EXHIBIT 99.1

Hub Group, Inc. Reports Record Third Quarter 2018 Results

Highlights of the quarter

  • 13% revenue growth
  • 33% gross margin growth
  • 121% increase in operating income
  • Sold Mode Transportation, LLC for approximately $238.5 million

OAK BROOK, Ill., Oct. 25, 2018 (GLOBE NEWSWIRE) -- Hub Group, Inc. (NASDAQ:HUBG) announced third quarter 2018 net income of $114.6 million, or diluted earnings per share of $3.41 versus third quarter 2017 net income of $15.3 million, or $0.46 per diluted share. Income from continuing operations for the current quarter was $25.8 million, or $0.77 per diluted share versus third quarter 2017 income from continuing operations of $11.6 million, or $0.35 per diluted share.

On August 31, 2018, Hub Group, Inc. closed on the sale of Mode Transportation, LLC.  Mode’s temperature protected services division (“Temstar”) was not included in the sale and was retained by Hub and is reported in the intermodal line of business.  The comparative results of Mode have been reported as “discontinued operations” in the Consolidated Financial Statements. 

Results of Continuing Operations

Revenue for the current quarter was $933.2 million compared with $824.8 million for the third quarter 2017 as a result of our success in providing integrated supply chain solutions.   Operating income for the current quarter increased to $34.7 million versus $15.7 million for the third quarter 2017. Operating income increased 121%.

Third quarter intermodal revenue increased 20% to $576.5 million due to a 3% increase in load volume, price increases and higher fuel revenue. Transcon volume was up 7%, local west was up 6%, and local east was down 2%. Intermodal gross margin increased compared to the third quarter of 2017 primarily due to higher pricing, improved mix and accessorial recovery, better network balance and increased volume.  These gains were partially offset by higher rail and drayage costs and one day worse utilization than 2017.  We ended the third quarter of 2018 with approximately 36,800 containers and 1,100 tractors assigned to the dray fleet.

Truck brokerage revenue increased 8% to $122.1 million in the third quarter of 2018 compared to the same quarter of last year.  Truck brokerage handled 1% fewer loads while fuel, price and mix combined were up 9%.  Contractual volume represented 78% of total load volume compared to 82% in the third quarter of 2017. Truck brokerage gross margin increased compared to the third quarter of 2017 primarily because of growth with strategic customers and increased spot activity. 

Third quarter logistics revenue decreased 11% to $156.0 million due primarily to lost customers partially offset by growth with existing customers.  Logistics gross margin decreased compared to the third quarter of 2017 due to lost customers, changes in customer mix, and increased purchased transportation costs.

Dedicated revenue increased 36% to $78.6 million compared to the same quarter in the prior year.  Dedicated gross margin decreased compared to the third quarter of 2017 due to higher usage of outside carriers, startup costs associated with new contracts and higher driver wages.  We ended the third quarter of 2018 with approximately 1,500 tractors and 5,100 trailers in Dedicated. 

Costs and expenses increased $9.7 million to $80.3 million in the third quarter of 2018 compared to $70.6 million in the third quarter of 2017 due primarily to a $7.5 million increase in incentive compensation, $1.6 million increase in salaries due to higher headcount and employee raises, $1.4 million of higher commissions, and $1.0 million of higher professional fees partially offset by a $1.4 million increase in gain on sale of assets. Professional fees include $0.5 million for due diligence associated with potential acquisitions.

Operating income was $34.7 million compared to $15.7 million in the third quarter 2017.

Discontinued Operations

Income from discontinued operations, net of income taxes, for the third quarter 2018 was $88.8 million or diluted earnings per share of $2.64, versus third quarter 2017 net income of $3.7 million or $0.11 per diluted share.  Third quarter 2018 includes a gain on sale of Mode Transportation, LLC, net of transaction costs and income tax, of $86.3 million or diluted earnings per share of $2.57. We recorded one time incentive payments of approximately $0.6 million or approximately $0.02 per diluted share in the third quarter of 2018.

