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): February 8, 2018  

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 February 8, 2018, Hub Group, Inc. issued a press release announcing its fourth quarter and full year 2017 operating results. The press release is furnished as Exhibit 99.1 to this Form 8-K.

Item 7.01. Regulation FD Disclosure.

     On February 8, 2018, Hub Group, Inc. will make available on its website an Investor Presentation, which includes business information and 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: February 8, 2018By: /s/ Terri A. Pizzuto        
  Terri Pizzuto
  Executive Vice President, Chief Financial Officer and Treasurer
  

EXHIBIT INDEX

Exhibit No.  
   
99.1 Press release, issued on February 8, 2018, announcing fourth quarter and full year 2017 operating results for Hub Group, Inc.

EdgarFiling

EXHIBIT 99.1

Hub Group, Inc. Reports Fourth Quarter and Full Year 2017 Results

      Highlights of the quarter

      Highlights of the year

OAK BROOK, Ill., Feb. 08, 2018 (GLOBE NEWSWIRE) -- Hub Group, Inc. (NASDAQ:HUBG) announced fourth quarter 2017 net income of $100 million, or diluted earnings per share of $2.99 versus fourth quarter 2016 net income of $18.2 million, or $0.55 per diluted share. The fourth quarter includes a $75.2 million, or $2.25 per diluted share, decrease in income taxes resulting from our estimate of the change to our deferred tax liability at December 31, 2017 caused by the reduction of the federal tax rate as part of the recently enacted Tax Cuts and Jobs Act.   

Revenue for the current quarter was $1.163 billion, a record for Hub, compared with $978.6 million for the fourth quarter 2016. Hub segment revenue increased 20% and Mode segment revenue increased 11%.  Operating income for the current quarter increased to $41.1 million versus $30.8 million for the fourth quarter 2016. Hub segment operating income increased 41% and Mode segment operating income increased 3%.

Revenue for the current year was $4.0 billion, another record for Hub, compared to $3.6 billion for 2016.  Hub segment revenue increased 14% and Mode segment revenue increased 8%.  Operating income for the current year decreased to $96.6 million versus $123.8 million for 2016.  The biggest factor driving the decrease in operating income was a $29 million decline in intermodal gross margin.  During most of 2017, intermodal cost increases were much higher than customer price increases.  Hub segment operating income decreased 25% and Mode segment operating income decreased 13%.

Segment Information:

Hub 
· Fourth quarter 2017 Segment Revenue:  $904.3 million, up 20%
· Fourth quarter 2017 Segment Operating Income:  $34.4 million, up 41%

Hub segment revenue increased 20% to $904.3 million compared to the fourth quarter of 2016 as a result of our success in providing multi-modal solutions to our customers.  This increase includes Hub Group Dedicated revenue totaling $57.8 million.

Fourth quarter intermodal revenue increased 8% to $502.7 million reflecting a 2% increase in volume and an increase in fuel revenue and freight rates.  Intermodal gross margin increased compared to the fourth quarter of 2016 primarily due to an increase in freight rates and volume.   

Truck brokerage revenue increased 22% to $159.1 million this quarter compared to the same quarter of last year.  Truck brokerage handled 2% more loads while fuel, price and mix combined were up 20%.  Truck brokerage gross margin increased primarily because of growth with strategic customers.

Fourth quarter Unyson Logistics revenue increased 19% to $185.4 million due primarily to growth from new customers on-boarded this year.  Unyson Logistics gross margin declined primarily due to unfavorable customer mix. 

Costs and expenses increased $6.8 million to $71.3 million in the fourth quarter of 2017 compared to $64.5 million in the fourth quarter of 2016.  Salaries and benefits increased $1.2 million due primarily to the additional costs associated with the employees from the Hub Group Dedicated acquisition.  In addition, the decrease in bonus expense was partially offset by salary and medical claim increases. General and administrative costs are $3.9 million higher because of the Hub Group Dedicated acquisition and an increase in IT costs and consultant fees.  Depreciation and amortization increased $1.7 million primarily as a result of Hub Group Dedicated.

Operating income was $34.4 million compared to $24.3 million in the fourth quarter of 2016.

Mode   
· Fourth quarter 2017 Segment Revenue:   $285.5 million, up 11%
· Fourth quarter 2017 Segment Operating Income:  $6.7 million, up 3%

Mode segment’s revenue increased 11% to $285.5 million compared to the fourth quarter 2016.   Revenue consisted of $139.2 million in intermodal which was up 6%, $92.0 million in truck brokerage which was up 16% and $54.3 million in logistics which was up 20%. 

Gross margin increased $0.8 million compared to the fourth quarter of 2016 due primarily to an increase in logistics margin.

Operating income was $6.7 million compared to $6.5 million in the fourth quarter of 2016.

Cash Flow and Capitalization:

Our capital expenditures for the fourth quarter totaled $34.6 million, primarily for transportation equipment including tractors, containers, and trailers and technology investments. At December 31, 2017, we had cash and cash equivalents of $28.6 million. 

