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Hub Group, Inc. (HUBG) SEC Filing 10-K Annual report for the fiscal year ending Saturday, December 31, 2016

Hub Group, Inc.

HISTORY TOOLS
CIK: 940942 Ticker: HUBG

EXHIBIT 99.1

Hub Group, Inc. Reports Fourth Quarter and Full Year 2016 Results

Fourth Quarter Results

  • Revenue of $978.6 million increased 10%
  • Operating income totaled $30.8 million, down 13%
  • Diluted earnings per share of $0.55 declined 13%

Full Year 2016 Results

  • Revenue of $3.6 billion increased 1%
  • Operating income totaled $123.8 million, up 6%
  • Diluted earnings per share of $2.20 increased 12%

OAK BROOK, Ill., Feb. 02, 2017 (GLOBE NEWSWIRE) -- Hub Group, Inc. (NASDAQ:HUBG) announced fourth quarter 2016 net income of $18.2 million, or diluted earnings per share of $0.55 vs. fourth quarter 2015 net income of $22.4 million, or $0.63 per diluted share.

Revenue for the current quarter was $978.6 million, compared with $890.3 million for the fourth quarter 2015. The Hub segment revenue increased 13% and the Mode segment revenue increased 6%. 
Operating income for the current quarter decreased to $30.8 million vs. $35.3 million for the fourth quarter 2015. The Hub segment operating income declined 14% and the Mode segment operating income decreased 6%.  “The above market revenue increase is the result of our on-going focus on excellent customer service.  The operating income decline was driven by our strategic investments in our people and technology.  We believe these investments provide a solid foundation for the future,” said Dave Yeager, Hub’s Chairman and CEO. 

Segment Information:

Hub

  • Fourth quarter 2016 Segment Revenue:       $754.1 million, up 13%
  • Fourth quarter 2016 Operating Income:       $24.3 million, down 14%

The fourth quarter started out slowly but gained momentum as the quarter progressed.  We were successful executing our strategy of targeting specific verticals and customers and providing our customers with multimodal solutions.  This resulted in growth in all of our service lines.  The Hub segment’s revenue increased 13% to $754.1 million as a result of our diversified services and our customer-centric approach. 

Fourth quarter intermodal revenue increased 5% to $468 million reflecting volume growth of 5%.  Intermodal gross margin decreased from the prior year because of lower prices than last year and rail cost increases.  Volume growth, lower dray costs and improved mix and lane balance partially offset the decline. 

Truck brokerage revenue increased 46% to $130 million this quarter compared to last year.  Truck brokerage handled 33% more loads while fuel, price and mix combined were up 13%.  During the quarter, we saw surges in demand from retail and e-commerce customers.  We are well positioned to handle surge freight.  Truck brokerage gross margin increased because of an increase in new business and seasonal business. 

Fourth quarter Unyson Logistics revenue increased 17% to $156 million due primarily to growth with new customers on-boarded this year.  This year we had a record number of new customer on-boardings.  Logistics gross margin was up due to growth with both new and existing customers. 

Costs and expenses increased $8.6 million to $64.5 million in the fourth quarter of 2016 compared to $55.9 million in the fourth quarter of 2015.  Salaries and benefits increased $6.4 million due to higher headcount, annual employee raises and an increase in bonus expense.  General and administrative costs are $1.9 million higher because of an increase in IT costs including costs for our new transportation management system and our new human resource system and an increase in professional fees. 

Operating income was $24.3 million compared to $ 28.4 million last year. 

Mode

  • Fourth quarter 2016 Segment Revenue:       $256.4 million, up 6%
  • Fourth quarter 2016 Operating Income:       $6.5 million, down 6%

Mode managed through a competitive environment and saw revenue increase 6% to $256 million compared to fourth quarter 2015.   Revenue consisted of $131 million in intermodal which was flat, $80 million in truck brokerage which was up 4% and $45 million in logistics which was up 33%.  Mode has made great strides in cross selling our services. 

Gross margin decreased $0.8 million year over year due primarily to a decrease in intermodal gross margin.

Mode’s costs and expenses decreased $0.4 million compared to last year primarily because of a decline in agent commissions.   

Mode added 3 new IBO’s to the network during the quarter along with 23 salespeople.  Mode’s pipeline remains strong for new recruits in 2017.