Cash Flow and Capitalization

Our capital expenditures for the third quarter 2018 totaled $69.6 million, primarily for tractors, containers, trailers and technology investments.  At September 30, 2018, we had cash and cash equivalents of $267.5 million. 

At September 30, 2018, we had total debt outstanding of $311.8 million on various debt instruments compared to $302.5 million at December 31, 2017. 

2018 Fourth Quarter Outlook

We expect that our fourth quarter 2018 diluted earnings per share will range from $0.85 to $0.95.  We estimate that our 2018 fourth quarter capital expenditures will range from $60 million to $80 million.  We project our effective tax rate for the fourth quarter will range from 22.0% to 22.4%.

CONFERENCE CALL

Hub will hold a conference call at 5:00 p.m. Eastern Time on Thursday, October 25th 2018 to discuss its third quarter 2018 results.

Hosting the conference call will be Dave Yeager, Chief Executive Officer.  Also participating on the call will be Don Maltby, Chief Operating Officer, and Terri Pizzuto, Chief Financial Officer.

This call is being webcast and can be accessed through the Investors link on Hub Group’s web site at www.hubgroup.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 register at http://www.yourconferencecenter.com/r.aspx?p=1&a=ULNKzderGUmOTD. Registrants will be issued a passcode and PIN to use when dialing into the live call which will provide quickest access to the conference.  You may register at any time, including up to and after the call start time.  On the day of the call, dial (888) 206-4064 approximately ten minutes prior to the scheduled call time; enter the participant passcode and PIN received during registration.   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.

On October 25 2018, the company will make available on its website an Investor Presentation, which includes updated business information and third quarter 2018 results, among other things. The presentation can be accessed by going to www.hubgroup.com, selecting the “Investors” tab, and then selecting the “Presentations” tab. The presentation will be available on the company’s website until the next regular update.

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, and should be viewed with caution. Forward-looking statements may contain words such as “expects”, “expected”, “believe”, “projected”, “estimate”, or similar words, and are based on management's experience and perception of historical trends, current conditions, and anticipated future developments, as well as other factors believed to be appropriate. We believe these statements and the assumptions and estimates contained in this release are reasonable based on information that is currently available to us. 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 intermodal costs and prices, the integration of any acquisitions and expenses relating thereto, the future performance of Hub’s Intermodal, Truck Brokerage, Dedicated and Unyson Logistics business lines, driver shortages, the amount and timing of strategic investments or divestitures by Hub, the failure to integrate critical information technology systems, retail customers encountering adverse economic conditions and 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, 2017.  Hub Group assumes no liability to update any such forward-looking statements.

 
HUB GROUP, INC.
CONSOLIDATED STATEMENTS OF EARNINGS
(in thousands, except per share amounts)
(unaudited)
            
       Three Months Ended September 30,
       2018
 2017
        % of  % of
       AmountRevenue AmountRevenue
Revenue   $933,224 100.0% $824,809 100.0%
            
Transportation costs    818,240 87.7%  738,482 89.5%
 Gross margin    114,984 12.3%  86,327 10.5%
            
Costs and expenses:        
 Salaries and benefits    57,123 6.1%  45,978 5.6%
 General and administrative    19,327 2.1%  20,637 2.5%
 Depreciation and amortization   3,800 0.4%  3,966 0.5%
  Total costs and expenses   80,250 8.6%  70,581 8.6%
            
Operating income    34,734 3.7%  15,746 1.9%
            
Other income (expense):        
 Interest expense    (2,411)-0.2%  (2,345)-0.2%
 Interest and dividend income   340 0.0%  42 0.0%
 Other, net    251 0.0%  355 0.0%
  Total other expense    (1,820)-0.2%  (1,948)-0.2%
            
Income from continuing operations before income taxes   32,914 3.5%  13,798 1.7%
            
Provision for income taxes    7,150 0.7%  2,210 0.3%
            
Income from continuing operations   25,764 2.8%  11,588 1.4%
            
Income from discontinued operations, net of income taxes  88,846    3,746  
            
Net income   $114,610   $15,334  
            
Earnings per share from continuing operations       
 Basic   $0.77   $0.35  
 Diluted   $0.77   $0.35  
            
