View:
Download DOC
Download PDF
Download XLS
 

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): July 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 July 26, 2017, Hub Group, Inc. issued a press release announcing its second 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 July 27, 2017, Hub Group, Inc. will make available on its website an Investor Presentation, which includes business information and second 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: July 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 July 26, 2017, announcing second quarter 2017 operating results for Hub Group, Inc.

EdgarFiling

EXHIBIT 99.1

Hub Group, Inc. Reports Second Quarter 2017 Results

OAK BROOK, Ill., July 26, 2017 (GLOBE NEWSWIRE) -- Hub Group, Inc. (NASDAQ:HUBG) announced second quarter 2017 net income of $9.5 million, or diluted earnings per share of $0.29 vs. second quarter 2016 net income of $20.7 million, or $0.61 per diluted share. Earnings for the second quarter of 2017 were negatively affected by margin declines across business lines and one-time costs of approximately $4.0 million, or $0.07 per share, for severance and expenses related to the acquisition of Estenson on July 1, 2017.

Revenue for the current quarter was $924.5 million, compared with $855.6 million for the second quarter 2016. The Hub segment revenue increased 9% and the Mode segment revenue increased 5%.  Operating income for the current quarter decreased to $16.6 million vs. $34.3 million for the second quarter 2016. The Hub segment operating income declined 62% and the Mode segment operating income decreased 13%.

Sequentially, our net income in the second quarter of 2017 excluding one-time costs increased $0.7 million to $12.0 million compared to net income excluding one-time costs in the first quarter of 2017 of $11.3 million.

Segment Information:

Hub

The Hub segment’s revenue increased 9% to $705 million compared to the second quarter of 2016 as a result of our success in providing multi-modal solutions to our customers.

Second quarter intermodal revenue increased 3% to $451 million reflecting volume growth of 1%, an increase in fuel revenue and more favorable mix.  Declines in freight rates partially offset these increases. Intermodal gross margin decreased from the prior year because of rail transportation cost increases and lower prices. 

Truck brokerage revenue increased 26% to $105 million this quarter compared to the same quarter of last year.  Truck brokerage handled 14% more loads while fuel, price and mix combined were up 12%.  Truck brokerage gross margin decreased primarily because of higher purchased transportation costs due to tight capacity and changes in customer mix. 

Second quarter Unyson Logistics revenue increased 17% to $149 million due primarily to growth with new customers on-boarded last year and in the first half of this year.  Unyson Logistics gross margin declined primarily due to startup costs related to new business on-boarded this quarter.  

Costs and expenses increased $6.3 million to $62.2 million in the second quarter of 2017 compared to $55.9 million in the second quarter of 2016.  Salaries and benefits increased $1.8 million due to $2.8 million of severance costs, employee raises, and higher headcount partially offset by a decrease in bonus expense. General and administrative costs are $4.1 million higher because of an increase in IT costs including costs for our transportation management system as well as a $1.2 million increase in professional fees related to the Estenson acquisition. 

Operating income was $10.4 million compared to $27.2 million last year. 

Mode

The Mode segment’s revenue increased 5% to $243 million compared to second quarter 2016.   Revenue consisted of $112 million in intermodal which was down 4%, $83 million in truck brokerage which was up 2% and $48 million in logistics which was up 43%. 

Gross margin decreased $2.7 million compared to the second quarter of 2016 due primarily to a decrease in truck brokerage and intermodal margin, partially offset by an increase in logistics gross margin. 

Mode’s costs and expenses decreased $1.8 million compared to last year primarily because of decreased agent commission.   

Operating income was $6.2 million compared to $7.1 million last year.

2017 Outlook

We expect that our full-year 2017 diluted earnings per share will range from $1.45 to $1.55.  Projected results for Estenson are included in our guidance as are the one-time costs in the first half of the year.  We estimate that our 2017 capital expenditures will range from $85 million to $95 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. Our acquisition of Estenson provides Hub a strong foundation for growth in dedicated trucking.  We continue to make strategic investments in our people and technology to strengthen our competitive position in the market,” said Dave Yeager, Hub’s Chairman and CEO.

