Hub Group, Inc. Reports Record Third Quarter 2007 Earnings
DOWNERS GROVE, IL, October 22, 2007, -- Hub Group, Inc. (NASDAQ: HUBG) today reported record income for the quarter ended September 30, 2007 of $16.6 million, a 23% increase versus income for the third quarter of 2006. Hub Group’s diluted earnings per share was $0.42 for the third quarter of 2007. This represents an increase of 27% compared to last year's third quarter diluted earnings per share of $0.33. Hub Group’s operating margin increased to 5.9% in 2007 from 5.1% in 2006 due to improved operational efficiencies and cost controls.
Hub Group’s revenue decreased 3.3% to $417.8 million compared to $432.0 million in the third quarter of 2006. Third quarter intermodal revenue decreased 4.9% to $303.3 million. The decrease was attributable to a 2% volume decline and a 3% decrease related to price and mix. Truck brokerage revenue was flat at $77.1 million this quarter. Third quarter logistics revenue increased 4.1% to $37.4 million. Gross margin increased 0.3% to $57.5 million compared to the third quarter of 2006.
Hub Group also announced that it has terminated its acquisition of DNJ Transportation. The closing was expected to occur around the beginning of October but was subject to certain conditions and approvals. Several of these conditions were not met and therefore Hub elected not to proceed with the transaction.
FULL YEAR 2007
We expect that the earnings for 2007 will be within a range of $1.39 to $1.44 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, October 22, 2007 to discuss its third quarter results.
Hosting the conference call will be David P. Yeager, Vice-Chairman and Chief Executive Officer and Terri A. Pizzuto, Executive 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 (866) 700-6293. The conference call participant code is 38099567. 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, truck 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, 2006 and the report on Form 10-Q for the periods ended March 31, 2007 and June 30, 2007. 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 | Nine Months | ||||||||||||||||||
Ended September 30, | Ended September 30, | ||||||||||||||||||
2007 | 2006 | 2007 | 2006 | ||||||||||||||||
| Revenue | $ | 417,842 | $ | 432,009 | $ | 1,212,704 | $ | 1,184,069 | |||||||||||
| Transportation costs | 360,332 | 374,673 | 1,040,770 | 1,023,869 | |||||||||||||||
| Gross margin | 57,510 | 57,336 | 171,934 | 160,200 | |||||||||||||||
| Costs and expenses: | |||||||||||||||||||
| Salaries and benefits | 22,100 | 23,965 | 71,887 | 71,271 | |||||||||||||||
| General and administrative | 9,596 | 9,890 | 31,415 | 28,585 | |||||||||||||||
| Depreciation and amortization | 1,080 | 1,642 | 3,455 | 5,029 | |||||||||||||||
| Total costs and expenses | 32,776 | 35,497 | 106,757 | 104,885 | |||||||||||||||
| Operating income | 24,734 | 21,839 | 65,177 | 55,315 | |||||||||||||||
| Other income (expense): | |||||||||||||||||||
| Interest expense | (33 | ) | (22 | ) | (78 | ) | (65 | ) | |||||||||||
| Interest income | 711 | 670 | 1,967 | 1,668 | |||||||||||||||
| Other, net | 24 | 7 | 82 | 63 | |||||||||||||||
| Total other income | 702 | 655 | 1,971 | 1,666 | |||||||||||||||
| Income from continuing operations before provision for income taxes | 25,436 | 22,494 | 67,148 | 56,981 | |||||||||||||||
| Provision for income taxes | 8,828 | 9,000 | 25,346 | 22,795 | |||||||||||||||
| Income from continuing operations | 16,608 | 13,494 | 41,802 | 34,186 | |||||||||||||||
| Discontinued operations: | |||||||||||||||||||
| Income from discontinued operations of HGDS | - | - | - | 1,634 | |||||||||||||||
| Provision for income taxes | - | - | - | 653 | |||||||||||||||
| Income from discontinued operations | - | - | - | 981 | |||||||||||||||
| Net income | $ | 16,608 | $ | 13,494 | $ | 41,802 | $ | 35,167 | |||||||||||
| Basic earnings per common share | |||||||||||||||||||
| Income from continuing operations | $ | 0.43 | $ | 0.34 | $ | 1.07 | $ | 0.85 | |||||||||||
| Income from discontinued operations | $ | - | $ | - | $ | - | $ | 0.02 | |||||||||||
| Net income | $ | 0.43 | $ | 0.34 | $ | 1.07 | $ | 0.87 | |||||||||||
| Diluted earnings per common share | |||||||||||||||||||
| Income from continuing operations | $ | 0.42 | $ | 0.33 | $ | 1.06 | $ | 0.83 | |||||||||||
| Income from discontinued operations | $ | - | $ | - | $ | - | $ | 0.02 | |||||||||||
| Net income | $ | 0.42 | $ | 0.33 | $ | 1.06 | $ | 0.85 | |||||||||||
| Basic weighted average number of shares outstanding | 38,777 | 39,773 | 39,026 | 40,246 | |||||||||||||||
| Diluted weighted average number of shares outstanding | 39,230 | 40,572 | 39,511 | 41,161 | |||||||||||||||
HUB GROUP, INC. | ||||||||
CONDENSED CONSOLIDATED BALANCE SHEETS | ||||||||