Earnings per share from discontinued operations       
 Basic   $2.66   $0.11  
 Diluted   $2.64   $0.11  
            
Earnings per share net income       
 Basic   $3.43   $0.46  
 Diluted   $3.41   $0.46  
            
Basic weighted average number of shares outstanding   33,399    33,227  
Diluted weighted average number of shares outstanding   33,605    33,335  
            


 
HUB GROUP, INC.
CONSOLIDATED STATEMENTS OF EARNINGS
(in thousands, except per share amounts)
(unaudited)
            
       Nine Months Ended September 30,
       2018
 2017
        % of  % of
       AmountRevenue AmountRevenue
Revenue   $2,665,300 100.0% $2,213,824 100.0%
            
Transportation costs    2,358,286 88.5%  1,982,800 89.6%
 Gross margin    307,014 11.5%  231,024 10.4%
            
Costs and expenses:        
 Salaries and benefits    163,496 6.1%  127,643 5.7%
 General and administrative    55,557 2.1%  57,681 2.6%
 Depreciation and amortization   11,286 0.4%  8,331 0.4%
  Total costs and expenses   230,339 8.6%  193,655 8.7%
            
Operating income    76,675 2.9%  37,369 1.7%
            
Other income (expense):        
 Interest expense    (6,702)-0.3%  (4,474)-0.2%
 Interest and dividend income   365 0.0%  332 0.0%
 Other, net    20 0.0%  533 0.0%
  Total other expense    (6,317)-0.3%  (3,609)-0.2%
            
Income from continuing operations before income taxes   70,358 2.6%  33,760 1.5%
            
Provision for income taxes    16,371 0.6%  10,060 0.4%
            
Income from continuing operations   53,987 2.0%  23,700 1.1%
            
Income from discontinued operations, net of income taxes  98,842    11,510  
            
Net income   $152,829   $35,210  
            
Earnings per share from continuing operations       
 Basic   $1.62   $0.71  
 Diluted   $1.61   $0.71  
            
Earnings per share from discontinued operations       
 Basic   $2.96   $0.35  
 Diluted   $2.95   $0.35  
            
Earnings per share net income       
 Basic   $4.58   $1.06  
 Diluted   $4.56   $1.06  
            
Basic weighted average number of shares outstanding   33,387    33,217  
Diluted weighted average number of shares outstanding   33,548    33,323  
            


 
HUB GROUP, INC.
FINANCIAL INFORMATION BY BUSINESS LINE
(in thousands)
(unaudited)
            
     Three Months Nine Months
     Ended September 30, Ended September 30,
     2018 2017 2018 2017
Intermodal $576,478 $478,531 $1,597,254 $1,362,564
Truck brokerage  122,062  112,653  357,016  323,128
Logistics  156,041  175,679  498,139  470,186
Dedicated  78,643  57,946  212,891  57,946
 Total Revenue $933,224 $824,809 $2,665,300 $2,213,824
            


 
HUB GROUP, INC.
CONSOLIDATED BALANCE SHEETS
(in thousands, except share data)
(unaudited)
           
        September 30, December 31,
        2018 2017
           
ASSETS       
 CURRENT ASSETS:     
  Cash and cash equivalents $267,507  $28,557 
  Accounts receivable trade, net  457,694   424,679 
  Accounts receivable other  4,575   5,704 
  Prepaid taxes   171   12,088 
  Prepaid expenses and other current assets 25,001   25,414 
  Current assets held for sale  -   159,616 
    TOTAL CURRENT ASSETS  754,948   656,058 
           
 Restricted investments  22,168   20,143 
 Property and equipment, net  662,755   561,214 
 Other intangibles, net   61,116   64,747 
 Goodwill, net   318,662   319,272 
 Other assets   3,552   5,491 
 Non-current assets held for sale  -   44,016 
    TOTAL ASSETS $1,823,201  $1,670,941 
           
