hubg-10qa_20170630.htm

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

 

FORM 10-Q/A

(Amendment No. 1)

 

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES AND EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2017 or

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from           to          

Commission file number:  0-27754

 

HUB GROUP, INC.

(Exact name of registrant as specified in its charter)

 

 

Delaware

 

36-4007085

(State or other jurisdiction of

incorporation or organization)

 

(I.R.S. Employer

Identification No.)

2000 Clearwater Drive

Oak Brook, Illinois 60523

(Address, including zip code, of principal executive offices)

(630) 271-3600

(Registrant’s telephone number, including area code)

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes      No  

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes      No  

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company.  See definition of “large accelerated filer”, “accelerated filer”, “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.  (Check one):

Large Accelerated Filer

 

Accelerated Filer

 

Non-Accelerated Filer

 

Smaller Reporting Company

Emerging Growth Company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.   

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes      No  

On July 25, 2017, the registrant had 33,471,682 outstanding shares of Class A common stock, par value $.01 per share, and 662,296 outstanding shares of Class B common stock, par value $.01 per share.

 


 


Explanatory Note

 

Hub Group, Inc. is filing this Amendment No. 1 to its Quarterly Report on Form 10-Q for the quarter ended June 30, 2017 (“Form 10-Q”) to add a date to the Section 906 certification in Exhibit 32.1.

 

 

 

 

 


 

HUB GROUP, INC.

INDEX

 

 

Page

PART I.  Financial Information:

 

Consolidated Balance Sheets – June 30, 2017 (unaudited) and December 31, 2016

4

Unaudited Consolidated Statements of Income and Comprehensive Income – Six Months Ended June 30, 2017 and 2016

5

Unaudited Consolidated Statements of Cash Flows – Six Months Ended June 30, 2017 and 2016

6

Notes to Unaudited Consolidated Financial Statements

7

Management’s Discussion and Analysis of Financial Condition and Results of Operations

15

Quantitative and Qualitative Disclosures about Market Risk

23

Controls and Procedures

24

PART II.  Other Information

24

 

 

 

 

3


 

HUB GROUP, INC.

CONSOLIDATED BALANCE SHEETS

(in thousands, except share amounts)

 

 

June 30,

 

 

December 31,

 

 

2017

 

 

2016

 

ASSETS

(unaudited)

 

 

 

 

 

CURRENT ASSETS:

 

 

 

 

 

 

 

Cash and cash equivalents

$

151,739

 

 

$

127,404

 

Accounts receivable trade, net

 

448,916

 

 

 

473,608

 

Accounts receivable other

 

2,786

 

 

 

4,331

 

Prepaid taxes

 

3,648

 

 

 

294

 

Prepaid expenses and other current assets

 

12,165

 

 

 

16,653

 

TOTAL CURRENT ASSETS

 

619,254

 

 

 

622,290

 

 

 

 

 

 

 

 

 

Restricted investments

 

23,285

 

 

 

20,877

 

Property and equipment, net

 

440,838

 

 

 

438,594

 

Other intangibles, net

 

11,196

 

 

 

11,844

 

Goodwill, net

 

262,266

 

 

 

262,376

 

Other assets

 

6,931

 

 

 

4,278

 

TOTAL ASSETS

$

1,363,770

 

 

$

1,360,259

 

 

 

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS' EQUITY

 

 

 

 

 

 

 

CURRENT LIABILITIES:

 

 

 

 

 

 

 

Accounts payable trade

$

262,529

 

 

$

266,555

 

Accounts payable other

 

25,404

 

 

 

21,070

 

Accrued payroll

 

20,913

 

 

 

36,223

 

Accrued other

 

43,277

 

 

 

46,013

 

Current portion of capital lease

 

2,733

 

 

 

2,697

 

Current portion of long term debt

 

47,582

 

 

 

45,163

 

TOTAL CURRENT LIABILITIES

 

402,438

 

 

 

417,721

 

 

 

 

 

 

 

 

 

Long term debt

 

106,141

 

 

 

115,529

 

Non-current liabilities

 

24,807

 

 

 

23,595

 

Long term portion of capital lease

 

9,141

 

 

 

10,576

 

Deferred taxes

 

171,417

 

 

 

164,659

 

 

 

 

 

 