Cash Flow and Capitalization:

At June 30, 2017, we had total debt outstanding of $166 million on various debt instruments compared to $174 million at December 31, 2016.

Our capital expenditures for the quarter totaled $23.0 million, primarily for containers and trailers. At June 30, 2017, we had cash and cash equivalents of $152 million.

CONFERENCE CALL

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

Hosting the conference call will be Dave Yeager, Chief Executive Officer.  Also participating on the call will be Don Maltby, Chief Operating Officer, and Terri Pizzuto, 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=UiRQszvGKbIdWq.
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 July 27, 2017, the company will make available on its website an Investor Presentation, which includes updated business information and second 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 and integration of any acquisitions and expenses relating thereto, the future performance of Hub’s Intermodal, Truck Brokerage, Dedicated and Unyson Logistics business lines, the future performance of Mode, the amount and timing of strategic investments by Hub, shipping volumes, anticipated intermodal, truck brokerage, and logistics 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 June 30,
     2017   2016 
      % of   % of
    Amount Revenue Amount Revenue
Revenue $  924,513  100.0% $  855,557  100.0%
           
Transportation costs    823,196  89.0%    741,067  86.6%
 Gross margin    101,317  11.0%    114,490  13.4%
           
Costs and expenses:        
 Salaries and benefits    45,038  4.9%    43,602  5.1%
 Agent fees and commissions    17,038  1.8%    18,360  2.1%
 General and administrative    20,114  2.2%    16,083  1.9%
 Depreciation and amortization    2,549  0.3%    2,148  0.3%
  Total costs and expenses    84,739  9.2%    80,193  9.4%
           
Operating income    16,578  1.8%    34,297  4.0%
           
Other income (expense):        
 Interest expense    (1,032) -0.1%    (857) -0.1%
 Interest and dividend income    200  0.0%    120  0.0%
 Other, net     -   0.0%    216  0.0%
  Total other expense    (832) -0.1%    (521) -0.1%
           
Income before provision for income taxes    15,746  1.7%    33,776  3.9%
           
Provision for income taxes    6,204  0.7%    13,105  1.5%
           
Net income $  9,542  1.0% $  20,671  2.4%
           
           
           
Basic earnings per common share $  0.29    $  0.61   
           
Diluted earnings per common share $  0.29    $  0.61   
           
Basic weighted average number of shares outstanding    33,220       33,944   
Diluted weighted average number of shares outstanding    33,262       34,027   

 

HUB GROUP, INC.
CONSOLIDATED STATEMENTS OF EARNINGS
(in thousands, except per share amounts)
(unaudited)
     
           
    Six Months Ended June 30,
     2017   2016 
      % of   % of
    Amount Revenue Amount Revenue
Revenue $  1,817,961  100.0% $  1,661,416  100.0%
           
Transportation costs    1,615,059  88.8%    1,438,539  86.6%
 Gross margin    202,902  11.2%    222,877  13.4%
           
Costs and expenses:        
 Salaries and benefits    88,217  4.8%    87,465  5.3%
 Agent fees and commissions    35,031  1.9%    35,262  2.1%
 General and administrative    40,938  2.3%    32,727  2.0%
 Depreciation and amortization    4,961  0.3%    4,283  0.2%
  Total costs and expenses    169,147  9.3%    159,737  9.6%
           
Operating income    33,755  1.9%    63,140  3.8%
           
Other income (expense):        
 Interest expense    (2,130) -0.1%    (1,767) -0.1%
 Interest and dividend income    330  0.0%    181  0.0%
 Other, net     194  0.0%    1,152  0.1%
  Total other expense    (1,606) -0.1%    (434) 0.0%
           
Income before provision for income taxes    32,149  1.8%    62,706  3.8%
           
Provision for income taxes    12,273  0.7%    24,069  1.5%
           
Net income $  19,876  1.1% $  38,637  2.3%
           
           
           
