Hub Group, Inc. Reports Second Quarter 2011 Earnings

DOWNERS GROVE, Ill., July 27, 2011 /PRNewswire/ -- Hub Group, Inc. (NASDAQ: HUBG) today announced financial results for the quarter ended June 30, 2011.

"We had a solid quarter with a 66% increase in revenue that came from organic growth and our acquisition.  We are executing well against our strategic priorities which resulted in 50% growth in EPS," said David P. Yeager, Chairman and Chief Executive Officer.  

Hub Group reported income of $14.4 million for the second quarter ended June 30, 2011, an increase of 49% compared to the second quarter of 2010.  Hub Group's diluted earnings per share was $0.39 for the second quarter of 2011, which represents an increase of 50% when compared with the prior year period.    

Hub Group acquired Exel Transportation Services, renamed Mode Transportation, on April 1, 2011.  Hub Group will now report two distinct business segments: Hub and Mode.  The Mode segment includes only the newly acquired business.  The Hub segment includes all Hub Group business excluding Mode.  

The Hub segment's revenue increased 22% to $560 million.  Second quarter intermodal revenue increased 24% to $396 million.  The increase was attributable to a 12% volume increase and a 12% increase for fuel, price and mix.  Truck brokerage revenue increased 4% to $90 million this quarter.  Second quarter Unyson Logistics revenue increased 45% to $74 million.  Hub's operating income increased $6.9 million, which represents an increase of 44% when compared with the prior year period.  The Hub results include approximately $400,000 of severance related primarily to truck brokerage operations.

The Mode segment's revenue was $202 million for the second quarter.  Operating income was $1.3 million.  The Mode results include approximately $350,000 of costs related to the acquisition and integration.

Hub Group ended the quarter with $18 million in cash.

CONFERENCE CALL

Hub will hold a conference call at 5:00 p.m. Eastern Time on Wednesday, July 27, 2011 to discuss its second quarter results.

Hosting the conference call will be David P. Yeager, Chairman and Chief Executive Officer and Terri A. Pizzuto, Executive Vice-President, Chief Financial Officer and Treasurer.

This call is being webcast and can be accessed through the Investors link on Hub Group's Web site at www.hubgroup.com .  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) 679-8034.  The conference call participant code is 64829656. Participants may pre-register for the call at https://www.theconferencingservice.com/prereg/key.process?key=P8YKYVAKA.  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, 2010 and the report on Form 10-Q for the period ended March 31, 2011.  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,








2011


2010


2011


2010

Revenue




$ 759,709


$ 458,113


$ 1,245,088


$ 875,407















Transportation costs




674,956


407,537


1,103,028


776,013


Gross margin




84,753


50,576


142,060


99,394















Costs and expenses:












Salaries and benefits




32,746


23,863


59,547


47,321


Agent fees and commissions



13,765


584


14,516


1,133


General and administrative




12,852


9,480


24,911


19,076


Depreciation and amortization



1,472


934


2,408


1,907



Total costs and expenses



60,835


34,861


101,382


69,437















Operating income




23,918


15,715


40,678


29,957















Other income (expense):












Interest expense




(69)


(12)


(83)


(26)


Interest and dividend income



45


23


77


48


Other, net




60


84


269


152



Total other income




36


95


263


174















Income before provision for income taxes



23,954


15,810


40,941


30,131















Provision for income taxes




9,564


6,180


16,053


11,799















Net income




$   14,390


$     9,630


$      24,888


$   18,332















Basic earnings per common share



$       0.39


$       0.26


$          0.67


$       0.49















Diluted earnings per common share



$       0.39


$       0.26


$          0.67


$       0.49















Basic weighted average number of shares outstanding



36,901


37,429


36,893


37,478

Diluted weighted average number of shares outstanding



37,060


37,580


37,041


37,611



HUB GROUP, INC.

FINANCIAL INFORMATION BY SEGMENT

(in thousands)






















Three Months








Ended June 30, 2011








Hub


Mode


Inter-Segment Elims


Hub Group Consolidated

Revenue




$ 560,418


$ 201,756


$ (2,465)


$ 759,709















Transportation costs




497,832


179,589


(2,465)


674,956


Gross margin




62,586


22,167


-


84,753















Costs and expenses:












Salaries and benefits




28,111


4,635




32,746


Agent fees and commissions



638


13,127




13,765


General and administrative



10,264


2,588




12,852


Depreciation and amortization



951


521




1,472



Total costs and expenses



39,964


20,871


-


60,835















Operating income




22,622


1,296


-


23,918

















HUB GROUP, INC.