 

 

 

STOCKHOLDERS' EQUITY:

 

 

 

 

 

 

 

Preferred stock, $.01 par value;  2,000,000 shares authorized;  no shares issued or outstanding in 2017 and 2016

-

 

 

-

 

Common stock

 

 

 

 

 

 

 

Class A:  $.01 par value;  97,337,700 shares authorized and 41,224,792 shares issued in 2017 and 2016; 33,433,910 shares outstanding in 2017 and 33,192,982 shares outstanding in 2016

 

412

 

 

 

412

 

Class B:  $.01 par value; 662,300 shares authorized; 662,296 shares issued and outstanding in 2017 and 2016

 

7

 

 

 

7

 

Additional paid-in capital

 

168,443

 

 

 

173,565

 

Purchase price in excess of predecessor basis, net of tax benefit of $10,306

 

(15,458

)

 

 

(15,458

)

Retained earnings

 

755,439

 

 

 

735,563

 

Accumulated other comprehensive loss

 

(181

)

 

 

(273

)

Treasury stock; at cost, 7,790,882 shares in 2017 and 8,031,810 shares in 2016

 

(258,836

)

 

 

(265,637

)

TOTAL STOCKHOLDERS' EQUITY

 

649,826

 

 

 

628,179

 

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY

$

1,363,770

 

 

$

1,360,259

 

See notes to unaudited consolidated financial statements.

 

 

 

4


 

HUB GROUP, INC.

UNAUDITED CONSOLIDATED STATEMENTS OF INCOME

AND COMPREHENSIVE INCOME

(in thousands, except per share amounts)

 

 

Three Months

 

 

Six Months

 

 

Ended June 30,

 

 

Ended June 30,

 

 

2017

 

 

2016

 

 

2017

 

 

2016

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenue

$

924,513

 

 

$

855,557

 

 

$

1,817,961

 

 

$

1,661,416

 

Transportation costs

 

823,196

 

 

 

741,067

 

 

 

1,615,059

 

 

 

1,438,539

 

Gross margin

 

101,317

 

 

 

114,490

 

 

 

202,902

 

 

 

222,877

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Costs and expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Salaries and benefits

 

45,038

 

 

 

43,602

 

 

 

88,217

 

 

 

87,465

 

Agent fees and commissions

 

17,038

 

 

 

18,360

 

 

 

35,031

 

 

 

35,262

 

General and administrative

 

20,114

 

 

 

16,083

 

 

 

40,938

 

 

 

32,727

 

Depreciation and amortization

 

2,549

 

 

 

2,148

 

 

 

4,961

 

 

 

4,283

 

Total costs and expenses

 

84,739

 

 

 

80,193

 

 

 

169,147

 

 

 

159,737

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating income

 

16,578

 

 

 

34,297

 

 

 

33,755

 

 

 

63,140

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other income (expense):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense

 

(1,032

)

 

 

(857

)

 

 

(2,130

)

 

 

(1,767

)

Interest and dividend income

 

200

 

 

 

120

 

 

 

330

 

 

 

181

 

Other, net

 

-

 

 

 

216

 

 

 

194

 

 

 

1,152

 

Total other expense

 

(832

)

 

 

(521

)

 

 

(1,606

)

 

 

(434

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income before provision for income taxes

 

15,746

 

 

 

33,776

 

 

 

32,149

 

 

 

62,706

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Provision for income taxes

 

6,204

 

 

 

13,105

 

 

 

12,273

 

 

 

24,069

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income

$

9,542

 

 

$

20,671

 

 

$

19,876

 

 

$

38,637

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other comprehensive income:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Foreign currency translation adjustments

 

28

 

 

 

(54

)

 

 

92

 

 

 

(53

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total comprehensive income

$

9,570

 

 

$

20,617

 

 

$

19,968

 

 

$

38,584

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic earnings per common share

$

0.29

 

 

$

0.61

 

 

$

0.60

 

 

$

1.12

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Diluted earnings per common share

$

0.29

 

 

$

0.61

 

 

$

0.60

 

 

$

1.12

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic weighted average number of shares outstanding

 

33,220

 

 

 

33,944

 

 

 

33,213

 

 

 

34,541

 

Diluted weighted average number of shares outstanding

 

33,262

 

 

 

34,027

 

 

 

33,318

 

 

 

34,575

 

See notes to unaudited consolidated financial statements.

