Hub Group, Inc. Reports Record Earnings for the Fourth Quarter and Full Year 2005 and Provides 2006 Guidance
DOWNERS GROVE, Ill., Feb. 7 /PRNewswire-FirstCall/ -- Hub Group, Inc. (Nasdaq: HUBG) today reported record net income for the quarter ended December 31, 2005 of $10.1 million. This represents a 45% increase versus fourth quarter 2004 net income. Hub Group's diluted earnings per share for the quarter ended December 31, 2005 is $0.49. This represents an increase of 48% compared to diluted earnings per share for the quarter ended December 31, 2004 of $0.33.
Hub's revenue grew by 8.6% to $420.6 million compared to $387.4 million in the fourth quarter of 2004. Fourth quarter intermodal revenue increased 11.8% to $302.3 million. Truckload brokerage revenue increased 15.6% to $71.2 million this quarter. Fourth quarter logistics revenue decreased to $29.7 million and Hub Group Distribution Services revenue increased to $17.4 million in the fourth quarter of 2005. Gross margin grew 8.0% to $49.7 million compared to the fourth quarter of 2004.
Costs and expenses decreased 1.7% in the fourth quarter of 2005 to $33.4 million compared to $34.0 million in the fourth quarter of 2004. Other income increased to $0.3 million in 2005 from an expense of $0.1 million in 2004 due primarily to increased interest income on a higher cash balance compared to the fourth quarter of 2004.
FULL YEAR 2005
Revenue for the year was $1,531.5 million compared to $1,426.8 million in 2004, or an increase of 7.3%. Gross margin grew 5.3% to $189.0 million compared to 2004.
Costs and expenses decreased 3.1% in 2005 to $134.6 million compared to $138.9 million in 2004. Other income was $0.8 million in 2005 compared to an expense of $10.6 million in 2004 due primarily to expenses associated with the extinguishment of the private placement debt during the third quarter of 2004 and interest expense in 2004.
Net income increased 53.2% to $32.9 million for 2005 compared to last year's adjusted net income of $21.5 million. Hub Group's diluted earnings per share for the year ended December 31, 2005 is $1.59. This represents an increase of 38% compared to adjusted diluted earnings per share for the year ended December 31, 2004 of $1.15. The 2004 adjusted net income and earnings per share exclude debt extinguishment costs.
On an as-reported basis, net income for 2005 increased to $32.9 million from $17.3 million in 2004. As reported diluted earnings per share increased to $1.59 compared to $0.92 last year.
As of December 31, 2005, the Company had $36.1 million of cash compared to $16.8 million at December 31, 2004.
FULL YEAR 2006
Given the current operating environment, we are comfortable that the earnings for 2006 will be within the current analysts' range of $1.82 to $2.00 per diluted share. Our guidance assumes that our acquisition of Comtrak closes on February 28, 2006.
A tabular reconciliation of the differences between the adjusted financial results for the year 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") is contained in the summary financial statements attached to this press release.
All share and per share amounts have been adjusted to give retroactive effect to the stock split which occurred in the second quarter of 2005. Certain prior year and quarter amounts have been reclassified to conform to the current year presentation.
CONFERENCE CALL
Hub will hold a conference call at 5:00 p.m. Eastern Time (4:00 p.m. Central Time) on Tuesday, February 7, 2006 to discuss its fourth quarter and full year 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 Investors link at Hub Group's Web site at http://www.hubgroup.com or individual investors can access the audio webcast at http://www.earnings.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 40679457. The call will be limited to 60 minutes, including questions and answers.
An audio replay will be available through the Investors 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, 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, 2004 and Form 10-Q for the periods ended March 31, 2005, June 30, 2005 and September 30, 2005. Hub Group assumes no liability to update any such forward-looking statements.