At December 31, 2017, we had total debt outstanding of $302.5 million on various debt instruments compared to $174.0 million at December 31, 2016.  The increase in debt is primarily a result of our acquisition of Hub Group Dedicated.

2018 and Long Term Outlook

We expect that our 2018 diluted earnings per share will range from $2.30 to $2.40.  We estimate that our 2018 capital expenditures will range from $150 million to $170 million.  We estimate our effective tax rate will be approximately 25% as a result of the Tax Cuts and Jobs Act.

“Our goal is to continue to provide innovative, value added multimodal solutions by offering reliability, visibility and value to our customers.  We will continue to invest in our people, equipment and technology to work towards this goal, while improving productivity and margins.  Our 2017 revenue of $4 billion is one significant milestone toward achieving our target of $6 billion in revenue in the next five years. We intend to achieve $6 billion in revenue through organic growth initiatives and acquisitions in both our core business and new service offerings.” said Dave Yeager, Hub’s Chief Executive Officer.

CONFERENCE CALL

Hub will hold a conference call at 5:00 p.m. Eastern Time on Thursday, February 8th, 2018, to discuss its fourth 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=UhUrOEEYpuYrDC. 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 February 8th, 2018, the company will make available on its website an Investor Presentation, which includes updated business information and 2017 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 and prices, the 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 or divestitures by Hub, the failure to integrate critical information technology systems, retail customers encountering adverse economic conditions 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.

SOURCE:  Hub Group, Inc.

 

 HUB GROUP, INC.
 CONSOLIDATED STATEMENTS OF EARNINGS
 (in thousands, except per share amounts)
 (unaudited)
             
        Three Months Ended December 31,
         2017  2016
         % of  % of
        AmountRevenue AmountRevenue
 Revenue   $  1,162,576 100.0% $  978,560 100.0%
             
 Transportation costs      1,024,485 88.1%    858,106 87.7%
  Gross margin      138,091 11.9%    120,454 12.3%
             
 Costs and expenses:        
  Salaries and benefits      51,046 4.4%    50,384 5.1%
  Agent fees and commissions     19,979 1.7%    18,562 1.9%
  General and administrative      21,841 1.9%    18,262 1.9%
  Depreciation and amortization     4,098 0.4%    2,407 0.2%
   Total costs and expenses     96,964 8.4%    89,615 9.1%
             
 Operating income      41,127 3.5%    30,839 3.2%
             
 Other income (expense):        
  Interest expense      (2,280)-0.2%    (970)-0.1%
  Interest and dividend income     28 0.0%    107 0.0%
  Other, net       127 0.0%    (359)0.0%
   Total other expense      (2,125)-0.2%    (1,222)-0.1%
             
 Income before provision for income taxes     39,002 3.3%    29,617 3.1%
             
 Income tax (benefit) expense      (60,941)-5.3%    11,373 1.2%
             
 Net income   $  99,943 8.6% $  18,244 1.9%
             
             
             
 Basic earnings per common share  $  3.01   $  0.55  
             
 Diluted earnings per common share  $  2.99   $  0.55  
             
 Basic weighted average number of shares outstanding     33,229      33,069  
 Diluted weighted average number of shares outstanding     33,429      33,281  
             


 HUB GROUP, INC.
 CONSOLIDATED STATEMENTS OF EARNINGS
 (in thousands, except per share amounts)
 (unaudited)
             
        Twelve Months Ended December 31,
         2017  2016
         % of  % of
        AmountRevenue AmountRevenue
 Revenue   $  4,034,897 100.0% $  3,572,790 100.0%
             
 Transportation costs      3,577,380 88.7%    3,118,005 87.3%
  Gross margin      457,517 11.3%    454,785 12.7%
             
 Costs and expenses:        
  Salaries and benefits      188,389 4.7%    180,459 5.1%
  Agent fees and commissions     74,082 1.8%    72,896 2.0%
  General and administrative      85,182 2.1%    68,630 1.9%
  Depreciation and amortization     13,313 0.3%    8,966 0.2%
   Total costs and expenses     360,966 8.9%    330,951 9.2%
             
 Operating income      96,551 2.4%    123,834 3.5%
             
 Other income (expense):        
  Interest expense      (6,754)-0.1%    (3,625)-0.1%
  Interest and dividend income     416 0.0%    393 0.0%
  Other, net       724 0.0%    819 0.0%
   Total other expense      (5,614)-0.1%    (2,413)-0.1%
             
 Income before provision for income taxes     90,937 2.3%    121,421 3.4%
             
 Income tax (benefit) expense      (44,216)-1.1%    46,616 1.3%
             
 Net income   $  135,153 3.4% $  74,805 2.1%
             
             
             
 Basic earnings per common share  $  4.07   $  2.21  
             
 Diluted earnings per common share  $  4.05   $  2.20  
             
 Basic weighted average number of shares outstanding     33,220      33,841  
 Diluted weighted average number of shares outstanding     33,350      33,949  
             


HUB GROUP, INC. 
FINANCIAL INFORMATION BY SEGMENT 
(in thousands) 
(unaudited) 
               