FINANCIAL INFORMATION BY SEGMENT

(in thousands)






















Six Months








Ended June 30, 2011








Hub


Mode


Inter-Segment Elims


Hub Group Consolidated

Revenue




$ 1,045,797


$ 201,756


$ (2,465)


$ 1,245,088















Transportation costs




925,904


179,589


(2,465)


1,103,028


Gross margin




119,893


22,167


-


142,060















Costs and expenses:












Salaries and benefits




54,912


4,635




59,547


Agent fees and commissions



1,389


13,127




14,516


General and administrative



22,323


2,588




24,911


Depreciation and amortization



1,887


521




2,408



Total costs and expenses



80,511


20,871


-


101,382















Operating income




39,382


1,296


-


40,678

















HUB GROUP, INC.

CONSOLIDATED BALANCE SHEETS

(in thousands, except share amounts)































June 30,


December 31,









2011


2010









(Unaudited)



ASSETS








CURRENT ASSETS:







Cash and cash equivalents

$      18,279


$       115,144



Accounts receivable trade, net

348,314


185,879



Accounts receivable other

28,256


17,958



Prepaid taxes



128


296



Deferred taxes



3,426


3,314



Prepaid expenses and other current assets

11,309


6,569





TOTAL CURRENT ASSETS

409,712


329,160













Restricted investments


14,642


11,421


Property and equipment, net

69,373


47,806


Other intangibles, net


20,876


5,856


Goodwill, net



262,223


233,029


Other assets



2,509


2,135





TOTAL ASSETS



$    779,335


$       629,407























LIABILITIES AND STOCKHOLDERS' EQUITY





CURRENT LIABILITIES:







Accounts payable trade


$    215,087


$       121,078



Accounts payable other


14,880


10,064



Accrued payroll



14,499


14,378



Accrued other



39,152


21,898





TOTAL CURRENT LIABILITIES

283,618


167,418













Non-current liabilities


18,463


13,950


Deferred taxes



74,500


71,739













STOCKHOLDERS' EQUITY:







Preferred stock, $.01 par value; 2,000,000 shares authorized;







no shares issued or outstanding in 2011 and 2010

-


-



Common stock









Class A: $.01 par value; 97,337,700 shares authorized and








41,224,792 shares issued in 2011 and 2010; 36,828,747 shares








outstanding in 2011 and 36,638,359 shares outstanding in 2010

412


412




Class B:  $.01 par value; 662,300 shares authorized;








662,296 shares issued and outstanding in 2011 and 2010

7


7



Additional paid-in capital


166,742


169,722



Purchase price in excess of predecessor basis, net of tax






benefit of $10,306


(15,458)


(15,458)



Retained earnings


367,898


343,010



Other comprehensive income

6


6



Treasury stock; at cost, 4,396,045 shares in 2011







and 4,586,433 shares in 2010

(116,853)


(121,399)




TOTAL STOCKHOLDERS' EQUITY

402,754


376,300





    TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY

$    779,335


$       629,407














HUB GROUP, INC.

UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)






















Six Months Ended










June 30,










2011


2010

























Cash flows from operating activities:






Net income




$  24,888


$   18,332


Adjustments to reconcile net income







to net cash provided by operating activities:








Depreciation and amortization


6,292


3,945




Deferred taxes



2,733


4,644




Compensation expense related to share-based compensation plans

2,433


1,822




(Gain) loss on sale of assets


(8)


19


Changes in operating assets and liabilities:








Restricted investments



(1,043)


289




Accounts receivable, net


(62,743)


(52,505)




Prepaid taxes



169


240




Prepaid expenses and other current assets


(3,976)


(66)




Other assets




305


(520)




Accounts payable



31,079


36,312




Accrued expenses



8,445


2,939




Non-current liabilities



1,400


(441)






Net cash provided by operating activities


9,974


15,010













Cash flows from investing activities:






Proceeds from sale of equipment


214


720


Purchases of property and equipment


(15,281)


(2,051)


Cash used in acquisitions, net of cash acquired


(90,909)


-





Net cash used in investing activities


(105,976)


(1,331)













Cash flows from financing activities:






Proceeds from stock options exercised


26


14


Purchase of treasury stock



(1,477)


(12,365)


Excess tax benefits from share-based compensation


584


154





Net cash used in financing activities


(867)


(12,197)


























Effect of exchange rate changes on cash and cash equivalents


4


11













Net (decrease) increase in cash and cash equivalents


(96,865)


1,493

Cash and cash equivalents beginning of period


115,144


126,863

Cash and cash equivalents end of period


$  18,279


$ 128,356















SOURCE Hub Group, Inc.



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