Hub Group, Inc. Reports Record Second Quarter 2014 Earnings

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Jul 17, 2014, 04:01 ET

OAK BROOK, Ill., July 17, 2014 /PRNewswire/ -- Hub Group, Inc. (NASDAQ: HUBG) today announced financial results for the quarter ended June 30, 2014.

Hub Group reported record income of $18.7 million for the second quarter ended June 30, 2014 compared to $18.6 million in the second quarter of 2013. Hub Group's diluted earnings per share was $0.51 for the second quarter of 2014, which represents an increase of 2% when compared with the prior year period. Hub Group's revenue increased 7% to $894 million.

The Hub segment's revenue increased 6% to $682 million. Second quarter intermodal revenue increased 1% to $456 million. Truck brokerage revenue increased 6% to $86 million this quarter. Second quarter Unyson Logistics revenue increased 24% to $140 million. The Hub segment's operating income was $24.3 million.

The Mode segment's revenue increased 14% to $232 million. Operating income was $6.6 million, an increase of 33% compared to the prior year period.

Hub Group ended the quarter with $73 million in cash.

CONFERENCE CALL

Hub will hold a conference call at 5:00 p.m. Eastern Time on Thursday, July 17, 2014 to discuss its second quarter 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) 713-4199. The conference call participant code is 72182809#. Participants may pre-register for the call at https://www.theconferencingservice.com/prereg/key.process?key=PYQBFLY7P. 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, 2013 and the report on Form 10-Q for the period ended March 31, 2014. 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		Six Months
			Ended June 30,		Ended June 30,
			2014	2013	2014	2013
Revenue			$ 893,930	$ 836,685	$ 1,742,379	$ 1,605,665

Transportation costs			795,345	741,212	1,555,050	1,422,854
	Gross margin		98,585	95,473	187,329	182,811

Costs and expenses:
	Salaries and benefits		35,556	35,002	72,648	69,585
	Agent fees and commissions		15,544	13,686	29,210	26,960
	General and administrative		14,681	14,728	30,113	27,919
	Depreciation and amortization		1,877	1,593	3,935	3,146
		Total costs and expenses	67,658	65,009	135,906	127,610

Operating income			30,927	30,464	51,423	55,201

Other income (expense):
	Interest expense		(398)	(305)	(805)	(595)
	Interest and dividend income		11	15	25	44
	Other, net		(25)	23	(230)	12
		Total other expense	(412)	(267)	(1,010)	(539)

Income before provision for income taxes			30,515	30,197	50,413	54,662

Provision for income taxes			11,839	11,587	19,702	20,688

Net income			$ 18,676	$ 18,610	$ 30,711	$ 33,974


Basic earnings per common share			$ 0.51	$ 0.50	$ 0.84	$ 0.92

Diluted earnings per common share			$ 0.51	$ 0.50	$ 0.84	$ 0.92

Basic weighted average number of shares outstanding			36,674	36,870	36,667	36,863
Diluted weighted average number of shares outstanding			36,814	36,989	36,769	36,969

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)

			Three Months
			Ended June 30, 2013
			Hub	Mode	Inter-Segment Elims	Hub Group Total
Revenue			$ 644,924	$ 203,918	$ (12,157)	$ 836,685

Transportation costs			573,498	179,871	(12,157)	741,212
	Gross margin		71,426	24,047	-	95,473

Costs and expenses:
	Salaries and benefits		31,208	3,794	-	35,002
	Agent fees and commissions		350	13,336	-	13,686
	General and administrative		13,338	1,390	-	14,728
	Depreciation and amortization		1,061	532	-	1,593
		Total costs and expenses	45,957	19,052	-	65,009

Operating income			$ 25,469	$ 4,995	$ -	$ 30,464

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 FINANCIAL INFORMATION BY SEGMENT
(in thousands)

			Six Months
			Ended June 30, 2013
			Hub	Mode	Inter-Segment Elims	Hub Group Total
Revenue			$ 1,237,575	$ 391,378	$ (23,288)	$ 1,605,665

Transportation costs			1,100,969	345,173	(23,288)	1,422,854
	Gross margin		136,606	46,205	-	182,811

