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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_____________________

Form 8-K
_____________________

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of Earliest Event Reported): April 26, 2017  

HUB GROUP, INC.
(Exact name of registrant as specified in its charter)

Delaware
(State or Other Jurisdiction of Incorporation)

 

0-2775436-4007085
(Commission File Number)(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)

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 under 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))

 

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (17 CFR §230.405) or Rule 12b-2 of the Securities Exchange Act of 1934 (17 CFR §240.12b-2). 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. [   ]

 
 

Item 2.02. Results of Operations and Financial Condition.

On April 26, 2017, Hub Group, Inc. issued a press release announcing its first quarter 2017 operating results. The press release is furnished as Exhibit 99.1 to this Form 8-K.

Item 7.01. Regulation FD Disclosure.

On April 27, 2017, Hub Group, Inc. will make available on its website an Investor Presentation, which includes business information and first quarter 2017 results. The presentation can be accessed by going to www.hubgroup.com, selecting the “Investors” tab, and then selecting the “Presentations” tab. The presentation will be available on the company’s website until the next regular update.

In accordance with General Instruction B.2 of Form 8-K, the information under this heading shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, except as shall be expressly set forth in such a filing.

Item 9.01. Financial Statements and Exhibits.

 (a)Not Applicable.
 (b)Not Applicable.
 (c)Not Applicable.
 (d)A list of exhibits filed herewith is contained on the Exhibit Index which immediately precedes such exhibits and is incorporated herein by reference.

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 HUB GROUP, INC.
   
  
Date: April 26, 2017By: /s/ Terri A. Pizzuto        
  Terri Pizzuto
  Executive Vice President, Chief Financial Officer and Treasurer
  

EXHIBIT INDEX

Exhibit No.  
   
99.1 Press release, issued on April 26, 2017, announcing first quarter 2017 operating results for Hub Group, Inc.

EdgarFiling

Exhibit 99.1

Hub Group, Inc. Reports First Quarter 2017 Results

OAK BROOK, Ill., April 26, 2017 (GLOBE NEWSWIRE) -- Hub Group, Inc. (NASDAQ:HUBG) announced first quarter 2017 net income of $10.3 million, or diluted earnings per share of $0.31 vs. first quarter 2016 net income of $18.0 million, or $0.51 per diluted share.

Revenue for the current quarter was $893.4 million, compared with $805.9 million for the first quarter 2016. The Hub segment revenue increased 10% and the Mode segment revenue increased 16%. 
Operating income for the current quarter decreased to $17.2 million vs. $28.8 million for the first quarter 2016. The Hub segment operating income declined 48% and the Mode segment operating income decreased 12%.  Earnings for the first quarter of 2017 include one-time costs of approximately $1.5 million, or $0.03 per share, for due diligence and severance expenses.

The primary factors negatively affecting earnings in the first quarter lie within our intermodal business line.  We are experiencing a soft pricing environment due primarily to excess truck capacity and extraordinarily aggressive intermodal pricing, particularly in the West.  At the same time, our rail transportation costs continue to increase, further compressing earnings.

  
Segment Information:
  
Hub 
· First quarter 2017 Segment Revenue: $677.1 million, up 10%
· First quarter 2017 Segment Operating Income: $11.6 million, down 48%
  

The Hub segment’s revenue increased 10% to $677 million as a result of our diversified services and our customer-centric approach. 

First quarter intermodal revenue increased 3% to $425 million reflecting volume growth of 1% and an increase in fuel revenue.  Declines in freight rates and changes in freight mix partially offset these increases. Intermodal gross margin decreased from the prior year because of lower prices and rail transportation cost increases. 

Truck brokerage revenue increased 31% to $107 million this quarter compared to last year.  Truck brokerage handled 19% more loads while fuel, price and mix combined were up 12%.  Truck brokerage gross margin was up due to growth with both new and existing customers. 

