Hub Group, Inc. Reports Third Quarter 2013 Earnings

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Oct 17, 2013, 04:00 ET

DOWNERS GROVE, Ill., Oct. 17, 2013 /PRNewswire/ -- Hub Group, Inc. (NASDAQ: 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