Hub Group, Inc. Reports Record Fourth Quarter 2004 Results and Stock Buy Back Plan
DOWNERS GROVE, Ill., Feb 08, 2005 /PRNewswire-FirstCall via COMTEX/ -- Hub Group, Inc. (Nasdaq: HUBG) today reported record net income for the quarter ended December 31, 2004 of $7.0 million. This represents a 164% increase in fourth quarter net income versus the fourth quarter of 2003. Hub Group's diluted earnings per share of $0.66 for the quarter ended December 31, 2004 represents an increase of 100% compared to last year's fourth quarter diluted earnings per share of $0.33 on 31% higher average diluted shares outstanding in the 2004 period. Hub's gross margin grew 10.4% to $46.1 million as compared to $41.7 million in the fourth quarter of 2003. As a percentage of revenue, gross margin increased to 11.9% this quarter from 11.6% in 2003 due to more effective yield management. Costs and expenses decreased 2.7% in the fourth quarter of 2004 to $34.0 million compared to $34.9 million in the fourth quarter of 2003, reflecting the benefits from the Company's improved operating efficiencies and cost reduction efforts.
Hub's revenue grew by 7.9% to $387.4 million as compared to $359.2 million in the fourth quarter of 2003 due primarily to price increases, mix and fuel surcharges. Fourth quarter intermodal revenue increased 3.2% to $270.3 million. Truckload brokerage revenue increased 15.5% to $61.6 million this quarter. Fourth quarter logistics revenue increased 32.4% to $39.0 million. Hub Group Distribution Services (HGDS) revenue increased to $16.5 million in the fourth quarter 2004 from $14.4 million in the same period last year.
FULL YEAR 2004
Revenue for the year was $1,426.8 million compared to $1,359.6 million in 2003, or an increase of 4.9%. Gross margin grew 5.2% to $179.5 million compared to 2003. Gross margin as a percentage of sales remained constant at 12.6% of sales.
Costs and expenses decreased 5.1% in 2004 to $139.0 million compared to $146.4 million in 2003, decreasing to 9.7% of revenue versus 10.8% in 2003. In addition, debt extinguishment costs of $7.3 million were recorded in the third quarter of 2004 due primarily to the $6.8 million in pre-payment penalties associated with the early extinguishment of debt as well as the write-off of deferred financing costs. Interest expense decreased to $4.3 million compared to $7.7 million in 2003 due to the lower average debt balance in 2004 as compared to 2003.
Net income was $17.3 million for 2004 or $1.84 diluted earnings per share compared to last year's net income of $8.4 million or $1.07 diluted earnings per share. Adjusted net income, excluding the effect of the prepayment penalty and the write off of the deferred financing costs associated with the repayment of debt, was $21.5 million for 2004 or $2.29 diluted earnings per share compared to last year's net income of $8.4 million or $1.07 diluted earnings per share.
As of December 31, 2004, the Company had $16.8 million of cash compared to zero at December 31, 2003. Debt was zero at year end 2004 versus $75.0 million at 2003 year end.
Note: A tabular reconciliation of the differences between the adjusted financial results for the twelve-month period ended December 31, 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.
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 2004. Our disciplined focus on yield management, operating efficiency improvements and cost management has translated into record results in a challenging environment."
STOCK BUY-BACK PLAN AND STOCK SPLIT
The Board of Directors has authorized the purchase of up to $30.0 million of Class A common stock. Hub intends to make repurchases from time to time as market and business conditions warrant. Repurchases may be made in the open market or in privately negotiated transactions. Hub intends to hold the repurchased shares in treasury for future use. This program replaces Hub's previous plan to repurchase up to 500,000 shares of Class A common stock originally announced in November 2003 pursuant to which 116,700 shares had been repurchased.
In addition, the Board approved a 2 for 1 stock split. This split is subject to the approval by Hub's shareholders of an increase in the authorized number of shares of Class A common stock. Hub intends to seek shareholder approval at its annual shareholders' meeting which is scheduled for May 4, 2005. If approved by Hub's shareholders, the stock split will be in the form of a 100 percent stock dividend, which will be tax-free to shareholders. The Board of Directors intends to set a record date and a payment date for the stock dividend following receipt of shareholder approval.
FULL YEAR 2005
Given the current operating environment, we are comfortable that the earnings for 2005 will be within the analysts' range of $2.50 to $2.67 per diluted share. These estimates do not reflect the impact of a stock buy-back or stock split.
CONFERENCE CALL
Hub will hold a conference call at 10:00 a.m. Eastern Time (9:00 a.m. Central Time) on Wednesday, February 9, 2005 to discuss its fourth quarter and full year 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) 237-9752. The conference call participant code is 72380302. 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 2005 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 reports on Form 10-Q for the periods ended March 31, 2004, June 30, 2004 and September 30, 2004 as well as our Prospectus dated June 28, 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)
Unaudited
Three Months Years Ended
Ended December 31, December 31,
2004 2003 2004 2003
Revenue $387,428 $359,196 $1,426,806 $1,359,614
Transportation costs 341,377 317,485 1,247,258 1,188,932
Gross margin 46,051 41,711 179,548 170,682
Costs and expenses:
Salaries and benefits 21,623 21,291 88,193 89,980
Selling, general and
administrative 9,599 10,718 39,218 45,650
Depreciation and
amortization of property
and equipment 2,752 2,892 11,539 10,757
Total costs and expenses 33,974 34,901 138,950 146,387
Operating income 12,077 6,810 40,598 24,295
Other income (expense):
Interest expense (308) (1,711) (4,276) (7,691)
Interest income 95 43 260 160
Debt extinguishment expenses - - (7,296) -
Other, net 128 72 712 131
Total other expense (85) (1,596) (10,600) (7,400)
Income before provision for
income taxes 11,992 5,214 29,998 16,895
Provision for income taxes 5,037 2,576 12,719 8,465
Net Income $6,955 $2,638 $17,279 $8,430
Basic earnings per common
share $0.70 $0.34 $1.96 $1.09
Diluted earnings per common
share $0.66 $0.33 $1.84 $1.07
Basic weighted average number
of shares outstanding 9,895 7,723 8,800 7,712
Diluted weighted average number
of shares outstanding 10,471 8,019 9,389 7,865
HUB GROUP, INC.
