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Hub Group, Inc. (HUBG) SEC Filing 10-Q Quarterly report for the period ending Sunday, March 31, 2019

Hub Group, Inc.

CIK: 940942 Ticker: HUBG

EXHIBIT 99.1

Hub Group, Inc. Reports Record First Quarter 2019 Results

Highlights of the quarter

  • 11% revenue growth
  • 40% increase in gross margin with growth in all four service lines
  • 115% increase in operating income
  • Operating margin improved 180 basis points to 3.8%
  • EBITDA increased 83% to $64.0 million
  • Benefit from investment in Elevate technology transformation

OAK BROOK, Ill., April 30, 2019 (GLOBE NEWSWIRE) -- Hub Group, Inc. (NASDAQ:HUBG) announced first quarter 2019 net income of $23.9 million, or diluted earnings per share of $0.71. Income from continuing operations for the first quarter 2018 was $11.1 million, or $0.33 per diluted share.   


Results of Continuing Operations

Revenue for the current quarter increased by 11% to $933.0 million compared with $837.3 million for the first quarter 2018 as a result of our success in providing multimodal solutions to our customers and the addition of the CaseStack business in December 2018.  Operating income for the current quarter increased 115% to $35.6 million versus $16.5 million for the first quarter 2018, primarily as a result of effective margin improvement initiatives, our focus on providing value-added customer solutions, continuing investments in technology and stringent cost control.  Operating margin expanded to 3.8% for the current quarter, as compared to 2.0% in the prior year quarter.

First quarter intermodal revenue increased 8% to $536.0 million due to price increases, partially offset by a 1% decline in volume. Transcon volume was up 1%, local west was down 1%, and local east was up 1%. Intermodal gross margin increased compared to the first quarter of 2018 primarily due to implementing our pricing strategy which improved network balance.

Truck brokerage revenue decreased 2% to $117.6 million in the first quarter of 2019 compared to the same quarter of last year.  Truck brokerage handled 20% more loads while fuel, price and mix combined were down 22% due primarily to the addition of CaseStack, which primarily handles LTL freight. Contractual truckload volume represented 85% of total truckload volume compared to 80% in the first quarter of 2018.   Truck brokerage gross margin increased compared to the first quarter of 2018 primarily due to the implementation of our new operating and procurement processes, pricing philosophy, compensation changes, and increased alignment with the sales organization, as well as the addition of CaseStack.

First quarter logistics revenue grew 25% to $203.3 million.  Revenue and gross margin expanded due to the addition of CaseStack, benefits from continuous improvements and cross selling to our customers and improved yield management. 

Dedicated revenue increased 26% to $76.1 million compared to the same quarter in the prior year due to improved pricing and growth with new accounts which was offset by lost business.  Dedicated gross margin improved compared to the first quarter of 2018 due to implementation of our yield management processes and improved operational discipline.  We ended the quarter with approximately 1,400 tractors and 5,300 trailers for Dedicated. 

Costs and expenses increased to $91.7 million in the first quarter of 2019 compared to $74.5 million in the first quarter of 2018 due primarily to costs and expenses of $12.6 million related to CaseStack (which includes $2.3 million of non-cash amortization expense), $2.5 million of higher compensation expense, and an increase of approximately $1.5 million in IT expense associated with our Elevate projects.  Costs and expenses include a total of $3.4 million of non-cash amortization expense related to CaseStack and Hub Group Dedicated and $0.6 million of compensation expense associated with restricted stock issued to CaseStack management in connection with the acquisition.


Results of Discontinued Operations

Income from discontinued operations related to the sale of our Mode segment for the first quarter 2018 was $5.1 million, or $0.15 per diluted share. 

Cash Flow and Capitalization

Our capital expenditures for the first quarter 2019 totaled $17.1 million, primarily for containers, tractors and technology investments.  At March 31, 2019, we had cash and cash equivalents of $112 million.    

