Hub Group, Inc. Reports Third Quarter 2014 Earnings per Share of $0.49 Excluding One-Time Costs and Non-Cash Impairment Charge

HUB GROUP, INC.

UNAUDITED CONSOLIDATED STATEMENTS OF INCOME

(in thousands, except per share amounts)

Three Months

Nine Months

Ended September 30,

Ended September 30,

2014

2013

2014

2013

Revenue

$ 913,386

$ 882,981

$ 2,655,765

$ 2,488,646

Transportation costs

820,190

789,857

2,375,240

2,212,711

Gross margin

93,196

93,124

280,525

275,935

Costs and expenses:

Salaries and benefits

30,868

31,888

103,516

101,473

Agent fees and commissions

16,592

14,557

45,802

41,517

General and administrative

13,868

13,757

43,981

41,676

Depreciation and amortization

1,967

1,627

5,902

4,773

Driver settlements and related costs

10,343

–

10,343

–

Impairment of software

11,881

–

11,881

–

Total costs and expenses

85,519

61,829

221,425

189,439

Operating income

7,677

31,295

59,100

86,496

Other income (expense):

Interest expense

(361)

(323)

(1,166)

(918)

Interest and dividend income

(4)

25

21

69

Other, net 

39

(35)

(191)

(23)

Total other (expense) income 

(326)

(333)

(1,336)

(872)

Income before provision for income taxes

7,351

30,962

57,764

85,624

Provision for income taxes

2,860

12,362

22,562

33,050

Net income

$    4,491

$  18,600

$     35,202

$     52,574

Basic earnings per common share

$      0.12

$      0.50

$         0.96

$         1.43

Diluted earnings per common share

$      0.12

$      0.50

$         0.96

$         1.42

Basic weighted average number of shares outstanding

36,676

36,873

36,670

36,866

Diluted weighted average number of shares outstanding

36,858

37,050

36,799

36,996

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)

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)

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 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

1,604

–

4,773

Total costs and expenses

131,752

57,687

–

189,439

Operating income

$     72,083

$  14,413

$                 –

$             86,496

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

2014

2013

$

%

2014

2013

$

%

Diluted GAAP EPS

$  0.12

$  0.50

$ (0.38)

-76.0%

$  0.96

$  1.42

$ (0.46)

-32.4%

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

Diluted NON-GAAP EPS (adjusted)

$  0.49

$  0.50

$ (0.01)

-2.0%

$  1.33

$  1.42

$ (0.09)

-6.3%

Diluted Shares

36,858

37,050

36,799

36,996

HUB GROUP, INC.

UNAUDITED CONSOLIDATED BALANCE SHEETS

(in thousands, except share amounts)

September 30,

December 31,

2014

2013

ASSETS

CURRENT ASSETS:

Cash and cash equivalents

$           92,827

$          68,964

Accounts receivable trade, net

426,627

371,528

Accounts receivable other

20,572

26,569

Prepaid taxes

6,203

409

Deferred taxes

5,100

5,826

Prepaid expenses and other current assets

19,842

12,738

TOTAL CURRENT ASSETS

571,171

486,034

Restricted investments

21,629

20,754

Property and equipment, net

315,151

260,400

Other intangibles, net

14,758

15,729

Goodwill, net

262,868

263,032

Other assets

3,566

1,994

TOTAL ASSETS

$      1,189,143

$     1,047,943

LIABILITIES AND STOCKHOLDERS’ EQUITY

CURRENT LIABILITIES:

Accounts payable trade

$         272,250

$        232,350

Accounts payable other

23,336

24,957

Accrued payroll

17,477

17,000

Accrued other

56,449

42,834

Current portion of capital lease

2,679

2,413

Current portion of long term debt

11,559

1,771

TOTAL CURRENT LIABILITIES

383,750

321,325

Long term debt

41,757

6,475

Non-current liabilities

21,793

22,304

Long term capital lease

16,579

18,477

Deferred taxes

125,002

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; 36,750,359 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

168,941

167,357

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

(15,458)

(15,458)

Retained earnings

573,453

538,251

Accumulated other comprehensive loss

(38)

(85)

Treasury stock; at cost, 4,474,433 shares in 2014 and 4,598,408 shares in 2013

(127,055)

(128,957)

TOTAL STOCKHOLDERS’ EQUITY

600,262

561,527

     TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY

$      1,189,143

$     1,047,943

HUB GROUP, INC.

UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

Nine Months Ended

September 30,

2014

2013

Cash flows from operating activities:

Net income

$ 35,202

$ 52,574

Adjustments to reconcile net income

to net cash provided by operating activities:

Depreciation and amortization 

21,165

15,479

Impairment of software

11,881

–

Deferred taxes

8,288

10,945

Compensation expense related to share-based compensation plans

6,238

5,638

Gain on sale of assets

(20)

(345)

Excess tax benefits from share-based compensation

–

(11)

Changes in operating assets and liabilities:

Restricted investments

(875)

(1,924)

Accounts receivable, net

(49,102)

(57,439)

Prepaid taxes

(5,794)

(504)

Prepaid expenses and other current assets

(7,104)

156

Other assets

(1,572)

(803)

Accounts payable

38,281

55,641

Accrued expenses

2,581

1,330

Non-current liabilities

(534)

1,164

Net cash provided by operating activities

58,635

81,901

Cash flows from investing activities:

Proceeds from sale of equipment

420

1,788

Purchases of property and equipment

(75,881)

(66,079)

Net cash used in investing activities

(75,461)

(64,291)

Cash flows from financing activities:

Proceeds from issuance of debt

49,268

9,120

Repayments of long term debt

(4,198)

(436)

Proceeds from stock options exercised

–

42

Stock tendered for payments of withholding taxes

(3,184)

(2,621)

Purchase of treasury stock

–

(903)

Capital lease payments

(1,632)

(1,733)

Excess tax benefits from share-based compensation

434

310

Net cash provided by financing activities

40,688

3,779

Effect of exchange rate changes on cash and cash equivalents

1

1

Net increase in cash and cash equivalents

23,863

21,390

Cash and cash equivalents beginning of period

68,964

70,760

Cash and cash equivalents end of period

$ 92,827

$ 92,150