EXHIBIT 99.1
Hub Group, Inc. Reports Record Revenue and Earnings for the Fourth Quarter and Full Year 2006 and Provides 2007 Guidance
DOWNERS GROVE, IL, February 12, 2007, -- Hub Group, Inc. (NASDAQ: HUBG) today reported record income from continuing operations for the quarter ended December 31, 2006 of $13.5 million, a 54% increase versus income from continuing operations for the fourth quarter of 2005. Hub Group’s diluted earnings per share from continuing operations was $0.34 for the fourth quarter 2006. This represents an increase of 55% compared to last year's fourth quarter diluted earnings per share from continuing operations of $0.22. Hub Group’s operating margin increased to 5.2% in 2006 from 3.5% in 2005 due to yield enhancement efforts, improved operational efficiencies and growth in drayage and truck brokerage.
Hub Group’s revenue grew by 5.5% to $425.5 million compared to $403.2 million in the fourth quarter of 2005. Fourth quarter intermodal revenue increased 1.6% to $307.1 million, which includes the addition of Comtrak for the entire quarter. Truck brokerage revenue increased 14.5% to $81.5 million this quarter. Fourth quarter logistics revenue increased 24.2% to $36.9 million. Gross margin from continuing operations grew 27.8% to $58.2 million compared to the fourth quarter of 2005.
FULL YEAR 2006
Revenue from continuing operations for the year was $1,609.5 million compared to $1,481.9 million in 2005, or an increase of 8.6%. Gross margin from continuing operations grew 25% to $218.4 million compared to 2005.
Costs and expenses from continuing operations increased 11.3% in 2006 to $141.2 million compared to $126.8 million in 2005 due primarily to the Comtrak acquisition. Other income from continuing operations was $2.3 million in 2006 compared to $1.0 million in 2005.
Income from continuing operations increased 63.5% to $47.7 million for 2006 compared to last year’s income from continuing operations of $29.2 million. Hub Group's diluted earnings per share from continuing operations for the year ended December 31, 2006 was $1.17. This represents an increase of 65% compared to diluted earnings per share from continuing operations for the year ended December 31, 2005 of $0.71.
As of December 31, 2006, the Company had $43.5 million of cash compared to $36.1 million at December 31, 2005.
FULL YEAR 2007
Given the current operating environment, we are comfortable that the earnings for 2007 will be within the current analysts’ range of $1.25 to $1.40 per diluted share.
CONFERENCE CALL
Hub will hold a conference call at 5:00 p.m. Eastern Time (4:00 p.m. Central Time) on Monday, February 12, 2007 to discuss its fourth quarter and full year 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 Investors link at Hub Group's Web site at http://www.hubgroup.com or individual investors can access the audio webcast at http://www.earnings.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) 510-0219. The conference call participant code is 35092717. 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 http://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, truckload brokerage and logistics 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, 2005 and Form 10-Q for the periods ended March 31, 2006, June 30, 2006 and September 30, 2006. Hub Group assumes no liability to update any such forward-looking statements.
SOURCE: HUB GROUP, INC.