2019 Outlook

We expect that our 2019 diluted earnings per share will range from $3.25 to $3.40. We estimate our quarterly costs and expenses will range from $96 million to $100 million.  We expect annual amortization expense associated with the CaseStack and Hub Group Dedicated acquisitions will be approximately $13.6 million and compensation expense related to restricted stock issued to CaseStack management in connection with the acquisition will be approximately $2.5 million in 2019. We project our effective tax rate for 2019 will range from 25% to 26%.

As our founder said, “Our greatest asset is our people.”  To accommodate the growth in our business, we will be embarking on the expansion of our headquarters campus in Oak Brook, IL, adding a second office building that will bring our total capacity to approximately 1,400 employees on the campus.  We purchased the land adjacent to our current headquarters in 2016 and will be breaking ground on the new building in the coming months.  The budget for the new building is $55 million, of which approximately $25 million will be spent in 2019.  As a result, we are revising our capital expenditure guidance for 2019 to range from $115 million to $125 million.

Non-GAAP Financial Measure

As required by the rules of the Securities and Exchange Commission (“SEC”), we provide a reconciliation of the non-GAAP financial measure contained in this press release to the most directly comparable measure under GAAP, which is set forth in the attached table.


CONFERENCE CALL

Hub will hold a conference call at 5:00 p.m. Eastern Time on Tuesday, April 30, 2019 to discuss its first quarter 2019 results.

Hosting the conference call will be Dave Yeager, Chief Executive Officer.  Also participating on the call will be Don Maltby, Chief Operating Officer, Phil Yeager, Chief Commercial 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=URLJFcvkRhDaQu. 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, 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 Logistics business lines, driver shortages, the amount and timing of strategic investments or divestitures by Hub, the failure to implement and integrate critical information technology systems, cyber security incidents, 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, 2018.  Hub Group assumes no liability to update any such forward-looking statements.

SOURCE:  Hub Group, Inc.

 
 
HUB GROUP, INC.
CONSOLIDATED STATEMENTS OF EARNINGS
(in thousands, except per share amounts)
(unaudited)
      
 Three Months Ended March 31,
 2019
 2018
  % of  % of
 AmountRevenue AmountRevenue
Revenue$932,998 100.0% $837,342 100.0%
      
Transportation costs 805,709 86.4%  746,303 89.1%
Gross margin 127,289 13.6%  91,039 10.9%
      
Costs and expenses:     
Salaries and benefits 62,028 6.6%  52,304 6.3%
General and administrative 22,918 2.5%  18,437 2.2%
Depreciation and amortization 6,754 0.7%  3,763 0.4%
Total costs and expenses 91,700 9.8%  74,504 8.9%
      
Operating income 35,589 3.8%  16,535 2.0%
      
Other income (expense):     
Interest expense (3,056)-0.3%  (2,103)-0.3%
Interest and dividend income 373 0.0%  11 0.0%
Other, net (40)0.0%  (50)0.0%
Total other expense (2,723)-0.3%  (2,142)-0.3%
      
Income from continuing operations before income taxes 32,866 3.5%  14,393 1.7%
      
Provision for income taxes 8,972 0.9%  3,324 0.4%
      
Income from continuing operations 23,894 2.6%  11,069 1.3%
      
Income from discontinued operations, net of income taxes -    5,098  
      
Net income$23,894   $16,167  
      
Earnings per share from continuing operations     
Basic$0.71   $0.33  
Diluted$0.71   $0.33  
      
Earnings per share from discontinued operations     
Basic$-   $0.15  
Diluted$-   $0.15  
      
Earnings per share net income     
Basic$0.71   $0.48  
Diluted$0.71   $0.48  
      
Basic weighted average number of shares outstanding 33,569    33,375  
Diluted weighted average number of shares outstanding 33,585    33,478  
      


HUB GROUP, INC.
CONSOLIDATED BALANCE SHEETS
(in thousands, except share data)
(unaudited)
    