Operating income was $6.5 million compared to $6.9 million last year.

2017 Outlook
“We are pleased with the results for 2016 and the progress we have made on our goals and objectives.  Looking to 2017, we remain committed to our strategy to increase market share by providing multimodal solutions for our customers,” said Dave Yeager.  “We are optimistic about growing all our service lines as we focus on targeted growth initiatives.  To support this growth, we will be increasing our fleet 10% and investing in technology to help us exceed customer expectations and improve operating efficiencies.”

Cash Flow and Capitalization:

At December 31, 2016, we had total debt outstanding of $174 million on various debt instruments compared to $149 million at December 31, 2015.

Our capital expenditures for 2016 approximated $107 million vs. $83 million in 2015. At December 31, 2016, we had cash and cash equivalents of $127 million.

CONFERENCE CALL

Hub will hold a conference call at 5:00 p.m. Eastern Time on Thursday, February 2, 2017, to discuss its fourth quarter and full year 2016 results and provide 2017 guidance. 

Hosting the conference call will be Dave Yeager, Chairman and Chief Executive Officer.  Also participating on the call will be Don Maltby, President and Chief Operating Officer, and Terri Pizzuto, Executive Vice-President and 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=UXfABcEEofgJcl. 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.

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, 2015 and the report on Form 10-Q for the period ended September 30, 2016.  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 December 31
         2016   2015 
         % of  % of
        AmountRevenue AmountRevenue
 Revenue   $  978,560 100.0% $  890,272 100.0%
             
 Transportation costs      858,106 87.7%    773,498 86.9%
  Gross margin      120,454 12.3%    116,774 13.1%
             
 Costs and expenses:        
  Salaries and benefits      50,384 5.1%    44,268 5.0%
  Agent fees and commissions     18,562 1.9%    19,350 2.1%
  General and administrative      18,262 1.9%    15,720 1.8%
  Depreciation and amortization     2,407 0.2%    2,095 0.2%
   Total costs and expenses     89,615 9.1%    81,433 9.1%
             
 Operating income      30,839 3.2%    35,341 4.0%
             
 Other income (expense):        
  Interest expense      (970)-0.1%    (753)-0.1%
  Interest and dividend income     107 0.0%    36 0.0%
  Other, net       (359)0.0%    (465)-0.1%
   Total other expense      (1,222)-0.1%    (1,182)-0.2%
             
 Income before provision for income taxes     29,617 3.1%    34,159 3.8%
             
 Provision for income taxes      11,373 1.2%    11,785 1.3%
             
 Net income   $  18,244 1.9% $  22,374 2.5%
             
             
             
 Basic earnings per common share  $  0.55   $  0.63  
             
 Diluted earnings per common share  $  0.55   $  0.63  
             
 Basic weighted average number of shares outstanding     33,069      35,595  
 Diluted weighted average number of shares outstanding     33,281      35,726  
             


 HUB GROUP, INC.
 CONSOLIDATED STATEMENTS OF EARNINGS
 (in thousands, except per share amounts)
 (unaudited)
             
        Twelve Months Ended December 31
         2016   2015 
         % of  % of
        AmountRevenue AmountRevenue
 Revenue   $  3,572,790 100.0% $  3,525,595 100.0%
             
 Transportation costs      3,118,005 87.3%    3,112,900 88.3%
  Gross margin      454,785 12.7%    412,695 11.7%
             
 Costs and expenses:        
  Salaries and benefits      180,459 5.1%    158,938 4.5%
  Agent fees and commissions     72,896 2.0%    68,724 2.0%
  General and administrative      68,630 1.9%    60,015 1.7%
  Depreciation and amortization     8,966 0.2%    7,988 0.2%
   Total costs and expenses     330,951 9.2%    295,665 8.4%
             
 Operating income      123,834 3.5%    117,030 3.3%
             
 Other income (expense):        
  Interest expense      (3,625)-0.1%    (2,971)-0.1%
  Interest and dividend income     393 0.0%    83 0.0%
  Other, net       819 0.0%    (2,560)-0.1%
   Total other expense      (2,413)-0.1%    (5,448)-0.1%
             
 Income before provision for income taxes     121,421 3.4%    111,582 3.2%
             
 Provision for income taxes      46,616 1.3%    40,633 1.2%
             
 Net income   $  74,805 2.1% $  70,949 2.0%
             
             
             