Costs and expenses:
	Salaries and benefits		61,985	7,600	-	69,585
	Agent fees and commissions		799	26,161	-	26,960
	General and administrative		25,036	2,883	-	27,919
	Depreciation and amortization		2,081	1,065	-	3,146
		Total costs and expenses	89,901	37,709	-	127,610

Operating income			$ 46,705	$ 8,496	$ -	$ 55,201

HUB GROUP, INC.
UNAUDITED CONSOLIDATED BALANCE SHEETS
(in thousands, except share amounts)


					June 30,	December 31,
					2014	2013

ASSETS
	CURRENT ASSETS:
		Cash and cash equivalents			$ 73,164	$ 68,964
		Accounts receivable trade, net			417,880	371,528
		Accounts receivable other			20,871	26,569
		Prepaid taxes			574	409
		Deferred taxes			7,432	5,826
		Prepaid expenses and other current assets			14,801	12,738
			TOTAL CURRENT ASSETS		534,722	486,034

	Restricted investments				21,960	20,754
	Property and equipment, net				286,133	260,400
	Other intangibles, net				15,081	15,729
	Goodwill, net				262,923	263,032
	Other assets				2,595	1,994
				TOTAL ASSETS	$ 1,123,414	$ 1,047,943


LIABILITIES AND STOCKHOLDERS' EQUITY
	CURRENT LIABILITIES:
		Accounts payable trade			$ 255,782	$ 232,350
		Accounts payable other			23,279	24,957
		Accrued payroll			15,816	17,000
		Accrued other			37,739	42,834
		Current portion of capital lease			2,456	2,413
		Current portion of long term debt			6,712	1,771
			TOTAL CURRENT LIABILITIES		341,784	321,325

	Long term debt				24,360	6,475
	Non-current liabilities				21,629	22,304
	Non-current portion of capital lease				17,215	18,477
	Deferred taxes				124,887	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; 36,764,442 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			166,113	167,357
		Purchase price in excess of predecessor basis, net of tax
		benefit of $10,306			(15,458)	(15,458)
		Retained earnings			568,962	538,251
		Accumulated other comprehensive loss			(52)	(85)
		Treasury stock; at cost, 4,460,350 shares in 2014 and 4,598,408 shares in 2013
					(126,445)	(128,957)
			TOTAL STOCKHOLDERS' EQUITY		593,539	561,527
			TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY		$ 1,123,414	$ 1,047,943

HUB GROUP, INC.
UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)

				Six Months Ended
				June 30,
				2014	2013


Cash flows from operating activities:
	Net income			$ 30,711	$ 33,974
	Adjustments to reconcile net income to net cash provided by operating activities:

		Depreciation and amortization		13,780	9,954
		Deferred taxes		5,557	6,548
		Compensation expense related to share-based compensation plans		4,191	3,757
		Gain on sale of assets		(10)	(287)
		Excess tax benefits from share-based compensation		-	(8)
	Changes in operating assets and liabilities:
		Restricted investments		(1,206)	(541)
		Accounts receivable, net		(40,654)	(45,558)
		Prepaid taxes		(165)	(48)
		Prepaid expenses and other current assets		(2,063)	(417)
		Other assets		(601)	(120)
		Accounts payable		21,756	30,685
		Accrued expenses		882	(3,680)
		Non-current liabilities		(537)	118
			Net cash provided by operating activities	31,641	34,377

Cash flows from investing activities:
	Proceeds from sale of equipment			319	1,358
	Purchases of property and equipment			(46,443)	(39,202)
			Net cash used in investing activities	(46,124)	(37,844)

Cash flows from financing activities:
	Proceeds from issuance of debt			25,361	9,120
	Repayments of long-term debt			(2,535)	-
	Proceeds from stock options exercised			-	41
	Stock tendered for payments of withholding taxes			(3,151)	(2,585)
	Purchase of treasury stock			-	(903)
	Capital lease payments			(1,219)	(1,143)
	Excess tax benefits from share-based compensation			228	177
			Net cash provided by financing activities	18,684	4,707


	Effect of exchange rate changes on cash and cash equivalents			(1)	-

Net increase in cash and cash equivalents				4,200	1,240
Cash and cash equivalents beginning of period				68,964	70,760
Cash and cash equivalents end of period				$ 73,164	$ 72,000