Hub Group, Inc. Reports Record Second Quarter 2016 Earnings

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Jul 26, 2016, 04:01 ET

OAK BROOK, Ill., July 26, 2016 /PRNewswire/ -- Hub Group, Inc. (NASDAQ: HUBG) today announced financial results for the quarter ended June 30, 2016.

Hub Group reported net income of $20.7 million for the second quarter ended June 30, 2016 compared to $18.5 million in the second quarter of 2015. Hub Group's diluted earnings per share was $0.61 for the quarter. Earnings per share increased 20% when compared with the prior year period. Hub Group's revenue decreased 5% to $856 million due primarily to lower fuel revenue.

The Hub segment's revenue decreased 6% to $649 million due primarily to a decrease in fuel revenue. Second quarter intermodal revenue decreased 6% to $438 million. Intermodal volume decreased 2%. Truck brokerage revenue decreased 11% to $83 million this quarter. Second quarter Unyson Logistics revenue decreased 1% to $127 million. The Hub segment's operating income was $27.2 million, an increase of 24% compared to the prior year period.

The Mode segment's revenue decreased 1% to $232 million. Operating income was $7.1 million compared to $7.5 million in the prior year period.

Hub Group ended the quarter with $164 million in cash.

CONFERENCE CALL

Hub Group will hold a conference call at 5:00 p.m. Eastern Time on Tuesday, July 26, 2016 to discuss its second quarter results.

Hosting the conference call will be Dave Yeager, Chairman and Chief Executive Officer. Also participating on the call will be Don Maltby, President and Chief Operating Officer, and Terri Pizzuto, Executive Vice-President and 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 register at http://www.yourconferencecenter.com/r.aspx?p=1&a=UVdYOgtaldUyqs. Registrants will be issued a passcode and PIN to use when dialing into the live call which will provide quickest access to the conference. You may register at any time, including up to and after the call start time. On the day of the call, dial (888) 771-4384 approximately ten minutes prior to the scheduled call time; enter the participant passcode and PIN received during registration. 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 transportation management company that provides multi-modal solutions throughout North America, including intermodal, truck brokerage and logistics services. As a publicly traded company with over $3.5 billion in revenue, Hub Group's organization of over 2,500 employees delivers innovative, customer-focused solutions and industry leading service to help customers better control supply chains and their costs. For more information, visit www.hubgroup.com.

CERTAIN FORWARD-LOOKING STATEMENTS: Statements in this press release that are not historical, including statements about Hub Group's or management's 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, our annual report on Form 10-K for the year ended December 31, 2015 and our report on Form 10-Q for the period ended March 31, 2016. 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,
			2016	2015	2016	2015
Revenue			$ 855,557	$ 899,513	$ 1,661,416	$ 1,735,454

Transportation costs			741,067	797,784	1,438,539	1,544,597
	Gross margin		114,490	101,729	222,877	190,857

Costs and expenses:
	Salaries and benefits		43,602	38,837	87,465	78,313
	Agent fees and commissions		18,360	16,686	35,262	31,512
	General and administrative		16,083	14,763	32,727	28,834
	Depreciation and amortization		2,148	1,967	4,283	3,927
		Total costs and expenses	80,193	72,253	159,737	142,586

Operating income			34,297	29,476	63,140	48,271

Other income (expense):
	Interest expense		(857)	(720)	(1,767)	(1,461)
	Interest and dividend income		120	19	181	25
	Other, net		216	261	1,152	(1,143)
		Total other expense	(521)	(440)	(434)	(2,579)

Income before provision for income taxes			33,776	29,036	62,706	45,692

Provision for income taxes			13,105	10,569	24,069	16,949

Net income			$ 20,671	$ 18,467	$ 38,637	$ 28,743


Basic earnings per common share			$ 0.61	$ 0.51	$ 1.12	$ 0.80

Diluted earnings per common share			$ 0.61	$ 0.51	$ 1.12	$ 0.80

Basic weighted average number of shares outstanding			33,944	35,986	34,541	36,071
Diluted weighted average number of shares outstanding			34,027	36,075	34,575	36,122