HUB GROUP, INC. UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF INCOME (in thousands, except per share amounts) Three Months Years Ended Ended December 31, December 31, 2005 2004 2005 2004 Revenue $420,611 $387,428 $1,531,499 $1,426,806 Transportation costs 370,869 341,377 1,342,476 1,247,258 Gross margin 49,742 46,051 189,023 179,548 Costs and expenses: Salaries and benefits 22,561 21,623 88,182 88,193 General and administrative 8,556 9,599 36,850 39,218 Depreciation and amortization of property and equipment 2,274 2,752 9,611 11,539 Total costs and expenses 33,391 33,974 134,643 138,950 Operating income 16,351 12,077 54,380 40,598 Other income (expense): Interest expense (146) (308) (638) (4,276) Interest income 370 95 971 260 Debt extinguishment expenses - - - (7,296) Other, net 63 128 474 712 Total other income (expense) 287 (85) 807 (10,600) Income before provision for income taxes 16,638 11,992 55,187 29,998 Provision for income taxes 6,575 5,037 22,241 12,719 Net income $10,063 $6,955 $32,946 $17,279 Basic earnings per common share $0.51 $0.35 $1.65 $0.98 Diluted earnings per common share $0.49 $0.33 $1.59 $0.92 Basic weighted average number of shares outstanding 19,820 19,790 19,930 17,600 Diluted weighted average number of shares outstanding 20,425 20,942 20,696 18,778 HUB GROUP, INC. UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS (in thousands, except share amounts) December 31, December 31, 2005 2004 ASSETS CURRENT ASSETS: Cash and cash equivalents $36,133 $16,806 Restricted investments 1,387 - Accounts receivable Trade, net 156,864 140,762 Other 10,603 8,313 Deferred taxes - current - 4,667 Prepaid expenses and other current assets 4,007 4,746 Prepaid taxes 6,040 - TOTAL CURRENT ASSETS 215,034 175,294 PROPERTY AND EQUIPMENT, net 13,524 19,487 GOODWILL, net 215,175 215,175 OTHER ASSETS 685 889 TOTAL ASSETS $444,418 $410,845 LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES: Accounts payable Trade $117,712 $115,819 Other 3,735 1,660 Accrued expenses Payroll 22,092 19,542 Other 19,390 15,100 Deferred taxes 960 - TOTAL CURRENT LIABILITIES 163,889 152,121 DEFERRED TAXES 38,454 31,788 STOCKHOLDERS' EQUITY: Preferred stock, $.01 par value, 2,000,000 shares authorized; - - no shares issued or outstanding in 2005 and 2004 Common stock Class A: $.01 par value; 47,337,700 shares authorized; 20,281,248 shares issued and 19,650,094 shares outstanding in 2005; 19,933,610 shares issued and outstanding in 2004 197 199 Class B: $.01 par value; 662,300 shares authorized; 662,296 shares issued and outstanding in 2005 and 2004 7 7 Additional paid-in capital 183,733 182,262 Purchase price in excess of predecessor basis, net of tax benefit of $10,306 (15,458) (15,458) Retained earnings 97,557 64,611 Unearned compensation (6,259) (4,685) Treasury stock, at cost (631,154 shares in 2005) (17,702) - TOTAL STOCKHOLDERS' EQUITY 242,075 226,936 TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $444,418 $410,845 HUB GROUP, INC. UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands) Years Ended December 31, 2005 2004 Cash flows from operating activities: Net income $32,946 $17,279 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization of property and equipment 10,025 11,828 Deferred taxes 20,816 12,752 Compensation expense related to restricted stock 2,177 2,148 Gain on sale of assets (271) (294) Other assets 204 128 Changes in working capital: Restricted investments (1,387) - Accounts receivable, net (18,392) (13,849) Prepaid expenses and other current assets 739 (168) Prepaid taxes (6,040) - Accounts payable 3,968 (2,866) Accrued expenses 6,840 8,893 Net cash provided by operating activities 51,625 35,851 Cash flows from investing activities: Proceeds from sale of property and equipment 579 383 Purchases of property and equipment (4,370) (3,549) Net cash used in investing activities (3,791) (3,166) Cash flows from financing activities: Proceeds from stock offering, net - 55,871 Proceeds from stock options exercised 4,732 7,394 Purchase of treasury stock (33,239) (4,110) Net payments on revolver - (6,000) Payments of long term debt - (69,034) Net cash used in financing activities (28,507) (15,879) Net increase in cash and cash equivalents 19,327 16,806 Cash and cash equivalents beginning of period 16,806 - Cash and cash equivalents end of period $36,133 $16,806 Supplemental disclosures of cash flow information Cash paid for: Interest $923 $2,995 Income taxes $6,811 $591 HUB GROUP, INC. MODAL REVENUE SUMMARY (in thousands) First Second Third Fourth Quarter Quarter Quarter Quarter Total 2005 2005 2005 2005 2005 Intermodal $234,133 $259,275 $284,052 $302,339 $1,079,799 Brokerage 59,755 68,016 67,590 71,185 266,546 Logistics 35,518 34,531 35,793 29,693 135,535 Total Core 329,406 361,822 387,435 403,217 1,481,880 HGDS 10,452 9,808 11,965 17,394 49,619 Consolidated $339,858 $371,630 $399,400 $420,611 $1,531,499 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 NOTE: HGDS transferred its Pharmaceutical business to Logistics in August 2004, resulting in an increase in Logistics revenue of $4,331 in first quarter 2005, $3,384 in second quarter 2005 and $484 in third quarter 2005. 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 $0.98 $(0.24) $1.22 Diluted earnings per common share $0.92 $(0.23) $1.15 Basic weighted average number of shares outstanding 17,600 17,600 17,600 Diluted weighted average number of shares outstanding 18,778 18,778 18,778 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- 02/07/2006 /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: FIN TRN SU: ERN ERP CCA CT-JR -- CGTU022 -- 3567 02/07/2006 16:05 EST http://www.prnewswire.com