 March 31, December 31,
 2019 2018
ASSETS
   
CURRENT ASSETS:   
Cash and cash equivalents$112,402  $61,435 
Accounts receivable trade, net 445,238   477,088 
Other receivables 2,608   22,021 
Prepaid taxes 169   616 
Prepaid expenses and other current assets 14,974   27,533 
TOTAL CURRENT ASSETS 575,391   588,693 
    
Restricted investments 21,077   19,236 
Property and equipment, net 663,337   681,859 
Right-of-use assets - operating leases 30,787   - 
Right-of-use assets - financing leases 7,601   - 
Other intangibles, net 131,333   134,788 
Goodwill, net 484,496   483,584 
Other assets 17,290   16,738 
TOTAL ASSETS$1,931,312  $1,924,898 
    
    
LIABILITIES AND STOCKHOLDERS' EQUITY   
CURRENT LIABILITIES:   
Accounts payable trade$252,185  $272,859 
Accounts payable other 17,191   10,906 
Accrued payroll 27,801   55,535 
Accrued other 78,486   82,900 
Lease liability - operating leases 8,010   - 
Lease liability - financing leases 2,988   2,845 
Current portion of long term debt 100,227   101,713 
TOTAL CURRENT LIABILITIES 486,888   526,758 
    
Long term debt 215,233   229,071 
Non-current liabilities 33,397   29,619 
Lease liability - operating leases 24,469   - 
Lease liability - financing leases 4,149   4,739 
Deferred taxes 160,112   153,877 
    
STOCKHOLDERS' EQUITY:   
Preferred stock, $.01 par value; 2,000,000 shares authorized;   
no shares issued or outstanding in 2019 and 2018 -   - 
Common stock   
Class A: $.01 par value; 97,337,700 shares authorized and   
41,224,792 shares issued in 2019 and 2018; 34,110,482 shares   
outstanding in 2019 and 33,793,709 shares outstanding in 2018 412   412 
Class B:  $.01 par value; 662,300 shares authorized;   
662,296 shares issued and outstanding in 2019 and 2018 7   7 
Additional paid-in capital 163,340   172,220 
Purchase price in excess of predecessor basis, net of tax   
benefit of $10,306 (15,458)  (15,458)
Retained earnings 1,096,324   1,072,456 
Accumulated other comprehensive loss (175)  (182)
Treasury stock; at cost, 7,114,310 shares in 2019   
and 7,431,083 shares in 2018 (237,386)  (248,621)
TOTAL STOCKHOLDERS' EQUITY 1,007,064   980,834 
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY$1,931,312  $1,924,898 
    


HUB GROUP, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
 
 Three Months Ended March 31,  
 2019 2018
    
    
Cash flows from operating activities:   
Net income$23,894  $16,167 
Adjustments to reconcile net income   
to net cash provided by operating activities:   
Depreciation and amortization 28,383   18,599 
Deferred taxes 6,335   4,714 
Compensation expense related to share-based compensation plans 4,933   3,501 
Gain on sale of assets (835)  (115)
Changes in operating assets and liabilities:   
Restricted investments (1,841)  916 
Accounts receivable, net 32,906   11,643 
Prepaid taxes 447   (47)
Prepaid expenses and other current assets 12,560   6,694 
Other assets (819)  1,866 
Accounts payable (14,389)  (19,465)
Accrued expenses (30,123)  (10,913)
Non-current liabilities 1,982   (386)
Net cash provided by operating activities 63,433   33,174 
    
Cash flows from investing activities:   
Proceeds from sale of equipment 3,799   516 
Purchases of property and equipment (17,057)  (22,179)
Proceeds from the disposition of discontinued operations 19,439   - 
Net cash provided by (used in) investing activities 6,181   (21,663)
    
Cash flows from financing activities:   
Proceeds from issuance of debt 10,456   16,783 
Repayments of long term debt (25,780)  (34,300)
Stock tendered for payments of withholding taxes (2,578)  (3,896)
Capital lease payments (740)  (695)
Net cash used in financing activities (18,642)  (22,108)
    
    
Effect of exchange rate changes on cash and cash equivalents (5)  (30)
    
