Hub Group's Q3 earnings up slightly from a year ago at US$18.6M as revenue rises 10% to US$679M; CEO says intermodal, truck brokerage business lines were affected by challenging market conditions
Cindy Allen
DOWNER'S GROVE, Illinois
,
October 18, 2013
(press release)
–
Hub Group, Inc. (
HUBG) announced financial results for the quarter ended September 30, 2013. Hub Group reported income of $18.6 million for the third quarter ended September 30, 2013. Hub Group's diluted earnings per share was $0.50 for the third quarter of 2013, which was equal to the third quarter of 2012. Hub Group's revenue increased 10% to $883 million.
The Hub segment's revenue increased 10% to $679 million. Third quarter intermodal revenue increased 5% to $467 million on a 5% increase in volume. Truck brokerage revenue increased 1% to $88 million this quarter. Third quarter Unyson Logistics revenue increased 42% to $124 million. The Hub segment's operating income was $25.4 million. The Mode segment's revenue increased 9% to $217 million. Operating income was $5.9 million, an increase of 18% compared to the prior year period. Hub Group ended the quarter with $92 million in cash. "As explained in our earnings update, results for the quarter for our intermodal and truck brokerage business lines were impacted by challenging market conditions as well as unfavorable mix," said David P. Yeager, Chairman and Chief Executive Officer of Hub Group. "We will continue to deliver the highest degree of customer service during this peak season and remain optimistic about our opportunities for future growth." CONFERENCE CALL Hub will hold a conference call at 5:00 p.m. Eastern Time on Thursday, October 17, 2013 to discuss its third quarter 2013 results. Hosting the conference call will be David Yeager, Chief Executive Officer, Mark Yeager, Chief Operating Officer, and Terri Pizzuto, Chief Financial Officer. This call is being webcast and can be accessed through the Investors link on Hub Group's Web site at www.hubgroup.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 (888) 680-0869. The conference call participant code is 94947913#. Participants may pre-register for the call at https://www.theconferencingservice.com/prereg/key.process?key=PRDMKTW4Q . Pre-registrants will be issued a pin number to use when dialing into the live call which will provide quick access to the conference, bypassing the operator. The call will be limited to 60 minutes, including questions and answers. An audio replay will be available through the Investors link on the Company's Web site at www.hubgroup.com. This replay will be available for 30 days. ABOUT HUB GROUP: Hub Group, Inc. is a leading asset-light freight transportation management company providing comprehensive intermodal, truck brokerage and logistics services. The Company operates through a network of offices and independent agents throughout the United States, Canada and Mexico. CERTAIN FORWARD-LOOKING STATEMENTS: Statements in this press release that are not historical, including statements about Hub Group's or management's 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, 2012 and the report on Form 10-Q for the periods ended March 31, 2013 and June 30, 2013. Hub Group assumes no liability to update any such forward-looking statements. 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 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 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 67,788 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) (34,277) 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
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