expenses:

Salaries and benefits

28,274

3,614

–

31,888

Agent fees and commissions

425

14,132

–

14,557

General and administrative

12,065

1,692

–

13,757

Depreciation and amortization

1,088

539

–

1,627

Total costs and expenses

41,852

19,977

–

61,829

Operating income

$   25,377

$    5,918

$                 –

$    31,295

HUB GROUP, INC.

UNAUDITED FINANCIAL INFORMATION BY SEGMENT

(in thousands)

Three Months

Ended September 30, 2012

Hub

Mode

Inter-Segment

 Elims

Hub Group

Total

Revenue

$ 619,336

$ 199,903

$         (14,351)

$  804,888

Transportation costs

552,071

175,581

(14,351)

713,301

Gross margin

67,265

24,322

–

91,587

Costs and expenses:

Salaries and benefits

27,852

3,533

–

31,385

Agent fees and commissions

401

13,409

–

13,810

General and administrative

12,566

1,864

–

14,430

Depreciation and amortization

1,118

493

–

1,611

Total costs and expenses

41,937

19,299

–

61,236

Operating income

$   25,328

$    5,023

$                 –

$    30,351

HUB GROUP, INC.

UNAUDITED FINANCIAL INFORMATION BY SEGMENT

(in thousands)

Nine Months

Ended September 30, 2013

Hub

Mode

Inter-Segment

Elims

Hub Group

Total

Revenue

$ 1,916,149

$ 608,802

$         (36,305)

$ 2,488,646

Transportation costs

1,712,314

536,702

(36,305)

2,212,711

Gross margin

203,835

72,100

–

275,935

Costs and expenses:

Salaries and benefits

90,259

11,214

–

101,473

Agent fees and commissions

1,223

40,294

–

41,517

General and administrative

37,101

4,575

–

41,676

Depreciation and amortization

3,169

4,773

Total costs and expenses

131,752

57,687

–

189,439

Operating income

$     72,083

$   14,413

$                 –

$     86,496

HUB GROUP, INC.

UNAUDITED FINANCIAL INFORMATION BY SEGMENT

(in thousands)

Nine Months

Ended September 30, 2012

Hub

Mode

Inter-Segment

Elims

Hub Group

Total

Revenue

$ 1,778,436

$ 581,378

$         (36,729)

$ 2,323,085

Transportation costs

1,584,844

512,283

(36,729)

2,060,398

Gross margin

193,592

69,095

–

262,687

Costs and expenses:

Salaries and benefits

84,523

11,597

–

96,120

Agent fees and commissions

1,526

39,580

–

41,106

General and administrative

34,004

5,737

–

39,741

Depreciation and amortization

3,338

1,670

–

5,008

Total costs and expenses

123,391

58,584

–

181,975

Operating income

$     70,201

$   10,511

$                 –

$     80,712

HUB GROUP, INC.

UNAUDITED CONSOLIDATED BALANCE SHEETS

(in thousands, except share amounts)

September 30,

December 31,

2013

2012

ASSETS

CURRENT ASSETS:

Cash and cash equivalents

$          92,150

$           70,760

Accounts receivable trade, net

408,279

346,917

Accounts receivable other

21,894

25,945

Prepaid taxes

589

139

Deferred taxes

5,884

4,965

Prepaid expenses and other current assets

10,432

10,619

TOTAL CURRENT ASSETS

539,228

459,345

Restricted investments

19,142

17,218

Property and equipment, net

220,210

157,584

Other intangibles, net

18,957

20,068

Goodwill, net

263,087

263,251

Other assets

3,182

2,387

TOTAL ASSETS

$ 1,063,806

$ 919,853

LIABILITIES AND STOCKHOLDERS’ EQUITY

CURRENT LIABILITIES:

Accounts payable trade

$        259,863

$         206,497

Accounts payable other

26,487

22,925

Accrued payroll

17,085

17,210

Accrued other

41,243

28,633

Current portion of capital lease

2,390

2,120

Current portion of long term debt

1,763

–

TOTAL CURRENT LIABILITIES

348,831

277,385

Long term debt

6,921

–

Non-current liabilities

20,841

20,041

Long term capital lease

19,096

21,099

Deferred taxes

112,298

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; 36,979,841 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

165,243

167,765

Purchase price in excess of predecessor basis, net of tax

 benefit of $10,306

(15,458)

(15,458)

Retained earnings

521,715

469,141

Accumulated other comprehensive (loss) income

(106)

1

Treasury stock; at cost, 4,244,951 shares in 2013

and 4,457,307 shares in 2012

(115,994)

(120,971)

TOTAL STOCKHOLDERS’ EQUITY

555,819

500,897

     TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY

$ 1,063,806

$ 919,853

HUB GROUP, INC.

UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

Nine Months Ended

September 30,

2013

2012

Cash flows from operating activities:

Net income

$ 52,574

$        49,109

Adjustments to reconcile net income

to net cash provided by operating activities:

Depreciation and amortization 

15,479

16,300

Deferred taxes

10,945

7,693

Compensation expense related to share-based compensation plans

5,638

4,826

(Gain) loss on sale of assets

(345)

42

Excess tax benefits from share-based compensation

(11)

(97)

Changes in operating assets and liabilities:

Restricted investments

(1,924)

(2,206)

Accounts receivable, net

(57,439)

(57,417)

Prepaid taxes

(504)

2,253

Prepaid expenses and other current assets

156

(1,913)

Other assets

(803)

685

Accounts payable

55,641

38,386

Accrued expenses

1,330

8,917

Non-current liabilities

1,164

1,210

Net cash provided by operating activities

81,901

Cash flows from investing activities:

Proceeds from sale of equipment

1,788

819

Purchases of property and equipment

(66,079)

(34,671)

Cash used in acquisitions, net of cash acquired

–

(425)

Net cash used in investing activities

(64,291)

Cash flows from financing activities:

Proceeds from issuance of debt

9,120

–

Repayments of long term debt

(436)

–

Proceeds from stock options exercised

42

46

Stock tendered for payments of withholding taxes

(2,621)

(1,800)

Purchase of treasury stock

(903)

–

Capital lease payments

(1,733)

(1,697)

Excess tax benefits from share-based compensation

310

443

Net cash provided by (used in) financing activities

3,779

(3,008)

Effect of exchange rate changes on cash and cash equivalents

1

(9)

Net increase in cash and cash equivalents

21,390

30,494

Cash and cash equivalents beginning of period

70,760

49,091

Cash and cash equivalents end of period

$ 92,150

$        79,585