Net increase (decrease) in cash and cash equivalents 50,967   (10,627)
Cash and cash equivalents beginning of period 61,435   28,557 
Cash and cash equivalents end of period$112,402  $17,930 
    


 
HUB GROUP, INC.
FINANCIAL INFORMATION BY BUSINESS LINE
(in thousands)
(unaudited)
 
 Three Months
 Ended March 31,
 2019 2018
Intermodal$536,032 $494,452
Truck brokerage 117,587  120,018
Logistics 203,263  162,476
Dedicated 76,116  60,396
Total Revenue$932,998 $837,342
    


 
HUB GROUP, INC.
UNAUDITED RECONCILIATION OF NET INCOME TO EBITDA
(in thousands)
(unaudited)
 
 Three Months
 Ended, March 31,
     Change Change
 2019 2018 $  %
        
Net income from continuing operations$23,894  $11,069  $12,825  115.9%
        
Interest expense 3,056   2,103   953  45.3%
        
Interest and dividend income (373)  (11)  (362) 3221.8%
        
Other income, net 40   50   (10) -19.8%
        
Depreciation and amortization 28,383   18,358   10,025  54.6%
        
Provision for income taxes 8,972   3,324   5,648  169.9%
        
EBITDA$63,972  $34,893  $29,079  83.3%
        

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


The following information was filed by Hub Group, Inc. (HUBG) on Tuesday, April 30, 2019 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-Q Quarterly 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-Q Quarterly Report:

Financial Statements, Disclosures and Schedules

Inside this 10-Q Quarterly Report

Document And Entity Information
Consolidated Balance Sheets
Consolidated Balance Sheets (Parenthetical)
Unaudited Consolidated Statements Of Cash Flows
Unaudited Consolidated Statements Of Income And Comprehensive Income
Unaudited Consolidated Statements Of Stockholders' Equity
Acquisition
Acquisition (Tables)
Acquisition - Additional Information (Detail)
Amortization Expense Of Intangible Assets (Detail)
Components Of Other Intangible Acquired (Detail)
Discontinued Operations
Discontinued Operations (Tables)
Discontinued Operations - Additional Information (Detail)
Earnings Per Share
Earnings Per Share (Tables)
Fair Value Measurement
Fair Value Measurement - Additional Information (Detail)
Interim Financial Statements
Internal-Use Software
Internal-Use Software - 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 - Schedule Of Future Minimum Lease Payments Under Operating And Finance Leases (Detail)
Leases, User Charges And Commitments - Summary Of Lease Costs (Detail)
Leases, User Charges And Commitments - Summary Of Other Information (Detail)
Leases, User Charges And Commitments - Summary Of Weighted Average Remaining Lease Term And Discount Rates (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)
New Pronouncements
Reconciliation Of Earnings Per Share (Detail)
Revenue From Contract With Customers
Revenue From Contract With Customers (Tables)
Schedule Of Income From Discontinued Operations (Detail)
Schedule Of Outstanding Debt (Detail)
Schedule Of Outstanding Debt (Parenthetical) (Detail)
Schedule Of Total Operating And Investing Cash Flows Of Discontinued Operations (Detail)
Summarizes The Preliminary Allocation Of Total Consideration To Assets Acquired And Liabilities Assumed (Detail)
Summary Of Disaggregated Revenue By Business Line (Detail)
Summary Of Total Purchase Price Allocated To Net Assets Acquired (Detail)
Unaudited Pro Forma Consolidated Results Of Operations (Detail)

Material Contracts, Statements, Certifications & more

Hub Group, Inc. provided additional information to their SEC Filing as exhibits

Ticker: HUBG
CIK: 940942
Form Type: 10-Q Quarterly Report
Accession Number: 0001564590-19-016011
Submitted to the SEC: Mon May 06 2019 12:47:31 PM EST
Accepted by the SEC: Mon May 06 2019
Period: Sunday, March 31, 2019
Industry: Arrangement Of Transportation Of Freight And Cargo

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