CONTACT: Amy Lisek of Hub Group, Inc., +1-630-795-2214
HUB GROUP, INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(in thousands, except per share amounts)
Three Months Ended December 31, | Twelve Months Ended December 31, | ||||||||||||
2006 | 2005 | 2006 | 2005 | ||||||||||
Revenue | $ | 425,460 | $ | 403,217 | $ | 1,609,529 | $ | 1,481,878 | |||||
Transportation costs | 367,242 | 357,663 | 1,391,111 | 1,307,136 | |||||||||
Gross margin | 58,218 | 45,554 | 218,418 | 174,742 | |||||||||
Costs and expenses: | |||||||||||||
Salaries and benefits | 23,881 | 21,267 | 95,152 | 83,392 | |||||||||
General and administrative | 11,344 | 7,952 | 39,929 | 34,541 | |||||||||
Depreciation and amortization | 1,072 | 2,169 | 6,101 | 8,905 | |||||||||
Total costs and expenses | 36,297 | 31,388 | 141,182 | 126,838 | |||||||||
Operating income | 21,921 | 14,166 | 77,236 | 47,904 | |||||||||
Other income (expense): | |||||||||||||
Interest expense | (50 | ) | (15 | ) | (115 | ) | (124 | ) | |||||
Interest income | 643 | 369 | 2,311 | 971 | |||||||||
Other, net | 13 | 30 | 76 | 120 | |||||||||
Total other income | 606 | 384 | 2,272 | 967 | |||||||||
Income from continuing operations before provision for income taxes | 22,527 | 14,550 | 79,508 | 48,871 | |||||||||
Provision for income taxes | 9,008 | 5,743 | 31,803 | 19,695 | |||||||||
Income from continuing operations | 13,519 | 8,807 | 47,705 | 29,176 | |||||||||
Discontinued operations: | |||||||||||||
Income from discontinued operations of HGDS (including loss on disposal of $70 in 2006) | - | 2,088 | 1,634 | 6,315 | |||||||||
Provision for income taxes | - | 832 | 653 | 2,545 | |||||||||
Income from discontinued operations | - | 1,256 | 981 | 3,770 | |||||||||
Net income | $ | 13,519 | $ | 10,063 | $ | 48,686 | $ | 32,946 | |||||
Basic earnings per common share | |||||||||||||
Income from continuing operations | $ | 0.35 | $ | 0.22 | $ | 1.19 | $ | 0.73 | |||||
Income from discontinued operations | $ | - | $ | 0.03 | 0.03 | $ | 0.10 | ||||||
Net income | $ | 0.35 | $ | 0.25 | $ | 1.22 | $ | 0.83 | |||||
Diluted earnings per common share | |||||||||||||
Income from continuing operations | $ | 0.34 | $ | 0.22 | $ | 1.17 | $ | 0.71 | |||||
Income from discontinued operations | $ | - | $ | 0.03 | 0.02 | $ | 0.09 | ||||||
Net income | $ | 0.34 | $ | 0.25 | $ | 1.19 | $ | 0.80 | |||||
Basic weighted average number of shares outstanding | 39,095 | 39,640 | 39,958 | 39,860 | |||||||||
Diluted weighted average number of shares outstanding | 39,810 | 40,850 | 40,823 | 41,392 |
HUB GROUP, INC.
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except share amounts)
December 31, | December 31, | ||||||
2006 | 2005 | ||||||
ASSETS | |||||||
CURRENT ASSETS: | |||||||
Cash and cash equivalents | $ | 43,491 | $ | 36,133 | |||
Accounts receivable | |||||||
Trade, net | 158,284 | 147,004 | |||||
Other | 8,369 | 10,603 | |||||
Prepaid taxes | 3,202 | 6,040 | |||||
Deferred taxes | 3,433 | - | |||||
Prepaid expenses and other current assets | 4,450 | 3,860 | |||||
Assets of discontinued operations | - | 17,855 | |||||
TOTAL CURRENT ASSETS | 221,229 | 221,495 | |||||
Restricted investments | 3,017 | 1,387 | |||||
Property and equipment, net | 26,974 | 12,767 | |||||
Other intangibles, net | 7,502 | - | |||||
Goodwill, net | 225,448 | 208,150 | |||||
Other assets | 378 | 619 | |||||
TOTAL ASSETS | $ | 484,548 | $ | 444,418 | |||
LIABILITIES AND STOCKHOLDERS' EQUITY | |||||||
CURRENT LIABILITIES: | |||||||
Accounts payable | |||||||
Trade | $ | 117,676 | $ | 114,094 | |||
Other | 6,839 | 3,668 | |||||
Accrued expenses | |||||||
Payroll | 15,901 | 14,826 | |||||
Other | 29,010 | 18,917 | |||||