 Basic earnings per common share  $  2.21   $  1.98  
             
 Diluted earnings per common share  $  2.20   $  1.97  
             
 Basic weighted average number of shares outstanding     33,841      35,876  
 Diluted weighted average number of shares outstanding     33,949      35,968  
             

 


HUB GROUP, INC. 
FINANCIAL INFORMATION BY SEGMENT 
(in thousands) 
(unaudited) 
               
       Three Months 
       Ended December 31, 2016 
       Hub Mode Inter-Segment Elims Hub Group Total 
Revenue   $  754,091 $  256,369 $  (31,900) $  978,560 
               
Transportation costs      665,270    224,736    (31,900)    858,106 
 Gross margin      88,821    31,633  -     120,454 
               
Costs and expenses:           
 Salaries and benefits      46,478    3,906  -     50,384 
 Agent fees and commissions     19    18,543  -     18,562 
 General and administrative      15,894    2,368  -     18,262 
 Depreciation and amortization     2,095    312  -     2,407 
  Total costs and expenses     64,486    25,129  -     89,615 
               
Operating income   $  24,335 $  6,504 $-  $  30,839 
               

 

HUB GROUP, INC.
FINANCIAL INFORMATION BY SEGMENT
(in thousands)
(unaudited)
               
       Three Months 
       Ended December 31, 2015 
       Hub Mode Inter-Segment Elims Hub Group Total 
Revenue   $  668,865 $  241,917 $  (20,510) $  890,272 
               
Transportation costs      584,569    209,439    (20,510)    773,498 
 Gross margin      84,296    32,478  -     116,774 
               
Costs and expenses:           
 Salaries and benefits      40,128    4,140  -     44,268 
 Agent fees and commissions     13    19,337  -     19,350 
 General and administrative      13,972    1,748  -     15,720 
 Depreciation and amortization     1,775    320  -     2,095 
  Total costs and expenses     55,888    25,545  -     81,433 
               
Operating income   $  28,408 $  6,933 $-  $  35,341 
               

 

HUB GROUP, INC.
FINANCIAL INFORMATION BY SEGMENT
(in thousands)
(unaudited)
               
       Twelve Months 
       Ended December 31, 2016 
       Hub Mode Inter-Segment Elims Hub Group Total 
Revenue   $  2,734,541 $  948,735 $  (110,486) $  3,572,790 
               
Transportation costs      2,404,946    823,545    (110,486)    3,118,005 
 Gross margin      329,595    125,190  -     454,785 
               
Costs and expenses:           
 Salaries and benefits      165,136    15,323  -     180,459 
 Agent fees and commissions     66    72,830  -     72,896 
 General and administrative      60,811    7,819  -     68,630 
 Depreciation and amortization     7,698    1,268  -     8,966 
  Total costs and expenses     233,711    97,240  -     330,951 
               
Operating income   $  95,884 $  27,950 $-  $  123,834 
               

 

HUB GROUP, INC.
FINANCIAL INFORMATION BY SEGMENT
(in thousands)
(unaudited)
               
       Twelve Months 
       Ended December 31, 2015 
       Hub Mode Inter-Segment Elims Hub Group Total 
Revenue   $  2,679,318 $  928,661 $  (82,384) $  3,525,595 
               
Transportation costs      2,385,197    810,087    (82,384)    3,112,900 
 Gross margin      294,121    118,574  -     412,695 
               
Costs and expenses:           
 Salaries and benefits      143,993    14,945  -     158,938 
 Agent fees and commissions     56    68,668  -     68,724 
 General and administrative      53,023    6,992  -     60,015 
 Depreciation and amortization     6,688    1,300  -     7,988 
  Total costs and expenses     203,760    91,905  -     295,665 
               
Operating income   $  90,361 $  26,669 $-  $  117,030 
               

 

HUB GROUP, INC. 
CONSOLIDATED BALANCE SHEETS 
(in thousands, except share data) 
(unaudited) 
            
        December 31, December 31, 
         2016   2015  
            
ASSETS        
 CURRENT ASSETS:      
  Cash and cash equivalents $  127,404  $  207,749  
  Accounts receivable trade, net    473,608     379,987  
  Accounts receivable other    4,331     10,344  
  Prepaid taxes     294     362  
  Deferred taxes   -     8,412  
  Prepaid expenses and other current assets   16,653     17,756  
    TOTAL CURRENT ASSETS    622,290     624,610  
            