First quarter Unyson Logistics revenue increased 22% to $146 million due primarily to growth with new customers on-boarded last year and in the first quarter of this year.  Unyson’s pipeline is exceeding the growth levels we experienced in 2016.  Logistics gross margin increased primarily due to new customers.

Costs and expenses increased $3.6 million to $60.2 million in the first quarter of 2017 compared to $56.6 million in the first quarter of 2016.  Salaries and benefits decreased $0.5 million due to a decrease in bonus expense partially offset by higher headcount and annual employee raises.  General and administrative costs are $3.8 million higher because of an increase in IT costs including costs for our new transportation management and our human resource systems and professional fees related to due diligence for potential acquisitions. 

Operating income was $11.6 million compared to $ 22.5 million last year. 

  
Mode 
· First quarter 2017 Segment Revenue: $241.9 million, up 16%
· First quarter 2017 Segment Operating Income:$5.6 million, down 12%
  

The Mode segment’s revenue increased 16% to $242 million compared to first quarter 2016.   Revenue consisted of $122 million in intermodal which was up 9%, $78 million in truck brokerage which was up 16% and $42 million in logistics which was up 43%. 

Gross margin increased $0.5 million year over year due primarily to an increase in logistics gross margin resulting from new business.

Mode’s costs and expenses increased $1.3 million compared to last year primarily because of increased agent commissions.   

Operating income was $5.6 million compared to $6.3 million last year.

2017 Outlook
We expect that our full-year 2017 diluted earnings per share will range from $1.60 to $1.80.  We project that our 2017 capital expenditures will range from $90 million to $100 million.

“Despite the current challenging market conditions, we remain committed to our strategy to increase market share by providing multi-modal solutions to our clients.  We are making strategic investments in our people and technology to strengthen our competitive position in the market,” said Dave Yeager, Hub’s Chairman and CEO.  “In addition, we continue to search for acquisitions that will further diversify our service offerings.”

Cash Flow and Capitalization:

At March 31, 2017, we had total debt outstanding of $161 million on various debt instruments compared to $174 million at December 31, 2016.

Our capital expenditures for the quarter totaled $6.6 million related primarily to IT projects. At March 31, 2017, we had cash and cash equivalents of $154 million.

CONFERENCE CALL

Hub will hold a conference call at 5:00 p.m. Eastern Time on Wednesday, April 26, 2017, to discuss its first quarter 2017 results.

Hosting the conference call will be Dave Yeager, Chairman and Chief Executive Officer.  Also participating on the call will be Don Maltby, President and Chief Operating Officer, and Terri Pizzuto, Executive Vice-President and Chief Financial Officer.

This call is being webcast and can be accessed through the Investors link on Hub Group’s Web site at www.hubgroup.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 register at http://www.yourconferencecenter.com/r.aspx?p=1&a=UNDNzOZtewTjkx . Registrants will be issued a passcode and PIN to use when dialing into the live call which will provide quickest access to the conference.  You may register at any time, including up to and after the call start time.  On the day of the call, dial (888) 206-4064 approximately ten minutes prior to the scheduled call time; enter the participant passcode and PIN received during registration.   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 www.hubgroup.com. This replay will be available for 30 days.

On April 27, 2017, the company will make available on its website an Investor Presentation, which includes updated business information and first quarter results, among other things. The presentation can be accessed by going to www.hubgroup.com, selecting the “Investors” tab, and then selecting the “Presentations” tab. The presentation will be available on the company’s website until the next regular update.

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, and should be viewed with caution. Forward-looking statements may contain words such as “expects”, “expected”, “believe”, “projected”, “estimate”, or similar words, and are based on management's experience and perception of historical trends, current conditions, and anticipated future developments, as well as other factors believed to be appropriate. We believe these statements and the assumptions and estimates contained in this release are reasonable based on information that is currently available to us. 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 intermodal costs, intermodal prices (including the timing of any changes), the timing of any acquisitions and expenses relating thereto, the future performance of Hub’s Intermodal, Truck Brokerage and Unyson Logistics business lines, the future performance of Mode, the amount and timing of strategic investments by Hub, shipping volumes, anticipated intermodal margins, customers encountering adverse economic conditions, the amount and timing of operating expenses and 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, 2016.  Hub Group assumes no liability to update any such forward-looking statements.

