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

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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