 Restricted investments    20,877     21,108  
 Property and equipment, net    438,594     374,847  
 Other intangibles, net     11,844     13,139  
 Goodwill, net     262,376     262,594  
 Other assets     4,278     4,848  
     TOTAL ASSETS $  1,360,259  $  1,301,146  
            
            
LIABILITIES AND STOCKHOLDERS' EQUITY    
 CURRENT LIABILITIES:      
  Accounts payable trade $  266,555  $  230,432  
  Accounts payable other    21,070     21,495  
  Accrued payroll     36,223     33,020  
  Accrued other     46,013     38,733  
  Current portion of capital lease    2,697     2,608  
  Current portion of long term debt    45,163     32,409  
    TOTAL CURRENT LIABILITIES   417,721     358,697  
            
 Long term debt     115,529     100,895  
 Non-current liabilities     23,595     20,233  
 Long term capital lease    10,576     13,299  
 Deferred taxes     164,659     160,182  
            
 STOCKHOLDERS' EQUITY:     
  Preferred stock, $.01 par value; 2,000,000 shares authorized;    
   no shares issued or outstanding in 2016 and 2015 -   -  
  Common stock      
   Class A: $.01 par value; 97,337,700 shares authorized and    
    41,224,792 shares issued in 2016 and 2015; 33,192,982 shares    
    outstanding in 2016 and 35,633,961 shares outstanding in 2015   412     412  
   Class B:  $.01 par value; 662,300 shares authorized;    
    662,296 shares issued and outstanding in 2016 and 2015   7     7  
  Additional paid-in capital    173,565     174,285  
  Purchase price in excess of predecessor basis, net of tax    
   benefit of $10,306     (15,458)    (15,458) 
  Retained earnings     735,563     660,758  
  Accumulated other comprehensive loss   (273)    (178) 
  Treasury stock; at cost, 8,031,810 shares in 2016    
   and 5,590,831 shares in 2015    (265,637)    (171,986) 
   TOTAL STOCKHOLDERS' EQUITY   628,179     647,840  
      TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY$  1,360,259  $  1,301,146  
            

 


HUB GROUP, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
          
         Years Ended December 31,
          2016   2015 
            
            
Cash flows from operating activities:     
 Net income   $  74,805  $  70,949 
 Adjustments to reconcile net income    
  to net cash provided by operating activities:    
   Depreciation and amortization      44,712     37,042 
   Deferred taxes      13,801     16,378 
   Compensation expense related to share-based compensation plans    8,479     7,833 
   Gain on sale of assets     (573)    (129)
   Excess tax benefits from share-based compensation    (733)    (81)
 Changes in operating assets and liabilities:    
   Restricted investments     231     836 
   Accounts receivable, net     (87,629)    36,373 
   Prepaid taxes      66     14,575 
   Prepaid expenses and other current assets    1,099     (3,401)
   Other assets      570     (805)
   Accounts payable     35,709     (25,736)
   Accrued expenses     9,238     20,505 
   Non-current liabilities     2,698     (2,642)
     Net cash provided by operating activities    102,473     171,697 
            
Cash flows from investing activities:     
 Proceeds from sale of equipment     2,061     2,309 
 Purchases of property and equipment    (107,409)    (83,042)
    Net cash used in investing activities    (105,348)    (80,733)
            
Cash flows from financing activities:     
 Proceeds from issuance of debt     62,155     64,442 
 Repayments of long term debt     (34,767)    (23,217)
 Stock tendered for payments of withholding taxes    (2,489)    (2,916)
 Purchase of treasury stock     (100,000)    (28,823)
 Capital lease payments     (2,634)    (2,534)
 Excess tax benefits from share-based compensation    372     195 
    Net cash (used in) provided by financing activities    (77,363)    7,147 
            
            
 Effect of exchange rate changes on cash and cash equivalents    (107)    (131)
            
Net (decrease) increase in cash and cash equivalents    (80,345)    97,980 
Cash and cash equivalents beginning of period    207,749     109,769 
Cash and cash equivalents end of period $  127,404  $  207,749 
            

 

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

The following information was filed by Hub Group, Inc. (HUBG) on Thursday, February 2, 2017 as an 8K 2.02 statement, which is an earnings press release pertaining to results of operations and financial condition. It may be helpful to assess the quality of management by comparing the information in the press release to the information in the accompanying 10-K Annual Report statement of earnings and operation as management may choose to highlight particular information in the press release.

