Press Release

Hub Group, Inc. Reports Record Third Quarter 2004 Results

DOWNERS GROVE, Ill., Oct. 20 /PRNewswire-FirstCall/ -- Hub Group, Inc. (Nasdaq: HUBG) today reported adjusted net income for the quarter ended September 30, 2004 of $7.8 million. This excludes $4.2 million of after-tax costs ($7.3 million pre-tax) related to the Company's early extinguishment of 9.14% debt following the successful offering of 1,800,000 shares of common stock. This represents a 170% increase in third quarter adjusted net income versus the third quarter of 2003. Hub Group's adjusted diluted earnings per share of $0.75 for the quarter ended September 30, 2004 represents an increase of 103% compared to last year's third quarter diluted earnings per share of $0.37 on 31% higher average diluted shares outstanding in the 2004 period. Hub's gross margin (net revenue) grew 10.5% to $48.0 million as compared to $43.5 million in the third quarter of 2003. As a percentage of revenue, gross margin increased to 13.3% this quarter from 12.8% in 2003 due to more effective yield management. The Company paid off $62 million in debt during the quarter and is now debt-free.

Note: A tabular reconciliation of the differences between the adjusted financial results for the three-month and nine-month periods ended September 30, 2004 and the Company's financial results determined in accordance with generally accepted accounting principles in the United States of America ("GAAP") are contained in the summary financial statements attached to this press release.

On an as-reported basis, net income for the third quarter of 2004 increased to $3.6 million from $2.9 million in the same quarter last year. As reported diluted earnings per share decreased to $0.34 compared to last year's third quarter of $0.37 on 31% higher average diluted shares outstanding in the 2004 period.

Transportation-related revenue, generated by the Company's intermodal, truckload brokerage and logistics business units, increased 5.6% to $350.1 million in the third quarter of 2004 compared to the third quarter of 2003 due primarily to price increases and fuel surcharges. Third quarter intermodal revenue increased 5.9% to $254.4 million. Truckload brokerage revenue increased 4.5% to $56.1 million this quarter. Third quarter logistics revenue increased 5.4% to $39.6 million. Hub Group Distribution Services (HGDS) revenue increased to $12.0 million in the third quarter 2004 from $8.0 million in the same period last year due to an increase in installation business offset partially by a decrease in pharmaceutical revenue which was transferred to our logistics unit. Hub's total revenue grew 6.7% to $362.1 million as compared to $339.5 million in the third quarter of 2003.

Costs and expenses decreased 6% in the third quarter of 2004 to $34.1 million compared to $36.3 million in the third quarter of 2003, reflecting the benefits from the Company's cost reduction efforts. Debt extinguishment costs were $7.3 million in the third quarter of 2004 due primarily to the $6.8 million in pre-payment penalties associated with the early extinguishment of debt. Interest expense decreased to $0.6 million compared to $1.9 million in the third quarter of 2003 due to the lower average debt balance in 2004 as compared to 2003.

Commenting on the results, David P. Yeager, Vice-Chairman and Chief Executive Officer of Hub Group stated, "We are very pleased and proud of our results in the third quarter. Despite the fact that our intermodal volume declined 2%, our top line and bottom line have improved and our balance sheet is stronger than ever. This demonstrates that our focus on yield management is delivering results."

FOURTH QUARTER EARNINGS GUIDANCE

Given the current operating environment, we are comfortable that the earnings for the fourth quarter will be within the analysts' range of $0.52 to $.55 per diluted share.

PUBLIC OFFERING

As previously announced, Hub's public offering of Class A common stock priced at $33.00 per share, before underwriting discounts and commissions, and closed on July 2, 2004. Net proceeds to the Company of $55.9 million from the sale of 1,800,000 shares were used to prepay $50.0 million of 9.14% debt and the related pre-payment penalty on July 6, 2004. As a result of the pre- payment, the Company recorded a pre-tax charge of $7.3 million (after-tax of approximately $4.2 million), consisting of $6.8 million in pre-payment penalties and a $0.5 million write-off of related deferred financing costs.

CONFERENCE CALL: Hub Group, Inc. (Nasdaq: HUBG) will hold a conference call at 10:00 a.m. Eastern Time (9:00 a.m. Central Time) on Thursday, October 21, 2004, to discuss its third quarter 2004 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) 510-0146. The conference call participant code is 34545895. 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 non-asset based 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 prior year amounts have been reclassified to conform to the current year presentation.