Basic earnings per common share $  0.60    $  1.12   
           
Diluted earnings per common share $  0.60    $  1.12   
           
Basic weighted average number of shares outstanding    33,213       34,541   
Diluted weighted average number of shares outstanding    33,318       34,575   
 

 

HUB GROUP, INC.
FINANCIAL INFORMATION BY SEGMENT
(in thousands)
(unaudited)
           
         
    Three Months
    Ended June 30, 2017
    Hub Mode Inter-Segment
Elims		 Hub Group Total
           
Revenue $  705,208 $  243,051 $  (23,746) $  924,513
           
Transportation costs    632,651    214,291    (23,746)    823,196
 Gross margin    72,557    28,760    -      101,317
           
Costs and expenses:        
 Salaries and benefits    41,569    3,469    -      45,038
 Agent fees and commissions    14    17,024    -      17,038
 General and administrative    18,331    1,783    -      20,114
 Depreciation and amortization    2,249    300    -      2,549
  Total costs and expenses    62,163    22,576    -      84,739
           
Operating income $  10,394 $  6,184 $  -   $  16,578
           
        
        
HUB GROUP, INC.
FINANCIAL INFORMATION BY SEGMENT
(in thousands)
(unaudited)
           
         
    Three Months
    Ended June 30, 2016
    Hub Mode Inter-Segment
Elims		 Hub Group Total
           
Revenue $  648,523 $  231,924 $  (24,890) $  855,557
           
Transportation costs    565,448    200,509    (24,890)    741,067
 Gross margin    83,075    31,415    -      114,490
           
Costs and expenses:        
 Salaries and benefits    39,787    3,815    -      43,602
 Agent fees and commissions    13    18,347    -      18,360
 General and administrative    14,226    1,857    -      16,083
 Depreciation and amortization        1,830    318    -      2,148
  Total costs and expenses    55,856    24,337    -      80,193
           
Operating income $  27,219 $  7,078 $  -   $  34,297
        

 

HUB GROUP, INC. 
FINANCIAL INFORMATION BY SEGMENT 
(in thousands) 
(unaudited) 
         
   Six Months
   Ended June 30, 2017
    Hub Mode Inter-Segment
Elims		 Hub Group Total
           
Revenue $  1,382,340 $  484,925 $  (49,304) $  1,817,961
           
Transportation costs    1,237,978    426,385    (49,304)    1,615,059
 Gross margin    144,362    58,540    -      202,902
           
Costs and expenses:        
 Salaries and benefits    81,164    7,053    -      88,217
 Agent fees and commissions    31    35,000    -      35,031
 General and administrative    36,810    4,128    -      40,938
 Depreciation and amortization      4,357    604    -      4,961
  Total costs and expenses    122,362    46,785    -      169,147
           
Operating income $  22,000 $  11,755 $  -   $  33,755
 
 
HUB GROUP, INC.
FINANCIAL INFORMATION BY SEGMENT
(in thousands)
(unaudited)
         
    Six Months
    Ended June 30, 2016
    Hub Mode Inter-Segment
Elims		 Hub Group Total
           
Revenue $  1,263,751 $  440,755 $  (43,090) $  1,661,416
           
Transportation costs    1,101,522    380,107    (43,090)    1,438,539
 Gross margin    162,229    60,648    -      222,877
           
Costs and expenses:        
 Salaries and benefits    79,883    7,582    -      87,465
 Agent fees and commissions    27    35,235    -      35,262
 General and administrative    28,948    3,779    -      32,727
 Depreciation and amortization    3,644    639    -      4,283
  Total costs and expenses    112,502    47,235    -      159,737
           
Operating income $  49,727 $  13,413 $  -   $  63,140
 

 

HUB GROUP, INC.
CONSOLIDATED BALANCE SHEETS
(in thousands, except share data)
(unaudited)
       
    June 30, December 31,
     2017   2016 
       
ASSETS    
 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 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 
 

 

HUB GROUP, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
       
      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 period    127,404     207,749 
Cash and cash equivalents end of period $  151,739  $  164,150 
 


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