           
LIABILITIES AND STOCKHOLDERS' EQUITY   
 CURRENT LIABILITIES:     
  Accounts payable trade $247,332  $242,316 
  Accounts payable other  13,959   13,903 
  Accrued payroll   46,443   26,674 
  Accrued other   84,559   53,507 
  Current portion of capital lease  2,820   2,777 
  Current portion of long term debt  95,946   77,267 
  Current liabilities held for sale  -   103,099 
    TOTAL CURRENT LIABILITIES 491,059   519,543 
           
 Long term debt   207,596   214,808 
 Non-current liabilities   36,634   33,599 
 Long term capital lease  5,472   7,696 
 Deferred taxes   154,485   121,095 
 Non-current liabilities held for sale  -   4,328 
           
 STOCKHOLDERS' EQUITY:    
  Preferred stock, $.01 par value; 2,000,000 shares authorized;   
   no shares issued or outstanding in 2018 and 2017 -   - 
  Common stock     
   Class A: $.01 par value; 97,337,700 shares authorized and   
    41,224,792 shares issued in 2018 and 2017; 33,612,071 shares   
    outstanding in 2018 and 33,447,070 shares outstanding in 2017 412   412 
   Class B:  $.01 par value; 662,300 shares authorized;   
    662,296 shares issued and outstanding in 2018 and 2017 7   7 
  Additional paid-in capital  175,442   173,011 
  Purchase price in excess of predecessor basis, net of tax   
   benefit of $10,306   (15,458)  (15,458)
  Retained earnings   1,023,545   870,715 
  Accumulated other comprehensive loss (168)  (193)
  Treasury stock; at cost, 7,612,721 shares in 2018   
   and 7,777,722 shares in 2017  (255,825)  (258,622)
   TOTAL STOCKHOLDERS' EQUITY 927,955   769,872 
    TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY$1,823,201  $1,670,941 
           


 
HUB GROUP, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
          
         Nine Months Ended September 30,
         2018
 2017
            
            
Cash flows from operating activities:     
 Net income   $152,829  $35,210 
 Adjustments to reconcile net income    
  to net cash provided by operating activities:    
   Depreciation and amortization   59,184   43,531 
   Deferred taxes    33,989   19,983 
   Compensation expense related to share-based compensation plans  9,490   7,402 
   Contingent consideration adjustment  (4,703)  - 
   (Gain) loss on sale of assets   (1,458)  360 
   (Gain) on disposition of discontinued operations  (113,601)  - 
 Changes in operating assets and liabilities:    
   Restricted investments   (2,454)  (3,189)
   Accounts receivable, net   (44,138)  (37,448)
   Prepaid taxes    11,918   (11,839)
   Prepaid expenses and other current assets  438   (3,059)
   Other assets    1,572   (3,505)
   Accounts payable   8,070   51,459 
   Accrued expenses   30,951   (13,179)
   Non-current liabilities   4,358   1,419 
    Net cash provided by operating activities  146,445   87,145 
            
Cash flows from investing activities:     
 Proceeds from sale of equipment   4,035   3,052 
 Purchases of property and equipment  (138,847)  (39,936)
 Acquisitions, net of cash acquired   -   (165,933)
 Proceeds from the disposition of discontinued operations  222,322   - 
    Net cash provided by (used in) investing activities  87,510   (202,817)
            
Cash flows from financing activities:     
 Proceeds from issuance of debt   118,809   73,606 
 Repayments of long term debt   (107,341)  (59,921)
 Stock tendered for payments of withholding taxes  (4,262)  (3,410)
 Capital lease payments   (2,181)  (2,101)
 Payment of debt issuance costs   -   (1,397)
    Net cash provided by financing activities  5,025   6,777 
            
            
 Effect of exchange rate changes on cash and cash equivalents  (30)  49 
            
Net increase (decrease) in cash and cash equivalents  238,950   (108,846)
Cash and cash equivalents beginning of period  28,557   127,404 
Cash and cash equivalents end of period $267,507  $18,558 
            

 

CONTACT: Maralee Volchko of Hub Group, Inc., +1-630-271-3745

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