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Inside Hub Group, Inc.'s 10-K Annual Report:

Financial Statements, Disclosures and Schedules

Inside this 10-K Annual Report

Document And Entity Information
Consolidated Balance Sheets
Consolidated Balance Sheets (parenthetical)
Consolidated Statements Of Cash Flows
Consolidated Statements Of Income And Comprehensive Income
Consolidated Statements Of Stockholders Equity
Amortization Expense (detail)
Business Segments
Business Segments (tables)
Business Segments - Additional Information (detail)
Capital Structure
Capital Structure - Additional Information (detail)
Carrying Amount Of Goodwill (detail)
Components Of Other Intangible Assets (detail)
Description Of Business And Summary Of Significant Accounting Policies
Description Of Business And Summary Of Significant Accounting Policies (policies)
Description Of Business And Summary Of Significant Accounting Policies - Additional Information (detail)
Earnings Per Share
Earnings Per Share (tables)
Employee Benefit Plans
Employee Benefit Plans - Additional Information (detail)
Fair Value Measurement
Fair Value Measurement - Additional Information (detail)
Goodwill And Other Intangible Assets
Goodwill And Other Intangible Assets (tables)
Goodwill And Other Intangible Assets - Additional Information (detail)
Guarantees
Guarantees - Additional Information (detail)
Impairment Of Software
Impairment Of Software - Additional Information (detail)
Income Taxes
Income Taxes (tables)
Income Taxes - Additional Information (detail)
Leases, User Charges And Commitments
Leases, User Charges And Commitments (tables)
Leases, User Charges And Commitments - Additional Information (detail)
Leases, User Charges And Commitments - Future Payments Due (detail)
Legal Matters
Legal Matters - Additional Information (detail)
Long-term Debt And Financing Arrangements
Long-term Debt And Financing Arrangements (tables)
Long-term Debt And Financing Arrangements - Additional Information (detail)
Property And Equipment
Property And Equipment (detail)
Property And Equipment (tables)
Property And Equipment - Additional Information (detail)
Reconciliation Of Earnings Per Share (detail)
Reconciliation Of Effective Tax Rate To Federal Statutory Tax Rate (detail)
Schedule Of Assets (detail)
Schedule Of Outstanding Debt (detail)
Schedule Of Outstanding Debt (parenthetical) (detail)
Selected Quarterly Financial Data (unaudited)
Selected Quarterly Financial Data (unaudited) (tables)
Selected Quarterly Financial Data (unaudited) - Summary Of Selected Quarterly Financial Data (detail)
Stock Buy Back Plans
Stock Buy Back Plans (tables)
Stock Buy Back Plans - Additional Information (detail)
Stock Buy Back Plans - Number Of Shares Purchased And Maximum Value Of Shares That Yet Be Purchased Under Plan (detail)
Stock-based Compensation Plans
Stock-based Compensation Plans (tables)
Stock-based Compensation Plans - Additional Information (detail)
Stock-based Compensation Plans - Restricted Stock Granted (detail)
Stock-based Compensation Plans - Schedule Of Non-vested Restricted Stock Activity (detail)
Summary Of Aggregate Principal Payments (detail)
Summary Of Deferred Tax Assets And Liabilities Presented As Noncurrent (detail)
Summary Of Operating Results (detail)
Summary Of Provision For Income Taxes (detail)
Summary Of Revenue By Segment And Business Line (detail)
Unrecognized Tax Benefits (detail)
Valuation And Qualifying Accounts
Valuation And Qualifying Accounts (detail)
Ticker: HUBG
CIK: 940942
Form Type: 10-K Annual Report
Accession Number: 0001564590-17-002435
Submitted to the SEC: Fri Feb 24 2017 5:11:41 PM EST
Accepted by the SEC: Fri Feb 24 2017
Period: Saturday, December 31, 2016
Industry: Arrangement Of Transportation Of Freight And Cargo

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