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except share amounts)
December 31, December 31,
2004 2003
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $16,806 $-
Accounts receivable
Trade, net 141,078 125,754
Other 7,996 9,472
Deferred taxes 4,226 4,676
Prepaid expenses and other current assets 4,747 4,578
TOTAL CURRENT ASSETS 174,853 144,480
PROPERTY AND EQUIPMENT, net 19,487 27,855
GOODWILL, net 215,175 215,175
OTHER ASSETS 889 1,017
TOTAL ASSETS $410,404 $388,527
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable
Trade $115,819 $117,790
Other 1,660 2,555
Accrued expenses
Payroll 19,542 14,157
Other 15,100 11,592
Current portion of long-term debt - 8,017
TOTAL CURRENT LIABILITIES 152,121 154,111
LONG-TERM DEBT, EXCLUDING CURRENT PORTION - 67,017
DEFERRED TAXES 31,347 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; 9,635,657 shares
issued and outstanding in 2004;
7,410,700 issued and 7,390,500
outstanding in 2003 96 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 182,365 115,820
Purchase price in excess of predecessor
basis, net of tax benefit of $10,306 (15,458) (15,458)
Retained earnings 64,611 47,332
Unearned compensation (4,685) (4,448)
Treasury stock, at cost (0 shares in
2004 and 20,200 shares in 2003) - (292)
TOTAL STOCKHOLDERS' EQUITY 226,936 143,035
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY $410,404 $388,527
HUB GROUP, INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
Years Ended
December 31,
2004 2003
Cash flows from operating activities:
Net income $17,279 $8,430
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization of property
and equipment 11,828 10,797
Deferred taxes 12,752 7,672
Compensation expense related to
restricted stock 2,148 180
Gain on sale of assets (294) (59)
Other assets 128 457
Changes in working capital:
Accounts receivable, net (13,849) 5,225
Prepaid expenses and other current
assets (168) 154
Accounts payable (2,866) (7,861)
Accrued expenses 8,893 6,503
Net cash provided by operating
activities 35,851 31,498
Cash flows from investing activities:
Purchases of property and equipment, net (3,166) (4,384)
Net cash used in investing activities (3,166) (4,384)
Cash flows from financing activities:
Proceeds from stock offering 55,871 -
Proceeds from stock options exercised 7,394 232
Purchase of treasury stock (4,110) (292)
Net payments on revolver (6,000) (19,000)
Payments of long term debt (69,034) (8,054)
Net cash used in financing activities (15,879) (27,114)
Net increase in cash and cash equivalents 16,806 -
Cash and cash equivalents beginning of period - -
Cash and cash equivalents end of period $16,806 $-
Supplemental disclosures of cash flow
information
Cash paid for:
Interest $2,995 $6,355
HUB GROUP, INC.
RECONCILIATION OF AS REPORTED FINANCIAL
RESULTS TO AS ADJUSTED FINANCIAL RESULTS
(in thousands, except per share amounts)
Year Ended December 31, 2004
As Reported Adjustments As Adjusted
Operating Income $40,598 $- $40,598
Interest (expense) (4,276) - (4,276)
Interest income 260 - 260
Debt extinguishment expenses (7,296) (7,296) a -
Other, net 712 - 712
Income before provision for income
taxes 29,998 (7,296) 37,294
Provision for income taxes 12,719 (3,064) b 15,783
Net Income $17,279 $(4,232) $21,511
Basic earnings per common share $1.96 $(0.48) $2.44
Diluted earnings per common share $1.84 $(0.45) $2.29
Basic weighted average number of
shares outstanding 8,800 8,800 8,800
Diluted weighted average number of
shares outstanding 9,389 9,389 9,389
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%
The purpose of this reconciliation is to reflect as adjusted earnings
excluding the one time costs associated with prepaying our debt.
HUB GROUP, INC.
MODAL REVENUE SUMMARY
(in thousands)
First Second Third Fourth
Quarter Quarter Quarter Quarter Total
2004 2004 2004 2004 2004
Intermodal $236,321 $247,940 $259,958 $270,314 $1,014,533
Brokerage 50,960 56,778 56,124 61,604 225,466
Logistics 33,913 33,786 34,028 38,996 140,723
Total Core 321,194 338,504 350,110 370,914 1,380,722
HGDS 7,108 10,467 11,995 16,514 46,084
Consolidated $328,302 $348,971 $362,105 $387,428 $1,426,806
First Second Third Fourth
Quarter Quarter Quarter Quarter Total
2003 2003 2003 2003 2003
Intermodal $233,307 $234,413 $246,990 $262,013 $976,723
Brokerage 50,589 52,899 53,684 53,321 210,493
Logistics 29,917 28,472 30,766 29,446 118,601
Total Core 313,813 315,784 331,440 344,780 1,305,817
HGDS 15,471 15,866 8,044 14,416 53,797
Consolidated $329,284 $331,650 $339,484 $359,196 $1,359,614
NOTE: HGDS transferred its Pharmaceutical business to Logistics in
August 2004, resulting in an increase in Logistics revenue of
$4,315 for the year ended December 31, 2004.
SOURCE Hub Group, Inc.
Amy Lisek of Hub Group, Inc., +1-630-795-2214
http://www.prnewswire.com