SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 8-K
CURRENT REPORT PURSUANT
TO SECTION 13
OR 15(D) OF THE
SECURITIES AND EXCHANGE
ACT OF 1934
Date of Report (Date of Earliest Event Reported) October 20, 2004
HUB GROUP, INC.
(Exact name of
registrant as specified in its charter)
DELAWARE
(State or Other Jurisdiction of
Incorporation)
| 0-27754 | 36-4007085 |
|---|---|
| (Commission File Number) | (I.R.S. Employer Identification No.) |
3050 Highland Parkway,
Suite 100
Downers Grove,
Illinois 60515
(Address, including zip
code, of principal executive offices)
(630) 271-3600
(Registrant’s
telephone number, including area code)
NOT APPLICABLE
(Former Name or Former Address, If Changed Since Last Report)
Check
the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the
filing obligation of the registrant any of the following provisions:
[ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
ITEM 2.02 RESULTS OF OPERATIONS AND FINANCIAL CONDITION
On October 20, 2004 Hub Group, Inc. issued a press release announcing its third quarter 2004 operating results. The press release is furnished as Exhibit 99.1 to this Form 8-K.
ITEM 9.01 FINANCIAL STATEMENTS AND EXHIBITS(a) Not Applicable.
(b) Not Applicable.
(c)
A list of exhibits filed herewith is contained on the Exhibit
Index which immediately precedes such exhibits and is
incorporated herein by reference.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly authorized this report to be signed on its behalf by the undersigned thereunto duly authorized.
HUB GROUP, INC.
| DATE: October 21, 2004 | /s/ Thomas M. White |
| By: Thomas M. White | |
| Its: Senior Vice President | |
| Chief Financial Officer and Treasurer | |
| (Principal Financial Officer) |
EXHIBIT INDEX
Exhibit No.
| 99.1 | Press release issued on October 20, 2004 announcing operating results for Hub Group, Inc. for the third quarter 2004. |
Microsoft Word 10.0.6612;Hub Group, Inc. Reports Record Third Quarter 2004 Results
DOWNERS GROVE, IL, October 20 — 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 www.hubgroup.com or individual investors can access the audio webcast at www.fulldisclosure.com and institutional investors can access the webcast at 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 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.
SOURCE: HUB GROUP, INC.
CONTACT: Erin Koops of Hub Group, Inc., +1-630-271-3656
HUB GROUP, INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share amounts)
| Three Months Ended September 30, |
Nine Months 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 and per share amounts)
| September 30, 2004 |
December 31, 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 | ||
| Prepaid 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 activity: | |||||
| 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 on 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 extinquishment 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 extinquishment 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 extinquishment 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.