HUB GROUP, INC.
UNAUDITED FINANCIAL INFORMATION BY SEGMENT
(in thousands)

			Three Months
			Ended June 30, 2016
			Hub	Mode	Inter-Segment Elims	Hub Group Total
Revenue			$ 648,523	$ 231,924	$ (24,890)	$ 855,557

Transportation costs			565,448	200,509	(24,890)	741,067
	Gross margin		83,075	31,415	-	114,490

Costs and expenses:
	Salaries and benefits		39,787	3,815	-	43,602
	Agent fees and commissions		13	18,347	-	18,360
	General and administrative		14,226	1,857	-	16,083
	Depreciation and amortization		1,830	318	-	2,148
		Total costs and expenses	55,856	24,337	-	80,193

Operating income			$ 27,219	$ 7,078	$ -	$ 34,297

HUB GROUP, INC.
UNAUDITED FINANCIAL INFORMATION BY SEGMENT
(in thousands)

			Three Months
			Ended June 30, 2015
			Hub	Mode	Inter-Segment Elims	Hub Group Total
Revenue			$ 686,451	$ 233,847	$ (20,785)	$ 899,513

Transportation costs			614,289	204,280	(20,785)	797,784
	Gross margin		72,162	29,567	-	101,729

Costs and expenses:
	Salaries and benefits		35,288	3,549	-	38,837
	Agent fees and commissions		14	16,672	-	16,686
	General and administrative		13,194	1,569	-	14,763
	Depreciation and amortization		1,647	320	-	1,967
		Total costs and expenses	50,143	22,110	-	72,253

Operating income			$ 22,019	$ 7,457	$ -	$ 29,476

HUB GROUP, INC.
UNAUDITED FINANCIAL INFORMATION BY SEGMENT
(in thousands)

			Six Months
			Ended June 30, 2016
			Hub	Mode	Inter-Segment Elims	Hub Group Total
Revenue			$ 1,263,751	$ 440,755	$ (43,090)	$ 1,661,416

Transportation costs			1,101,522	380,107	(43,090)	1,438,539
	Gross margin		162,229	60,648	-	222,877

Costs and expenses:
	Salaries and benefits		79,883	7,582	-	87,465
	Agent fees and commissions		27	35,235	-	35,262
	General and administrative		28,948	3,779	-	32,727
	Depreciation and amortization		3,644	639	-	4,283
		Total costs and expenses	112,502	47,235	-	159,737

Operating income			$ 49,727	$ 13,413	$ -	$ 63,140

HUB GROUP, INC.
UNAUDITED FINANCIAL INFORMATION BY SEGMENT
(in thousands)

			Six Months
			Ended June 30, 2015
			Hub	Mode	Inter-Segment Elims	Hub Group Total
Revenue			$ 1,329,894	$ 447,369	$ (41,809)	$ 1,735,454

Transportation costs			1,194,547	391,859	(41,809)	1,544,597
	Gross margin		135,347	55,510	-	190,857

Costs and expenses:
	Salaries and benefits		70,948	7,365	-	78,313
	Agent fees and commissions		29	31,483	-	31,512
	General and administrative		25,392	3,442	-	28,834
	Depreciation and amortization		3,265	662	-	3,927
		Total costs and expenses	99,634	42,952	-	142,586

Operating income			$ 35,713	$ 12,558	$ -	$ 48,271

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


					June 30,	December 31,
					2016	2015
					(unaudited)

ASSETS
	CURRENT ASSETS:
		Cash and cash equivalents			$ 164,150	$ 207,749
		Accounts receivable trade, net			399,207	379,987
		Accounts receivable other			3,917	10,344
		Prepaid taxes			3,339	362
		Deferred taxes			-	8,412
		Prepaid expenses and other current assets			15,071	17,756
				TOTAL CURRENT ASSETS	585,684	624,610

