Hub Group, Inc. Reports Record First Quarter 2006 Earnings
DOWNERS GROVE, Ill., April 19 /PRNewswire-FirstCall/ -- Hub Group, Inc. (Nasdaq: HUBG) today reported record income from continuing operations for the quarter ended March 31, 2006 of $8.5 million. This represents an 80% increase in first quarter income versus the first quarter of 2005. Hub Group's diluted earnings per share from continuing operations of $0.41 for the first quarter 2006 represents an increase of 86% compared to last year's first quarter of $0.22. Hub's gross margin as a percent of revenue has increased to 13.3% in 2006 from 12.2% in 2005 due to a focus on margin improvement. Results for the quarter include one month of operations of Comtrak, a drayage company acquired on February 28, 2006.
Hub's revenue grew by 8.3% to $356.7 million compared to $329.4 million in the first quarter of 2005. First quarter intermodal revenue increased 11.3% to $260.7 million, which includes the addition of Comtrak. Truckload brokerage revenue increased 16.4% to $69.5 million this quarter. First quarter logistics revenue decreased 25.3% to $26.5 million.
Hub Group Distribution Services (HGDS) is currently a wholly owned subsidiary of Hub Group. As previously disclosed, in November 2004, Hub Group entered into a Purchase Option and Right of First Refusal Agreement and gave a third party the option to buy HGDS. This individual has given Hub Group written notice that he intends to exercise this option within the next sixty days. Although there can be no assurances that the transaction will in fact close, the Company anticipates it will be completed in the second quarter of 2006. The comparative results of HGDS have been reported as "discontinued operations" in the Company's Consolidated Financial Statements. These discontinued operations generated $0.03 of diluted earnings per share in the first quarter of 2006 and 2005.
Commenting on the results, David P. Yeager, Vice-Chairman and Chief Executive Officer of Hub Group stated, "We are very pleased with the quarter. The divesture of our HGDS installation business furthers our strategy of focusing on our core transportation business and our acquisition of Comtrak strengthens our intermodal franchise."
FULL YEAR 2006
Given the current operating environment, the Company is comfortable that the earnings from continuing operations for 2006 will be within the analysts' range of $1.90 to $2.02 per diluted share.
Hub will hold a conference call at 5:00 p.m. Eastern Time (4:00 p.m. Central Time) on Wednesday, April 19, 2006 to discuss its first quarter results.
Hosting the conference call will be David P. Yeager, Vice-Chairman and CEO and Thomas M. White, Senior Vice-President, Chief Financial Officer and Treasurer.
This call is being webcast by Thomson/CCBN and can be accessed through the Investor Relations link at Hub Group's Web site at http://www.hubgroup.com or individual investors can access the audio webcast at http://www.fulldisclosure.com and institutional investors can access the webcast at http://www.streetevents.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 call ten minutes early by dialing (800) 659-2037. The conference call participant code is 62583642. The call will be limited to 60 minutes, including questions and answers.
An audio replay will be available through the Investor Relations link on the Company's Web site at http://www.hubgroup.com. This replay will be available for 30 days.
ABOUT HUB GROUP: Hub Group, Inc. is a leading asset light freight transportation management company providing comprehensive intermodal, truckload brokerage and logistics and distribution services. The Company operates through a network of over 30 offices throughout the United States, Canada and Mexico.
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, 2005. Hub Group assumes no liability to update any such forward-looking statements.