CERTAIN FORWARD-LOOKING STATEMENTS: Statements in this press release that are not historical, including statements about Hub Group's or management's fourth quarter 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, 2003, our report on Form 10-Q for the period ended March 31, 2004, our Prospectus dated June 28, 2004 and our report on Form 10-Q for the period ended June 30, 2004. 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             Nine Months
                            Ended September 30,      Ended September 30,
                             2004         2003        2004         2003

    Revenue               $362,105     $339,484   $1,039,377   $1,000,418

    Transportation costs   314,077      296,023      905,881      871,447
      Gross margin          48,028       43,461      133,496      128,971

    Costs and expenses:
      Salaries and
       benefits             21,995       22,508       66,570       68,689
      Selling, general
       and administrative    9,023       11,041       29,618       34,932
      Depreciation and
       amortization of
       property and
       equipment             3,052        2,716        8,786        7,865
        Total costs and
         expenses           34,070       36,265      104,974      111,486

          Operating income  13,958        7,196       28,522       17,485

    Other income (expense):
      Interest expense        (571)      (1,885)      (3,968)      (5,981)
      Interest income           56           43          165          118
      Debt extinguishment
       expenses             (7,296)           -       (7,296)           -
      Other, net               180           46          583           59
        Total other expense (7,631)      (1,796)     (10,516)      (5,804)

    Income before provision
     for income taxes        6,327        5,400       18,006       11,681

    Provision for income
     taxes                   2,775        2,514        7,682        5,889

    Net Income              $3,552       $2,886      $10,324       $5,792

    Basic earnings per
     common share            $0.37        $0.37        $1.22        $0.75
    Diluted earnings per
     common share            $0.34        $0.37        $1.14        $0.74

    Basic weighted average
     number of shares
     outstanding             9,707        7,709        8,435        7,709
    Diluted weighted average
     number of shares
     outstanding            10,324        7,897        9,029        7,814


                               HUB GROUP, INC.
               UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
                     (in thousands, except share amounts)

                                                  September 30,  December 31,
                                                       2004          2003
      ASSETS
    CURRENT ASSETS:
      Cash and cash equivalents                           $-             $-
      Accounts receivable
        Trade, net                                   134,551        125,754
        Other                                          5,948          9,472
      Deferred taxes                                   4,676          4,676
      Prepaid expenses and other current assets        4,359          4,578
          TOTAL CURRENT ASSETS                       149,534        144,480

    PROPERTY AND EQUIPMENT, net                       21,544         27,855
    GOODWILL, net                                    215,175        215,175
    OTHER ASSETS                                         321          1,017
            TOTAL ASSETS                            $386,574       $388,527


      LIABILITIES AND STOCKHOLDERS' EQUITY
    CURRENT LIABILITIES:
      Accounts payable
        Trade                                       $110,709       $117,790
        Other                                          2,905          2,555
      Accrued expenses
        Payroll                                       16,305         14,157
        Other                                         13,200         11,592
      Current portion of long-term debt                    -          8,017
          TOTAL CURRENT LIABILITIES                  143,119        154,111


    LONG-TERM DEBT, EXCLUDING CURRENT PORTION              -         67,017
    DEFERRED TAXES                                    30,594         24,364
    STOCKHOLDERS' EQUITY:
      Preferred stock, $.01 par value, 2,000,000
       shares authorized; no shares issued or
       outstanding in 2004 and 2003                        -              -
      Common stock
        Class A: $.01 par value; 12,337,700 shares
         authorized; 9,354,977 shares issued and
         9,337,687 outstanding in 2004; 7,410,700
         issued and 7,390,500 outstanding in 2003         93             74
        Class B: $.01 par value; 662,300 shares
         authorized; 662,296 shares issued and
         outstanding in 2004 and 2003                      7              7
    Additional paid-in capital                       174,449        115,820
    Purchase price in excess of predecessor
     basis, net of tax benefit of $10,306            (15,458)       (15,458)
    Retained earnings                                 57,656         47,332
    Unearned compensation                             (3,475)        (4,448)
    Treasury stock, at cost (17,290 shares in 2004
     and 20,200 shares in 2003)                         (411)          (292)
      TOTAL STOCKHOLDERS' EQUITY                     212,861        143,035
        TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY  $386,574       $388,527


                               HUB GROUP, INC.
          UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                (in thousands)

