Hub Group, Inc. Reports Record Second Quarter 2016 Earnings

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