 

 

 

 

5


 

HUB GROUP, INC.

UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

 

 

Six Months Ended June 30,

 

 

2017

 

 

2016

 

Cash flows from operating activities:

 

 

 

 

 

 

 

    Net Income

$

19,876

 

 

$

38,637

 

    Adjustments to reconcile net income to net cash provided by operating activities:

 

 

 

 

 

 

 

       Depreciation and amortization

 

25,288

 

 

 

21,426

 

       Deferred taxes

 

7,713

 

 

 

7,777

 

       Compensation expense related to share-based compensation plans

 

4,972

 

 

 

4,245

 

       Loss (gain) on sale of assets

 

307

 

 

 

(255

)

       Excess tax benefits from share based compensation

 

-

 

 

 

132

 

       Changes in operating assets and liabilities:

 

 

 

 

 

 

 

          Restricted investments

 

(2,408

)

 

 

1,117

 

          Accounts receivable, net

 

26,240

 

 

 

(12,826

)

          Prepaid taxes

 

(3,352

)

 

 

(2,977

)

          Prepaid expenses and other current assets

 

4,493

 

 

 

2,685

 

          Other assets

 

(2,653

)

 

 

561

 

          Accounts payable

 

307

 

 

 

24,740

 

          Accrued expenses

 

(18,013

)

 

 

(14,031

)

          Non-current liabilities

 

368

 

 

 

1,211

 

            Net cash provided by operating activities

 

63,138

 

 

 

72,442

 

 

 

 

 

 

 

 

 

Cash flows from investing activities:

 

 

 

 

 

 

 

   Proceeds from sale of equipment

 

2,356

 

 

 

1,148

 

   Purchases of property and equipment

 

(29,593

)

 

 

(25,217

)

            Net cash used in investing activities

 

(27,237

)

 

 

(24,069

)

 

 

 

 

 

 

 

 

Cash flows from financing activities:

 

 

 

 

 

 

 

   Proceeds from issuance of debt

 

16,149

 

 

 

13,274

 

   Repayments of long term debt

 

(23,118

)

 

 

(16,180

)

   Stock tendered for payments of withholding taxes

 

(3,293

)

 

 

(2,379

)

   Purchase of treasury stock

 

-

 

 

 

(85,000

)

   Capital lease payments

 

(1,399

)

 

 

(1,297

)

   Excess tax benefits from share-based compensation

 

-

 

 

 

(359

)

            Net cash used in financing activities

 

(11,661

)

 

 

(91,941

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

   Effect of exchange rate changes on cash and cash equivalents

 

95

 

 

 

(31

)

 

 

 

 

 

 

 

 

Net increase (decrease) in cash and cash equivalents

 

24,335

 

 

 

(43,599

)

Cash and cash equivalents beginning of the period

 

127,404

 

 

 

207,749

 

Cash and cash equivalents end of the period

$

151,739

 

 

$

164,150

 

 

 

 

 

 

 

 

 

Supplemental disclosures of cash paid for:

 

 

 

 

 

 

 

     Interest

$

2,176

 

 

$

1,762

 

     Income taxes

$

10,743

 

 

$

22,399

 

 

See notes to unaudited consolidated financial statements.

 

 

 

6


 

HUB GROUP, INC.

NOTES TO UNAUDITED

CONSOLIDATED FINANCIAL STATEMENTS

 

 

NOTE 1.

Interim Financial Statements

Our accompanying unaudited consolidated financial statements of Hub Group, Inc. (“we”, “us” or “our”) have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission.  Certain information and footnote disclosures normally included in annual financial statements have been omitted pursuant to those rules and regulations.  However, we believe that the disclosures contained herein are adequate to make the information presented not misleading.

The financial statements reflect, in our opinion, all material adjustments (which include only normal recurring adjustments) necessary to fairly present our financial position as of June 30, 2017 and results of operations for the six months ended June 30, 2017 and 2016.

These unaudited consolidated financial statements and notes thereto should be read in conjunction with the consolidated financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2016.  Results of operations in interim periods are not necessarily indicative of results to be expected for a full year due partially to seasonality.

 

 

NOTE 2.