                                                             Nine Months
                                                          Ended September 30,
                                                         2004           2003

    Cash flows from operating activities:
      Net income                                       $10,324         $5,792
      Adjustments to reconcile net income to net
       cash provided by operating activities:
        Depreciation and amortization of property
         and equipment                                   8,966          7,908
        Deferred taxes                                   7,535          5,739
        Compensation expense related to restricted
         stock                                           1,593              -
        (Gain) on sale of assets                          (248)           (60)
        Other assets                                       696           (110)
        Changes in working capital:
          Accounts receivable, net                      (5,273)           553
          Prepamd expenses and other current assets        219           (201)
          Accounts payable                              (6,731)        (4,225)
          Accrued expenses                               3,756          7,799
            Net cash provided by operating activities   20,837         23,195

    Cash flows from investing activities:
      Purchases of property and equipment, net          (2,407)        (3,173)
        Net cash used in investing activities           (2,407)        (3,173)

    Cash flows from financing activities:
      Proceeds from sale of stock, net                  55,871              -
      Proceeds from stock options exercised              3,500             22
      Purchase of treasury stock                        (2,767)             -
      Net payments on revolver                          (6,000)       (14,000)
      Payments of long term debt                       (69,034)        (6,044)
        Net cash used in financing activities          (18,430)       (20,022)

    Net increase (decrease) in cash and cash equivalents     -              -
    Cash and cash equivalents beginning of period            -              -
    Cash and cash equivalents end of period                 $-             $-

    Supplemental disclosures of cash flow information
      Cash paid for:
        Interest                                        $2,995         $4,951
        Income Taxes                                      $477             $-



                               HUB GROUP, INC.
               RECONCILIATION OF AS REPORTED FINANCIAL RESULTS
                       TO AS ADJUSTED FINANCIAL RESULTS
                   (in thousands, except per share amounts)

                                    Three Months Ended September 30, 2004
                                  As Reported     Adjustments    As Adjusted

    Operating Income                $13,958              $-       $13,958
    Interest (expense)                 (571)              -          (571)
    Interest income                      56               -            56
    Debt extinguishment expenses     (7,296)         (7,296)  a         -
    Other, net                          180               -           180
    Income before provision
     for income taxes                 6,327          (7,296)       13,623
    Provision for income taxes        2,775          (3,064)  b     5,839
    Net Income                       $3,552         $(4,232)       $7,784

    Basic earnings per
     common share                     $0.37          $(0.43)        $0.80
    Diluted earnings per
     common share                     $0.34          $(0.41)        $0.75

    Basic weighted average number
     of shares outstanding            9,707           9,707         9,707
    Diluted weighted average number
     of shares outstanding           10,324          10,324        10,324



                                     Nine Months Ended September 30, 2004
                                   As Reported     Adjustments   As Adjusted
    Operating Income                $28,522              $-       $28,522
    Interest (expense)               (3,968)              -        (3,968)
    Interest income                     165               -           165
    Debt extinguishment expenses     (7,296)         (7,296)  a         -
    Other, net                          583               -           583
    Income before provision
     for income taxes                18,006          (7,296)       25,302
    Provision for income taxes        7,682          (3,064)  b    10,746
    Net Income                      $10,324         $(4,232)      $14,556

    Basic earnings per
     common share                     $1.22          $(0.50)        $1.72
    Diluted earnings per
     common share                     $1.14          $(0.47)        $1.61

    Basic weighted average number
     of shares outstanding            8,435           8,435         8,435
    Diluted weighted average number
     of shares outstanding            9,029           9,029         9,029


    a) Fees and expenses related to our early extinguishment of 9.14% debt
        1) Pre-payment penalty of $6,804
        2) Write-off of related deferred financing costs of $492


    b) Income taxes at 42.0%

         Note: The purpose of this statement is to reflect as adjusted
         earnings excluding the one time costs associated with prepaying our
         debt.
SOURCE  Hub Group, Inc.
    -0-                             10/20/2004
    /CONTACT:  Erin Koops of Hub Group, Inc., +1-630-271-3656/
    /Web site:  http://www.hubgroup.com /
    (HUBG)

CO:  Hub Group, Inc.
ST:  Illinois
IN:  TRN
SU:  ERN CCA ERP OFR

JR-SH 
-- CGW062 --
7831 10/20/2004 16:03 EDT http://www.prnewswire.com