Hub Group, Inc. Announces Results for the Second Quarter Ended June 30, 2003
Downers Grove, IL, August 4, 2003 - Hub Group, Inc. (NASDAQ: HUBG) reported
results of operations for the quarter ended June 30, 2003.
Overall revenue for the Company increased 1.2% from the prior year to $331.7
million. Intermodal revenue decreased 3.2% to $234.7 million from $242.5 million
in 2002 due primarily to a decrease in volume. Truckload brokerage revenue
decreased 3.9% to $48.5 million from $50.4 million in 2002 due primarily to a
strategic decision to support logistics customer growth with traditional
brokerage resources. Supply chain solutions logistics revenue increased 107.4%
to $32.6 million from $15.7 million in 2002 due primarily to increased volume
from new customers added in 2002 and existing customers. In addition, Hub Group
Distribution Services ("HGDS") revenue decreased 16.3% to $15.9 million in 2003
from $19.0 million in 2002 due to the previously disclosed loss of a large
logistics customer and transferring certain HGDS customers to another Hub
subsidiary in 2002 offset by an increase in installation business. Certain prior
year amounts have been reclassified to conform to the current year presentation.
Net income for the second quarter was $1.5 million compared to a net loss of
$2.2 million in 2002. Earnings per share were $0.20 in the second quarter versus
a loss per share of $0.29 in 2002. During the quarter ended June 30, 2003, there
was a nonrecurring tax charge of $0.8 million (or $0.10 per share), in addition
to the normal tax provision, due to the write off of deferred tax assets
associated with the Illinois Research and Development tax credit carryforwards
which were eliminated by Illinois law enacted on June 20, 2003. Earnings per
share without the nonrecurring tax charge of $0.8 million would have been $0.30
for the quarter versus the reported amount of $0.20.
Gross margin increased 18.8% to $43.5 million in 2003 from $36.6 million in
2002. As a percent of revenue, gross margin increased to 13.1% in 2003 from
11.2% in 2002. The increase in margin as a percent of revenue is primarily due
to changes in customer mix, competitively pricing increased costs and
improvements in purchasing transportation services. Salaries and benefits
decreased to $22.9 million in 2003 from $23.3 million in 2002. As a percentage
of revenue, salaries and benefits decreased to 6.9% from 7.1% in 2002 due
primarily to a decrease in headcount and an increase in revenue. Selling,
general and administrative expenses increased to $12.1 million in 2003 from
$11.6 million in 2002. As a percentage of revenue, these expenses increased
slightly to 3.6% in 2003 from 3.5% in 2002. The increase as a percentage of
revenue is primarily attributed to an increase in outside services, bad debts,
insurance and sales commissions.
Hub's Chairman, Phillip C. Yeager, stated: "This quarter's results validate that
the margin enhancement and cost control programs that were launched in previous
quarters continue to bear fruit. We will continue to focus on controlling costs
while enhancing margin with renewed emphasis on top line growth for our core
intermodal and brokerage services."
Statements in this press release that are not historical, including statements
regarding Hub Group's or management's 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, 2002 and the quarterly report on Form 10-Q for the
quarter ended March 31, 2003. Hub Group assumes no liability to update any such
forward-looking statements.
Hub Group, Inc. is a leading non-asset based freight transportation management
company providing comprehensive intermodal, truckload, LTL, railcar, air
freight, international and related logistics and distribution services. The
Company operates through a network of over 30 offices throughout the United
States, Canada and Mexico and had 2002 sales of approximately $1.3 billion.
HUB GROUP, INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share amounts)
THREE MONTHS
ENDED JUNE 30,
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2003 2002
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Revenue $ 331,651 $ 327,595
Transportation costs 288,191 290,999
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Gross margin 43,460 36,596
Costs and expenses:
Salaries and benefits 22,853 23,348
Selling, general and administrative 12,105 11,610
Depreciation and amortization of property and equipment 2,588 2,535
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Total costs and expenses 37,546 37,493
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Operating income (loss) 5,914 (897)
Other income (expense):
Interest expense (2,010) (2,482)
Interest income 25 54
Other, net 49 60
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Total other expense (1,936) (2,368)
Income (loss) before provision for (benefit from) income taxes 3,978 (3,265)
Provision for (benefit from) income taxes 2,431 (1,038)
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Net income (loss) $ 1,547 $ (2,227)
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Basic earnings (loss) per common share $ 0.20 $ (0.29)
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Diluted earnings (loss) per common share $ 0.20 $ (0.29)
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