Business Segments

We report two distinct business segments.  The first segment is Mode, which includes the Mode Transportation, LLC (“Mode LLC”) business we acquired on April 1, 2011.  The second segment is Hub, which is all business other than Mode.

Hub offers comprehensive intermodal, truck brokerage and logistics services.  Our employees operate the freight through a network of operating centers located in the United States, Canada and Mexico.  Each operating center is strategically located in a market with a significant concentration of shipping customers and one or more railheads.  Hub has full time employees located throughout the United States, Canada and Mexico.

Mode LLC has Independent Business Owners (“IBOs”) who sell and operate the business throughout North America, as well as sales only agents.  Mode LLC also has a company managed operation and corporate offices in Dallas, TX, a temperature protected services division, Temstar, located in Oak Brook, IL and corporate offices in Memphis, TN.

Mode LLC markets and operates its freight transportation services, consisting of intermodal, truck brokerage and logistics, primarily through agents who enter into contractual arrangements with Mode LLC.

The following is a summary of operating results and certain other financial data for our business segments (in thousands):

 

 

Three Months

 

 

Three Months

 

 

Ended June 30, 2017

 

 

Ended June 30, 2016

 

 

 

 

 

 

 

 

Inter-

 

Hub

 

 

 

 

 

 

 

 

Inter-

 

Hub

 

 

 

 

 

 

 

 

Segment

 

Group

 

 

 

 

 

 

 

 

Segment

 

Group

 

 

Hub

 

Mode

 

Elims

 

Total

 

 

Hub

 

Mode

 

Elims

 

Total

 

Revenue

$

705,208

 

$

243,051

 

$

(23,746

)

$

924,513

 

 

$

648,523

 

$

231,924

 

$

(24,890

)

$

855,557

 

Transportation costs

 

632,651

 

 

214,291

 

 

(23,746

)

 

823,196

 

 

 

565,448

 

 

200,509

 

 

(24,890

)

 

741,067

 

Gross margin

 

72,557

 

 

28,760

 

 

-

 

 

101,317

 

 

 

83,075

 

 

31,415

 

 

-

 

 

114,490

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Costs and expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Salaries and benefits

 

41,569

 

 

3,469

 

 

-

 

 

45,038

 

 

 

39,787

 

 

3,815

 

 

-

 

 

43,602

 

Agent fees and commissions

 

14

 

 

17,024

 

 

-

 

 

17,038

 

 

 

13

 

 

18,347

 

 

-

 

 

18,360

 

General and administrative

 

18,331

 

 

1,783

 

 

-

 

 

20,114

 

 

 

14,226

 

 

1,857

 

 

-

 

 

16,083

 

Depreciation and amortization

 

2,249

 

 

300

 

 

-

 

 

2,549

 

 

 

1,830

 

 

318

 

 

-

 

 

2,148

 

Total costs and expenses

 

62,163

 

 

22,576

 

 

-

 

 

84,739

 

 

 

55,856

 

 

24,337

 

 

-

 

 

80,193

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating income

$

10,394

 

$

6,184

 

$

-

 

$

16,578

 

 

$

27,219

 

$

7,078

 

$

-

 

$

34,297

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Capital Expenditures

$

22,937

 

$

31

 

$

-

 

$

22,968

 

 

$

20,314

 

$

10

 

$

-

 

$

20,324

 

 

 

7


 

The following tables summarize our revenue by segment and business line (in thousands) for the quarter ended June 30:

 

 

Three Months

 

 

Three Months

 

 

Ended June 30, 2017

 

 

Ended June 30, 2016

 

 

 

 

 

 

 

 

Inter-

 

Hub

 

 

 

 

 

 

 

 

Inter-

 

Hub

 

 

 

 

 

 

 

 

Segment

 

Group

 

 

 

 

 

 

 

 

Segment

 

Group

 

 

Hub

 

Mode

 

Elims

 

Total

 

 

Hub

 

Mode

 

Elims

 

Total

 

Intermodal

$

451,593

 

$

112,119

 

$

(12,866

)

$

550,846

 

 

$

438,133

 

$

116,963

 

$

(22,168

)

$

532,928

 

Truck brokerage

 

104,980

 

 

82,891

 

 

(310

)

 

187,561

 

 