(in thousands, except share amounts) | ||||||||
September 30, 2007 | December 31, 2006 | |||||||
| ASSETS | (unaudited) | |||||||
| CURRENT ASSETS: | ||||||||
| Cash and cash equivalents | $ | 39,824 | $ | 43,491 | ||||
| Accounts receivable | ||||||||
| Trade, net | 181,601 | 158,284 | ||||||
| Other | 11,296 | 8,369 | ||||||
| Prepaid taxes | 86 | 2,119 | ||||||
| Deferred taxes | 4,207 | 3,433 | ||||||
| Prepaid expenses and other current assets | 5,244 | 4,450 | ||||||
| TOTAL CURRENT ASSETS | 242,258 | 220,146 | ||||||
| Restricted investments | 5,116 | 3,017 | ||||||
| Property and equipment, net | 29,477 | 26,974 | ||||||
| Other intangibles, net | 7,168 | 7,502 | ||||||
| Goodwill, net | 225,448 | 225,448 | ||||||
| Other assets | 1,440 | 1,461 | ||||||
| TOTAL ASSETS | $ | 510,907 | $ | 484,548 | ||||
| LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||||
| CURRENT LIABILITIES: | ||||||||
| Accounts payable | ||||||||
| Trade | $ | 129,986 | $ | 117,676 | ||||
| Other | 6,091 | 6,839 | ||||||
| Accrued expenses | ||||||||
| Payroll | 12,484 | 18,294 | ||||||
| Other | 35,742 | 26,617 | ||||||
| Related party payable | - | 5,000 | ||||||
| TOTAL CURRENT LIABILITIES | 184,303 | 174,426 | ||||||
| Non-current liabilities | 13,400 | 7,691 | ||||||
| Deferred taxes | 42,248 | 43,587 | ||||||
| STOCKHOLDERS' EQUITY: | ||||||||
| Preferred stock, $.01 par value; 2,000,000 shares authorized; no shares issued or outstanding in 2007 and 2006 | - | - | ||||||
| Common stock | ||||||||
| Class A: $.01 par value; 97,337,700 shares authorized in 2007; 41,224,792 shares issued and 38,217,278 outstanding in 2007; 47,337,700 shares authorized in 2006; 41,224,792 shares issued and 38,943,122 outstanding in 2006 | 412 | 412 | ||||||
| Class B: $.01 par value; 662,300 shares authorized; 662,296 shares issued and outstanding in 2007 and 2006 | 7 | 7 | ||||||
| Additional paid-in capital | 176,317 | 179,203 | ||||||
| Purchase price in excess of predecessor basis, net of tax benefit of $10,306 | (15,458 | ) | (15,458 | ) | ||||
| Retained earnings | 188,045 | 146,243 | ||||||
| Treasury stock; at cost, 3,007,514 shares in 2007 and 2,281,670 shares in 2006 | (78,367 | ) | (51,563 | ) | ||||
| TOTAL STOCKHOLDERS' EQUITY | 270,956 | 258,844 | ||||||
| TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | $ | 510,907 | $ | 484,548 | ||||
HUB GROUP, INC. | ||||||||
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS | ||||||||
(in thousands) | ||||||||
Nine Months Ended September 30, | ||||||||
2007 | 2006 | |||||||
| Cash flows from operating activities: | ||||||||
| Income from continuing operations | $ | 41,802 | $ | 34,186 | ||||
| Adjustments to reconcile income from continuing operations to net cash | ||||||||
| provided by operating activities: | ||||||||
| Depreciation and amortization | 5,475 | 6,410 | ||||||
| Deferred taxes | 3,178 | 12 | ||||||
| Compensation expense related to share-based compensation plans | 2,893 | 2,649 | ||||||
| Gain on sale of assets | (156 | ) | (31 | ) | ||||
| Changes in operating assets and liabilities excluding effects of purchase transaction: | ||||||||
| Restricted investments | (2,099 | ) | (1,163 | ) | ||||
| Accounts receivable, net | (26,244 | ) | (6,325 | ) | ||||
| Prepaid taxes | 2,033 | 5,295 | ||||||
| Prepaid expenses and other current assets | (794 | ) | (1,202 | ) | ||||
| Other assets | 21 | 234 | ||||||
| Accounts payable | 11,562 | 13,904 | ||||||
| Accrued expenses | 3,315 | 9,152 | ||||||
| Non-current liabilities | 418 | - | ||||||
| Net cash provided by operating activities | 41,404 | 63,121 | ||||||
| Cash flows from investing activities: | ||||||||
| Proceeds from sale of equipment | 715 | 228 | ||||||
| Purchases of property and equipment | (8,203 | ) | (5,247 | ) | ||||
| Cash used in acquisition of Comtrak, Inc. | (5,000 | ) | (39,942 | ) | ||||
| Proceeds from the disposal of discontinued operations | - | 12,203 | ||||||
| Net cash used in investing activities | (12,488 | ) | (32,758 | ) | ||||
| Cash flows from financing activities: | ||||||||
| Proceeds from stock options exercised | 703 | 1,924 | ||||||
| Purchase of treasury stock | (37,142 | ) | (45,191 | ) | ||||
| Excess tax benefits from share-based compensation | 3,856 | 7,897 | ||||||
| Net cash used in by financing activities | (32,583 | ) | (35,370 | ) | ||||
| Cash flows from operating activities of discontinued operations | - | 1,848 | ||||||
| Cash flows used in investing activities of discontinued operations | - | (38 | ) | |||||
| Net cash provided by discontinued operations | - | 1,810 | ||||||
| Net decrease in cash and cash equivalents | (3,667 | ) | (3,197 | ) | ||||
| Cash and cash equivalents beginning of period | 43,491 | 36,133 | ||||||
| Cash and cash equivalents end of period | $ | 39,824 | $ | 32,936 | ||||