Hub Group, Inc. Reports Record Earnings for the Second Quarter
DOWNERS GROVE, Ill., July 20 -- Hub Group, Inc. today reported record net income for the quarter ended June 30, 2005 of $7.9 million. This represents a 95% increase in second quarter net income versus the second quarter of 2004. Hub Group's diluted earnings per share for the quarter ended June 30, 2005 is $0.38 which represents an increase of 58% when compared to diluted earnings per share for the quarter ended June 30, 2004 of $0.24. Diluted shares outstanding increased by 23% due primarily to our stock offering in July 2004.
Costs and expenses decreased 5.5% in the second quarter of 2005 to $33.4 million compared to $35.4 million in the second quarter of 2004, reflecting the benefits from the Company's improved operating efficiencies and cost containment programs. Interest expense decreased from $1.7 million in the second quarter 2004 to $0.1 million in 2005 due to the extinguishment of debt in the third quarter of 2004.
Hub's revenue grew by 6.5% to $371.6 million as compared to $349.0 million in the second quarter of 2004. Second quarter intermodal revenue increased 4.6% to $259.3 million. Truckload brokerage revenue increased 19.8% to $68.0 million this quarter. Second quarter logistics revenue increased 2.2% to $34.5 million. Hub Group Distribution Services revenue decreased 6.3% to $9.8 million in the second quarter of 2005.
Commenting on the results, David P. Yeager, Vice-Chairman and Chief Executive Officer of Hub Group stated, "We are pleased with our record second quarter. Our focus on yield management, while maintaining effective control of our costs, continues to generate strong shareholder returns."
Stock Split
As previously announced, the Board of Directors approved a 2 for 1 stock split in the form of a stock dividend which was paid on May 11, 2005. Accordingly, all share and per share amounts have been adjusted to give retroactive effect to the stock split.
Full Year 2005
Given the current operating environment, we are comfortable that the earnings for 2005 will be within the analysts' range of $1.35 to $1.45 per diluted share.
Certain prior year amounts have been reclassified to conform to the current year presentation.
Conference Call
Hub will hold a conference call at 11:00 a.m. Eastern Time (10:00 a.m. Central Time) on Thursday, July 21, 2005 to discuss its second quarter results.
Hosting the conference call will be David P. Yeager, Vice-Chairman and CEO and Thomas M. White, Senior Vice-President, Chief Financial Officer and Treasurer.
This call is being webcast by Thomson/CCBN and can be accessed through the Investor Relations link at Hub Group's Web site at http://www.hubgroup.com/ or individual investors can access the audio webcast at http://www.fulldisclosure.com/ and institutional investors can access the webcast at http://www.streetevents.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 (800) 638-4817. The conference call participant code is 96097629. The call will be limited to 60 minutes, including questions and answers.
An audio replay will be available through the Investor Relations link on the Company's Web site at http://www.hubgroup.com/ . This replay will be available for 30 days.
About Hub Group: Hub Group, Inc. is a leading non-asset based freight transportation management company providing comprehensive intermodal, truckload brokerage, logistics and distribution services. The Company operates through a network of over 30 offices 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, 2004 and Form 10-Q for the period ended March 31, 2005. Hub Group assumes no liability to update any such forward-looking statements.