Related party payable | 5,000 | ||||||
Deferred taxes | - | 960 | |||||
Liabilities of discontinued operations | - | 5,341 | |||||
TOTAL CURRENT LIABILITIES | 174,426 | 157,806 | |||||
Deferred compensation | 7,691 | 6,083 | |||||
Deferred taxes | 43,587 | 38,454 | |||||
STOCKHOLDERS' EQUITY: | |||||||
Preferred stock, $.01 par value; 2,000,000 shares authorized; no shares issued or outstanding in 2006 and 2005 | - | - | |||||
Common stock | |||||||
Class A: $.01 par value; 47,337,700 shares authorized; 41,224,792 shares issued and 38,943,122 outstanding in 2006; 41,224,792 shares issued and 39,962,484 outstanding in 2005 | 412 | 412 | |||||
Class B: $.01 par value; 662,300 shares authorized; 662,296 shares issued and outstanding in 2006 and 2005 | 7 | 7 | |||||
Additional paid-in capital | 179,203 | 183,524 | |||||
Purchase price in excess of predecessor basis, net of tax benefit of $10,306 | (15,458 | ) | (15,458 | ) | |||
Retained earnings | 146,243 | 97,557 | |||||
Unearned compensation | - | (6,259 | ) | ||||
Treasury stock; at cost, 2,281,670 shares in 2006 and 1,262,308 shares in 2005 | (51,563 | ) | (17,708 | ) | |||
TOTAL STOCKHOLDERS' EQUITY | 258,844 | 242,075 | |||||
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | $ | 484,548 | $ | 444,418 |
HUB GROUP, INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
Twelve Months Ended | |||||||
December 31, | |||||||
2006 | 2005 | ||||||
Cash flows from operating activities: | |||||||
Income from continuing operations | $ | 47,705 | $ | 29,176 | |||
Adjustments to reconcile income from continuing operations to net cash provided by operating activities: | |||||||
Depreciation and amortization | 8,170 | 9,319 | |||||
Deferred taxes | 690 | 18,382 | |||||
Compensation expense related to share-based compensation plans | 3,405 | 2,148 | |||||
Gain on sale of assets | (131 | ) | (271 | ) | |||
Changes in operating assets and liabilities excluding effects of purchase transaction: | |||||||
Restricted investments | (1,630 | ) | (1,387 | ) | |||
Accounts receivable, net | 393 | (18,931 | ) | ||||
Prepaid taxes | 2,234 | (6,151 | ) | ||||
Prepaid expenses and other current assets | (297 | ) | 722 | ||||
Other assets | 246 | 200 | |||||
Accounts payable | 4,754 | 3,039 | |||||
Accrued expenses | 9,440 | 8,497 | |||||
Deferred compensation | 1,608 | (1,534 | ) | ||||
Net cash provided by operating activities | 76,587 | 43,209 | |||||
Cash flows from investing activities: | |||||||
Proceeds from sale of equipment | 394 | 579 | |||||
Purchases of property and equipment | (8,372 | ) | (4,078 | ) | |||
Cash used in acquisition of Comtrak, Inc. | (39,942 | ) | - | ||||
Proceeds from the disposal of discontinued operations | 12,203 | - | |||||
Net cash used in investing activities | (35,717 | ) | (3,499 | ) | |||
Cash flows from financing activities: | |||||||
Proceeds from stock options exercised | 1,963 | 4,738 | |||||
Purchase of treasury stock | (49,622 | ) | (33,245 | ) | |||
Excess tax benefits from share-based compensation | 12,337 | - | |||||
Net cash used in financing activities | (35,322 | ) | (28,507 | ) | |||
Cash flows from operating activities of discontinued operations | 1,848 | 8,416 | |||||
Cash flows used in investing activities of discontinued operations | (38 | ) | (292 | ) | |||
Net cash provided by discontinued operations | 1,810 | 8,124 | |||||
Net increase in cash and cash equivalents | 7,358 | 19,327 | |||||
Cash and cash equivalents beginning of period | 36,133 | 16,806 | |||||
Cash and cash equivalents end of period | $ | 43,491 | $ | 36,133 | |||
Supplemental disclosures of cash paid for: | |||||||
Interest | $ | 114 | $ | 124 | |||
Income taxes | $ | 16,801 | $ | 6,811 |