	Restricted investments				19,991	21,108
	Property and equipment, net				381,532	374,847
	Other intangibles, net				12,491	13,139
	Goodwill, net				262,485	262,594
	Other assets				4,287	4,848
				TOTAL ASSETS	$ 1,266,470	$ 1,301,146


LIABILITIES AND STOCKHOLDERS' EQUITY
	CURRENT LIABILITIES:
		Accounts payable trade			$ 251,815	$ 230,432
		Accounts payable other			24,841	21,495
		Accrued payroll			22,883	33,020
		Accrued other			38,005	38,733
		Current portion of capital lease			2,648	2,608
		Current portion of long term debt			35,430	32,409
				TOTAL CURRENT LIABILITIES	375,622	358,697

	Long term debt				94,968	100,895
	Non-current liabilities				21,536	20,233
	Long term portion of capital lease				11,962	13,299
	Deferred taxes				159,319	160,182

	STOCKHOLDERS' EQUITY:
		Preferred stock, $.01 par value; 2,000,000 shares authorized; no shares issued or outstanding in 2016 and 2015
					-	-
		Common stock
			Class A: $.01 par value; 97,337,700 shares authorized and 41,224,792 shares issued in 2016 and 2015; 33,567,862 shares outstanding in 2016 and 35,633,961 shares outstanding in 2015

					412	412
			Class B: $.01 par value; 662,300 shares authorized; 662,296 shares issued and outstanding in 2016 and 2015
					7	7
		Additional paid-in capital			169,229	174,285
		Purchase price in excess of predecessor basis, net of tax benefit of $10,306
					(15,458)	(15,458)
		Retained earnings			699,395	660,758
		Accumulated other comprehensive loss			(231)	(178)
		Treasury stock; at cost, 7,656,930 shares in 2016 and 5,590,831 shares in 2015
					(250,291)	(171,986)
			TOTAL STOCKHOLDERS' EQUITY		603,063	647,840
				TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$ 1,266,470	$ 1,301,146

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

					Six Months Ended
					June 30,
					2016	2015


Cash flows from operating activities:
	Net income				$ 38,637	$ 28,743
	Adjustments to reconcile net income
		to net cash provided by operating activities:
			Depreciation and amortization		21,426	17,526
			Deferred taxes		7,777	2,489
			Compensation expense related to share-based compensation plans		4,245	4,110
			Gain on sale of assets		(255)	(60)
			Excess tax benefits from share-based compensation		132	(33)
	Changes in operating assets and liabilities:
			Restricted investments		1,117	(295)
			Accounts receivable, net		(12,826)	(11,407)
			Prepaid taxes		(2,977)	13,284
			Prepaid expenses and other current assets		2,685	3,030
			Other assets		561	216
			Accounts payable		24,740	15,132
			Accrued expenses		(14,031)	8,943
			Non-current liabilities		1,211	(1,226)
				Net cash provided by operating activities	72,442	80,452

Cash flows from investing activities:
	Proceeds from sale of equipment				1,148	136
	Purchases of property and equipment				(25,217)	(23,716)
				Net cash used in investing activities	(24,069)	(23,580)

Cash flows from financing activities:
	Proceeds from issuance of debt				13,274	18,548
	Repayments of long term debt				(16,180)	(10,938)
	Stock tendered for payments of withholding taxes				(2,379)	(2,877)
	Purchase of treasury stock				(85,000)	(13,419)
	Capital lease payments				(1,297)	(1,243)
	Excess tax benefits from share-based compensation				(359)	89
				Net cash used in financing activities	(91,941)	(9,840)


	Effect of exchange rate changes on cash and cash equivalents				(31)	(21)

Net (decrease) increase in cash and cash equivalents					(43,599)	47,011
Cash and cash equivalents beginning of period					207,749	109,769
Cash and cash equivalents end of period					$ 164,150	$ 156,780

SOURCE Hub Group, Inc.

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