HUB GROUP, INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(in thousands, except per share amounts)
Three Months Six Months
Ended June 30 Ended June 30
2005 2004 2005 2004
Revenue $371,630 $348,971 711,488 $677,273
Transportation costs 324,721 305,306 621,334 591,805
Gross margin 46,909 43,665 90,154 85,468
Costs and expenses:
Salaries and benefits 21,503 22,233 43,379 44,575
General and administrative 9,489 10,315 19,241 20,596
Depreciation and amortization
of property and equipment 2,453 2,851 4,936 5,734
Total costs and expenses 33,445 35,399 67,556 70,905
Operating income 13,464 8,266 22,598 14,563
Other income (expense):
Interest expense (140) (1,684) (347) (3397)
Interest income 183 56 384 109
Other, net 40 363 54 404
Total other income (expense) 83 (1,265) 91 (2,884)
Income before provision for
income taxes 13,547 7,001 22,689 11,679
Provision for income taxes 5,622 2,942 9,416 4,907
Net income $7,925 $4,059 $13,273 $6,772
Basic earnings per common
share $0.40 $0.26 $0.66 $0.43
Diluted earnings per common
share $0.38 $0.24 $0.63 $0.40
Basic weighted average number
of shares outstanding 19,977 15,702 20,130 15,598
Diluted weighted average
number of shares outstanding 20,796 16,938 20,977 16,762
HUB GROUP, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except share amounts)
June 30, December 31,
2005 2004
(Unaudited)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $6,972 $16,806
Restricted investments 885 --
Accounts receivable
Trade, net 140,609 140,762
Other 13,576 8,313
Deferred taxes 4,364 4,667
Prepaid expenses and other
current assets 3,126 4,746
TOTAL CURRENT ASSETS 169,532 175,294
PROPERTY AND EQUIPMENT, net 16,385 19,487
GOODWILL, net 215,175 215,175
OTHER ASSETS 428 889
TOTAL ASSETS 401,520 $410,845
LIABILITIES AND STOCKHOLDERS'
EQUITY
CURRENT LIABILITIES:
Accounts payable
Trade $116,820 $115,819
Other 3,598 1,660
Accrued expenses
Payroll 14,052 19,542
Other 13,909 15,100
TOTAL CURRENT LIABILITIES 148,379 152,121
DEFERRED TAXES 35,723 31,788
STOCKHOLDERS' EQUITY:
Preferred stock, $.01 par value,
2,000,000 shares authorized; -- --
no shares issued or outstanding
in 2005 and 2004
Common stock
Class A: $.01 par value;
47,337,700 shares authorized;
20,281,248 shares issued
(including treasury stock in
2005) and 19,329,763 outstanding
in 2005; 19,933,610 shares
issued and outstanding in 2004 203 199
Class B: $.01 par value;
662,300 shares authorized;
662,296 shares issued and
outstanding in 2005 and 2004 7 7
Additional paid-in capital 184,477 182,262
Purchase price in excess of
predecessor basis, net of tax
benefit of $10,306 (15,458) (15,458)
Retained earnings 77,884 64,611
Unearned compensation (3,910) (4,685)
Treasury stock, at cost (951,485
shares in 2005) (25,785) --
TOTAL STOCKHOLDERS' EQUITY 217,418 226,936
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $401,520 $410,845
HUB GROUP, INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
Six Months Ended
June 30,
2005 2004
Cash flows from operating
activities:
Net income $13,273 $6,772
Adjustments to reconcile net
income to net cash provided
by operating activities:
Depreciation and amortization of
property and equipment 5,154 5,812
Deferred taxes 8,150 4,735
Compensation expense related to
restricted stock 1,061 1,044
Gain on sale of assets (18) (162)
Other assets 461 697
Changes in working capital:
Restricted investments (885) --
Accounts receivable, net (5,110) (1,547)
Prepaid expenses and other
current assets 1,620 (101)
Accounts payable 2,939 (4,814)
Accrued expenses (6,681) 1,667
Net cash provided by operating
activities 19,964 14,103
Cash flows from investing
activities:
Purchases of property and
equipment, net (2,034) (1,682)
Net cash used in investing
activities (2,034) (1,682)
Cash flows from financing
activities:
Proceeds from stock options
exercised 2,794 3,359
Purchase of treasury stock (30,558) (2,767)
Net payments on revolver -- (6,000)
Payments of long term debt -- (7,013)
Net cash used in financing
activities (27,764) (12,421)
Net decrease in cash and cash
equivalents (9,834) --
Cash and cash equivalents beginning
of period 16,806 --
Cash and cash equivalents end of
period $6,972 $--
Supplemental disclosures of cash
flow information
Cash paid for:
Interest $-- $2,630
Income taxes $1,066 $368
HUB GROUP, INC.
MODAL REVENUE SUMMARY
(in thousands)
First Second
Quarter Quarter YTD
2005 2005 2005
Intermodal $233,662 $259,260 $492,922
Brokerage 60,154 68,038 128,192
Logistics 35,589 34,524 70,113
Total Core 329,405 361,822 691,227
HGDS 10,453 9,808 20,261
Consolidated $339,858 $371,630 $711,488
First Second
Quarter Quarter YTD
2004 2004 2004
Intermodal $236,321 $247,940 $484,261
Brokerage 50,960 56,778 107,738
Logistics 33,913 33,786 67,699
Total Core 321,194 338,504 659,698
HGDS 7,108 10,467 17,575
Consolidated $328,302 $348,971 $677,273
NOTE: HGDS transferred its Pharmaceutical business to Logistics in August
2004, resulting in an increase in Logistics revenue of $4,331 and
$3,384 for the quarters ending March 31, 2005 and June 30, 2005,
respectively.