  
  
 HUB GROUP, INC.
 CONSOLIDATED STATEMENTS OF EARNINGS
 (in thousands, except per share amounts)
 (unaudited)
             
        Three Months Ended March 31,
         2017   2016 
         % of  % of
        AmountRevenue AmountRevenue
 Revenue   $893,448 100.0% $805,859 100.0%
             
 Transportation costs    791,863 88.6%  697,472 86.6%
  Gross margin    101,585 11.4%  108,387 13.4%
             
 Costs and expenses:        
  Salaries and benefits    43,179 4.8%  43,863 5.4%
  Agent fees and commissions   17,993 2.0%  16,901 2.1%
  General and administrative    20,824 2.4%  16,644 2.1%
  Depreciation and amortization   2,412 0.3%  2,136 0.3%
   Total costs and expenses   84,408 9.5%  79,544 9.9%
             
 Operating income    17,177 1.9%  28,843 3.5%
             
 Other income (expense):        
  Interest expense    (1,098)-0.1%  (911)-0.1%
  Interest and dividend income   130 0.0%  61 0.0%
  Other, net    194 0.0%  936 0.1%
   Total other (expense) income   (774)-0.1%  86 0.0%
             
 Income before provision for income taxes   16,403 1.8%  28,929 3.5%
             
 Provision for income taxes    6,069 0.7%  10,964 1.3%
             
 Net income   $10,334 1.1% $17,965 2.2%
             
             
             
 Basic earnings per common share  $0.31   $0.51  
             
 Diluted earnings per common share  $0.31   $0.51  
             
 Basic weighted average number of shares outstanding   33,205    35,137  
 Diluted weighted average number of shares outstanding   33,373    35,122  
             


HUB GROUP, INC. 
FINANCIAL INFORMATION BY SEGMENT 
(in thousands) 
(unaudited) 
               
       Three Months 
        Ended March 31, 2017 
    Hub Mode Inter-Segment Elims Hub Group Total 
Revenue   $677,132 $241,874 $(25,558) $893,448 
               
Transportation costs    605,326  212,095  (25,558)  791,863 
 Gross margin    71,806  29,779  -   101,585 
               
Costs and expenses:           
 Salaries and benefits    39,596  3,583  -   43,179 
 Agent fees and commissions   17  17,976  -   17,993 
 General and administrative    18,479  2,345  -   20,824 
 Depreciation and amortization   2,109  303  -   2,412 
  Total costs and expenses   60,201  24,207  -   84,408 
               
Operating income   $11,605 $5,572 $-  $17,177 
               

 

HUB GROUP, INC.
FINANCIAL INFORMATION BY SEGMENT
(in thousands)
(unaudited)
               
       Three Months 
       Ended March 31, 2016 
       Hub Mode Inter-Segment Elims Hub Group Total 
Revenue   $615,227 $208,832 $(18,200) $805,859 
               
Transportation costs    536,073  179,599  (18,200)  697,472 
 Gross margin    79,154  29,233  -   108,387 
               
Costs and expenses:           
 Salaries and benefits    40,096  3,767  -   43,863 
 Agent fees and commissions   13  16,888  -   16,901 
 General and administrative    14,722  1,922  -   16,644 
 Depreciation and amortization   1,815  321  -   2,136 
  Total costs and expenses   56,646  22,898  -   79,544 
               
Operating income   $22,508 $6,335 $-  $28,843 
               

 

HUB GROUP, INC. 
CONSOLIDATED BALANCE SHEETS 
(in thousands, except share data) 
(unaudited) 
          