HUB GROUP, INC. UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands, except per share amounts) Three Months Ended March 31, 2006 2005 Revenue $356,745 $329,405 Transportation costs 309,175 289,297 Gross margin 47,570 40,108 Costs and expenses: Salaries and benefits 22,854 20,610 General and administrative 9,158 9,226 Depreciation and amortization of property, equipment and intangibles 1,859 2,222 Total costs and expenses 33,871 32,058 Operating income 13,699 8,050 Other income (expense): Interest expense (127) (207) Interest income 446 200 Other, net 105 14 Total other income 424 7 Income from continuing operations before provision for income taxes 14,123 8,057 Provision for income taxes 5,649 3,344 Income from continuing operations 8,474 4,713 Discontinued operations: Income from discontinued operations of HGDS before provision for income taxes 1,094 1,085 Provision for income taxes 438 450 Income from discontinued operations 656 635 Net Income $9,130 $5,348 Basic earnings per common share Income from continuing operations $0.42 $0.23 Income from discontinued operations 0.03 0.03 Net Income $0.45 $0.26 Diluted earnings per common share Income from continuing operations $0.41 $0.22 Income from discontinued operations 0.03 0.03 Net Income $0.44 $0.25 Basic weighted average number of shares outstanding 20,098 20,282 Diluted weighted average number of shares outstanding 20,651 21,158 HUB GROUP, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (in thousands, except share amounts) March 31, December 31, 2006 2005 (Unaudited) ASSETS CURRENT ASSETS: Cash and cash equivalents $17,314 $36,133 Restricted investments 1,973 1,387 Accounts receivable Trade, net 139,641 147,004 Other 9,943 10,603 Prepaid taxes 5,777 6,040 Prepaid expenses and other current assets 5,683 3,860 Assets of discontinued operations 15,690 17,855 TOTAL CURRENT ASSETS 196,021 222,882 Property and Equipment, net 25,315 12,767 Other Intangibles, net 7,837 - Goodwill, net 220,168 208,150 Other Assets 325 619 TOTAL ASSETS $449,666 $444,418 LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES: Accounts payable Trade $108,440 $114,094 Other 6,767 3,668 Accrued expenses Payroll 11,873 20,909 Other 20,443 18,917 Deferred Taxes 687 960 Liabilities of discontinued operations 3,916 5,341 TOTAL CURRENT LIABILITIES 152,126 163,889 DEFERRED TAXES 39,694 38,454 STOCKHOLDERS' EQUITY: Preferred stock, $.01 par value, 2,000,000 shares authorized; no shares issued or outstanding in 2006 and 2005 - - Common stock Class A: $.01 par value; 47,337,700 shares authorized; 20,281,248 shares issued and 19,995,823 outstanding in 2006; 20,281,248 shares issued and 19,650,094 outstanding in 2005 203 203 Class B: $.01 par value; 662,300 shares authorized; 662,296 shares issued and outstanding in 2006 and 2005 7 7 Additional paid-in capital 174,364 183,733 Purchase price in excess of predecessor basis, net of tax benefit of $10,306 (15,458) (15,458) Retained earnings 106,687 97,557 Unearned compensation - (6,259) Treasury stock, at cost (285,425 shares in 2006 and 631,154 shares in 2005) (7,957) (17,708) TOTAL STOCKHOLDERS' EQUITY 257,846 242,075 TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $449,666 $444,418 HUB GROUP, INC. UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands) Three Months Ended March 31, 2006 2005 Cash flows from operating activities: Income from continuing operations $8,474 $4,713 Adjustments to reconcile income from continuing operations to net cash provided by operating activities: Depreciation and amortization of property, equipment and intangibles 2,175 2,332 Deferred taxes 917 2,558 Compensation expense related to share based compensation plans 771 520 Loss (Gain) on sale of assets 26 (12) Other assets 299 511 Changes in working capital net of effects of purchase transaction: Restricted investments (586) (661) Accounts receivable, net 18,172 2,256 Prepaid taxes (125) - Prepaid expenses and other current assets (1,628) 1,011 Accounts payable (5,090) 381 Accrued expenses (8,372) (11,727) Net cash provided by operating activities 15,033 1,882 Cash flows from investing activities: Proceeds from sale of equipment 26 12 Purchases of property and equipment, net (1,047) (932) Cash used in acquisition of Comtrak, Inc (40,491) - Net cash used in investing activities (41,512) (920) Cash flows from financing activities: Proceeds from stock options exercised 1,141 2,184 Purchase of treasury stock (38) (5,599) Excess tax benefits from share-based compensation 4,767 - Net cash provided by (used in) financing activities 5,870 (3,415) Cash flows from operating activities of discontinued operations 1,822 1,245 Cash flows used in investing activities of discontinued operations (32) (28) Net cash provided by discontinued operations 1,790 1,217 Net decrease in cash and cash equivalents (18,819) (1,236) Cash and cash equivalents beginning of period 36,133 16,806 Cash and cash equivalents end of period $17,314 $15,570 Supplemental disclosures of cash flow information Cash paid for: Income taxes $91 $333
SOURCE Hub Group, Inc. -0- 04/19/2006 /CONTACT: Renee Jurczyk of Hub Group, Inc., +1-630-271-3611/ /Web site: http://www.hubgroup.com/ (HUBG) CO: Hub Group, Inc. ST: Illinois IN: TRN SU: ERN ERP CCA CS-CM -- CGW041 -- 2107 04/19/2006 16:05 EDT http://www.prnewswire.com