 

83,140

 

 

81,374

 

 

(475

)

 

164,039

 

Logistics

 

148,635

 

 

48,041

 

 

(10,570

)

 

186,106

 

 

 

127,250

 

 

33,587

 

 

(2,247

)

 

158,590

 

Total revenue

$

705,208

 

$

243,051

 

$

(23,746

)

$

924,513

 

 

$

648,523

 

$

231,924

 

$

(24,890

)

$

855,557

 

 

The following is a summary of operating results and certain other financial data for our business segments (in thousands):

 

 

Six Months

 

 

Six Months

 

 

Ended June 30, 2017

 

 

Ended June 30, 2016

 

 

 

 

 

 

 

 

Inter-

 

Hub

 

 

 

 

 

 

 

 

Inter-

 

Hub

 

 

 

 

 

 

 

 

Segment

 

Group

 

 

 

 

 

 

 

 

Segment

 

Group

 

 

Hub

 

Mode

 

Elims

 

Total

 

 

Hub

 

Mode

 

Elims

 

Total

 

Revenue

$

1,382,340

 

$

484,925

 

$

(49,304

)

$

1,817,961

 

 

$

1,263,751

 

$

440,755

 

$

(43,090

)

$

1,661,416

 

Transportation costs

 

1,237,978

 

 

426,385

 

 

(49,304

)

 

1,615,059

 

 

 

1,101,522

 

 

380,107

 

 

(43,090

)

 

1,438,539

 

Gross margin

 

144,362

 

 

58,540

 

 

-

 

 

202,902

 

 

 

162,229

 

 

60,648

 

 

-

 

 

222,877

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Costs and expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Salaries and benefits

 

81,164

 

 

7,053

 

 

-

 

 

88,217

 

 

 

79,883

 

 

7,582

 

 

-

 

 

87,465

 

Agent fees and commissions

 

31

 

 

35,000

 

 

-

 

 

35,031

 

 

 

27

 

 

35,235

 

 

-

 

 

35,262

 

General and administrative

 

36,810

 

 

4,128

 

 

-

 

 

40,938

 

 

 

28,948

 

 

3,779

 

 

-

 

 

32,727

 

Depreciation and amortization

 

4,357

 

 

604

 

 

-

 

 

4,961

 

 

 

3,644

 

 

639

 

 

-

 

 

4,283

 

Total costs and expenses

 

122,362

 

 

46,785

 

 

-

 

 

169,147

 

 

 

112,502

 

 

47,235

 

 

-

 

 

159,737

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating income

$

22,000

 

$

11,755

 

$

-

 

$

33,755

 

 

$

49,727

 

$

13,413

 

$

-

 

$

63,140

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Capital Expenditures

$

29,562

 

$

31

 

$

-

 

$

29,593

 

 

$

24,945

 

$

272

 

$

-

 

$

25,217

 

 

 

As of June 30, 2017

 

 

As of December 31, 2016

 

 

 

 

 

 

 

 

Inter-

 

Hub

 

 

 

 

 

 

 

 

Inter-

 

Hub

 

 

 

 

 

 

 

 

Segment

 

Group

 

 

 

 

 

 

 

 

Segment

 

Group

 

 

Hub

 

Mode

 

Elims

 

Total

 

 

Hub

 

Mode

 

Elims

 

Total

 

Total assets

$

1,201,733

 

$

169,700

 

$

(7,663

)

$

1,363,770

 

 

$

1,178,110

 

$

191,374

 

$

(9,225

)

$

1,360,259

 

Goodwill

 

232,877

 

 

29,389

 

 

-

 

 

262,266

 

 

 

232,987

 

 

29,389

 

 

-

 

 

262,376

 

 

The following tables summarize our revenue by segment and business line (in thousands) for the six months ended June 30:

 

 

Six Months

 

 

Six Months

 

 

Ended June 30, 2017

 

 

Ended June 30, 2016

 

 

 

 

 

 

 

 

Inter-

 

Hub

 

 

 

 

 

 

 

 

Inter-

 

Hub

 

 

 

 

 

 

 

 

Segment

 

Group

 

 

 

 

 

 

 

 

Segment

 

Group

 

 

Hub

 

Mode

 

Elims

 

Total

 

 

Hub

 

Mode