        March 31,
 December 31,
 
         2017  2016 
            
ASSETS        
 CURRENT ASSETS:      
  Cash and cash equivalents $154,000  $127,404  
  Accounts receivable trade, net  418,357   473,608  
  Accounts receivable other  4,984   4,331  
  Prepaid taxes   469   294  
  Prepaid expenses and other current assets 13,863   16,653  
    TOTAL CURRENT ASSETS  591,673   622,290  
            
 Restricted investments  22,313   20,877  
 Property and equipment, net  443,207   438,594  
 Other intangibles, net   11,520   11,844  
 Goodwill, net   262,321   262,376  
 Other assets   3,905   4,278  
     TOTAL ASSETS $1,334,939  $1,360,259  
            
            
LIABILITIES AND STOCKHOLDERS' EQUITY    
 CURRENT LIABILITIES:      
  Accounts payable trade $249,224  $266,555  
  Accounts payable other  25,228   21,070  
  Accrued payroll   12,886   36,223  
  Accrued other   54,626   46,013  
  Current portion of capital lease  2,708   2,697  
  Current portion of long term debt  44,750   45,163  
    TOTAL CURRENT LIABILITIES 389,422   417,721  
            
 Long term debt   104,160   115,529  
 Non-current liabilities   24,329   23,595  
 Long term capital lease  9,838   10,576  
 Deferred taxes   169,161   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; 33,474,911 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  164,560   173,565  
  Purchase price in excess of predecessor basis, net of tax    
  benefit of $10,306   (15,458)  (15,458) 
  Retained earnings   745,897   735,563  
  Accumulated other comprehensive loss (209)  (273) 
  Treasury stock; at cost, 7,749,881 shares in 2017    
   and 8,031,810 shares in 2016  (257,180)  (265,637) 
   TOTAL STOCKHOLDERS' EQUITY 638,029   628,179  
    TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY$1,334,939  $1,360,259  
            

 

HUB GROUP, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
          
         Three Months Ended March 31,
          2017   2016 
            
            
Cash flows from operating activities:     
 Net income   $10,334  $17,965 
 Adjustments to reconcile net income    
  to net cash provided by operating activities:    
   Depreciation and amortization   12,522   10,639 
   Deferred taxes    5,279   2,383 
   Compensation expense related to share-based compensation plans  2,609   2,181 
   Gain on sale of assets   (48)  (83)
   Excess tax benefits from share-based compensation  -   (30)
 Changes in operating assets and liabilities:    
   Restricted investments   (1,436)  1,685 
   Accounts receivable, net   54,600   21,332 
   Prepaid taxes    (171)  26 
   Prepaid expenses and other current assets  2,795   1,409 
   Other assets    373   400 
   Accounts payable   (13,175)  5,421 
   Accrued expenses   (25,990)  (13,517)
   Non-current liabilities   12   481 
     Net cash provided by operating activities  47,704   50,292 
            
Cash flows from investing activities:     
 Proceeds from sale of equipment   1,127   592 
 Purchases of property and equipment  (6,625)  (4,893)
    Net cash used in investing activities  (5,498)  (4,301)
            
Cash flows from financing activities:     
 Repayments of long term debt   (11,782)  (8,132)
 Stock tendered for payments of withholding taxes  (3,157)  (2,208)
 Purchase of treasury stock   -   (42,368)
 Capital lease payments   (727)  (643)
 Excess tax benefits from share-based compensation  -   (134)
    Net cash used in financing activities  (15,666)  (53,485)
            
            
 Effect of exchange rate changes on cash and cash equivalents  56   1 
            
Net increase (decrease) in cash and cash equivalents  26,596   (7,493)
Cash and cash equivalents beginning of period  127,404   207,749 
Cash and cash equivalents end of period $154,000  $200,256 
            

CONTACT: Maralee Volchko of Hub Group, Inc., +1-630-271-3745