Press Release

Hub Group, Inc. Announces Results for the Fourth Quarter and Year Ended December 31, 2002


Downers Grove, IL, February 20, 2003 - Hub Group, Inc. (NASDAQ: HUBG) reported results of operations for the quarter and year ended December 31, 2002.

For the quarter, revenue totaled $346.1 million for an increase of 4.1% compared to 2001. Intermodal revenue was $235.9 million, which represents an increase of 5.3% from the prior year. Brokerage revenue increased 3.9% from $56.7 million in 2001 to $58.9 million in 2002. Supply chain solutions logistics revenue increased 13.3% to $29.3 million in 2002. Hub Group Distribution Services (HGDS) revenue decreased 14.4% to $22.0 million in 2002.

Net income for the fourth quarter was $1.4 million compared to $1.2 million in 2001. For the year, net income was $1.5 million versus $0.4 million the prior year. Earnings per share were $0.18 in the fourth quarter compared to $0.15 per share in 2001. Earnings per share were $0.19 for the year compared to $0.06 in 2001.

Revenue for the year increased 1.2% to $1,335.7 million in 2002 from $1,319.3 million in 2001. Intermodal revenue was $914.6 million, a 1.1% increase from the prior year. The Company estimates that the West Coast port lock out negatively impacted revenue by between $7.0 and $9.0 million during the fourth quarter of 2002. Brokerage revenue increased 8.3% to $230.9 million primarily due to increased volume. Supply chain solutions logistics revenue increased by 21.1% to $109.3 million from $90.2 million in 2001 as a result of adding new customers and increased business from existing customers. Hub has begun an initial engagement with The Home Depot to manage inbound truckload freight. At the end of the fourth quarter there were 22 supply chain solution projects in various stages of implementation and 35 prospects in various stages of development consisting of 17 large cap companies and 18 mid cap companies. Hub Group Distribution Services revenue decreased 27.1% to $80.9 million in 2002 from $110.9 million in 2001. HGDS experienced a significant revenue decline due to the loss of a large logistics customer as well as a temporary decrease in their installation business from a large customer during the first and second quarter of 2002.

Gross margin as a percentage of revenue decreased to 12.4% from 12.9% for the quarter and to 12.2% in 2002 from 13.6% in 2001. The decrease is related to changes in customer mix, competitive pricing and increased transportation costs as compared to 2001.

Salaries and benefits decreased 1.6% to $93.5 million in 2002 from $95.0 million in 2001. As a percentage of revenue, salaries and benefits decreased to 7.0% from 7.2% in 2001. The decrease as a percentage of revenue is due to a decrease in headcount and increase in revenue.

In the fourth quarter of 2002, the Company recorded a restructuring charge of approximately $0.9 million consisting of severance and a liability for the remaining lease obligation related to a facility that has been closed.

Selling, general and administrative expenses decreased 12.7% to $46.8 million in 2002 from $53.6 million in 2001. The decrease is primarily attributed to a $4.7 million write-off in 2001 associated with the bankruptcy and forced liquidation of a Korean steamship line customer and a decrease in costs associated with the outsourcing of the data center.

While the Company's 2001 results included goodwill amortization of $5.7 million, the Company ceased amortizing goodwill as of January 1, 2002 in accordance with Statement of Financial Accounting Standards No. 142.

Hub's Chairman, Phillip C. Yeager, stated "Our positive results in the second half of last year indicate that the cost reduction programs that have been put in place are taking hold. We have reestablished our historical focus on cost control and are well positioned to generate profitable growth."

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, 2001, and the quarterly reports on Form 10-Q for the quarters ended March 31, 2002, June 30, 2002 and September 30, 2002. 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, airfreight and related logistics and distribution services. The Company operates through a network of over 30 offices throughout the United States, Canada and Mexico.

HUB GROUP, INC.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except per share amounts)

 
 

Unaudited

 

 

Three Months

 

     

Ended December 31,

Years Ended December 31,

     
2002
2001
2002
2001
2000
   
 
 
 
 
 
 
               

Revenue

$ 346,100

$ 332,327

$ 1,335,660

$ 1,319,331

$ 1,382,880

     

Transportation costs

 303,174

289,302

1,172,848

1,140,368

1,215,113

   

Gross margin

           42,926

43,025

162,812

178,963

167,767

     

Costs and expenses:

 

Salaries and benefits

23,237

23,319

93,476

94,982

96,201

 

Selling, general and administrative

11,879

12,072

46,824

53,613

46,233

 

Depreciation and amortization of property and equipment

3,512

2,561

11,371

10,678

6,097

 

Amortization of goodwill

-  

1,436

-  

5,741

5,741

 

Impairment of property and equipment

       -  

       -  

       -     

  3,401

         -   

   

Total costs and expenses

38,628

39,388

151,671

168,415

154,272

     
   

Operating income

   4,298

    3,637

    11,141

    10,548

    13,495

     

Other income (expense):

 

Interest expense

(2,146)

(2,552)

(9,453)

(10,345)

(11,532)

 

Interest income

64

171

230

693

779

 

Other, net

     (178)

        191

        97

           6

         136

   

Total other expense

(2,260)

(2,190)

(9,126)

(9,646)

(10,617)

     

Income before minority interest and provision for income taxes

  2,038

     1,447

         2,015

        902

        2,878

     

Minority interest

       -  

      (529)

          (524)

         151

      (1,669)

     

Income before provision for income taxes

2,038

1,976

2,539

751

4,547

     

Provision for income taxes

      632

        810

        1,041

        308

         1,864

     

Net income (loss)

 $ 1,406

 $ 1,166

 $ 1,498

 $ 443

 $ 2,683

     

Basic earnings (loss) per common share

 $ 0.18

 $ 0.15

 $ 0.19

 $ 0.06

 $ 0.35

Diluted earnings per common share

 $ 0.18

 $ 0.15

 $ 0.19

 $ 0.06

 $ 0.35

     

Basic weighted average number of shares outstanding

    7,709

     7,709

     7,709

      7,708

      7,708

Diluted weighted average number of shares outstanding

     7,717

     7,714

      7,714

     7,716

     7,716

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