       Three Months 
       Ended December 31, 2017 
       Hub Mode Inter-Segment Elims Hub Group Total 
Revenue   $  904,252 $  285,539 $  (27,215) $  1,162,576 
               
Transportation costs      798,567    253,133    (27,215)    1,024,485 
 Gross margin      105,685    32,406    -      138,091 
               
Costs and expenses:           
 Salaries and benefits      47,681    3,365    -      51,046 
 Agent fees and commissions     12    19,967    -      19,979 
 General and administrative      19,755    2,086    -      21,841 
 Depreciation and amortization     3,820    278    -      4,098 
  Total costs and expenses     71,268    25,696    -      96,964 
               
Operating income   $  34,417 $  6,710 $  -   $  41,127 
               


HUB GROUP, INC.
FINANCIAL INFORMATION BY SEGMENT
(in thousands)
(unaudited)
               
       Three Months 
       Ended December 31, 2016 
       Hub Mode Inter-Segment Elims Hub Group Total 
Revenue   $  754,091 $  256,369 $  (31,900) $  978,560 
               
Transportation costs      665,270    224,736    (31,900)    858,106 
 Gross margin      88,821    31,633    -      120,454 
               
Costs and expenses:           
 Salaries and benefits      46,478    3,906    -      50,384 
 Agent fees and commissions     19    18,543    -      18,562 
 General and administrative      15,894    2,368    -      18,262 
 Depreciation and amortization     2,095    312    -      2,407 
  Total costs and expenses     64,486    25,129    -      89,615 
               
Operating income   $  24,335 $  6,504 $  -   $  30,839 
               


HUB GROUP, INC. 
FINANCIAL INFORMATION BY SEGMENT 
(in thousands) 
(unaudited) 
               
       Twelve Months 
       Ended December 31, 2017 
       Hub Mode Inter-Segment Elims Hub Group Total 
Revenue   $  3,107,394 $  1,029,160 $  (101,657) $  4,034,897 
               
Transportation costs      2,771,291    907,746    (101,657)    3,577,380 
 Gross margin      336,103    121,414    -      457,517 
               
Costs and expenses:           
 Salaries and benefits      174,573    13,816    -      188,389 
 Agent fees and commissions     58    74,024    -      74,082 
 General and administrative      77,085    8,097    -      85,182 
 Depreciation and amortization     12,139    1,174    -      13,313 
  Total costs and expenses     263,855    97,111    -      360,966 
               
Operating income   $  72,248 $  24,303 $  -   $  96,551 
               


HUB GROUP, INC. 
FINANCIAL INFORMATION BY SEGMENT 
(in thousands) 
(unaudited) 
               
       Twelve Months 
       Ended December 31, 2016 
       Hub Mode Inter-Segment Elims Hub Group Total 
Revenue   $  2,734,541 $  948,735 $  (110,486) $  3,572,790 
               
Transportation costs      2,404,946    823,545    (110,486)    3,118,005 
 Gross margin      329,595    125,190    -      454,785 
               
Costs and expenses:           
 Salaries and benefits      165,136    15,323    -      180,459 
 Agent fees and commissions     66    72,830    -      72,896 
 General and administrative      60,811    7,819    -      68,630 
 Depreciation and amortization     7,698    1,268    -      8,966 
  Total costs and expenses     233,711    97,240    -      330,951 
               
Operating income   $  95,884 $  27,950 $  -   $  123,834 
               


HUB GROUP, INC. 
CONSOLIDATED BALANCE SHEETS 
(in thousands, except share data) 
(unaudited) 
            
        December 31, December 31, 
         2017   2016  
            
ASSETS        
 CURRENT ASSETS:      
  Cash and cash equivalents $  28,557  $  127,404  
  Accounts receivable trade, net    583,994     473,608  
  Accounts receivable other    5,722     4,331  
  Prepaid taxes     12,088     294  
  Prepaid expenses and other current assets   25,697     16,653  
    TOTAL CURRENT ASSETS    656,058     622,290  
            
 Restricted investments    24,181     20,877  
 Property and equipment, net    562,150     438,594  
 Other intangibles, net     74,348     11,844  
 Goodwill, net     348,661     262,376  
 Other assets     5,543     4,278  
    TOTAL ASSETS $  1,670,941  $  1,360,259  
            
            
LIABILITIES AND STOCKHOLDERS' EQUITY    
 CURRENT LIABILITIES:      
  Accounts payable trade $  338,933  $  266,555  
  Accounts payable other    24,690     21,070  
  Accrued payroll     28,994     36,223  
  Accrued other     55,072     46,013  
  Current portion of capital lease    2,777     2,697  
  Current portion of long term debt    78,111     45,163  
    TOTAL CURRENT LIABILITIES   528,577     417,721  
            
 Long term debt     213,963     115,529  
 Non-current liabilities     29,738     23,595  
 Long term capital lease    7,696     10,576  
 Deferred taxes     121,095     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; 33,447,070 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    173,011     173,565  
  Purchase price in excess of predecessor basis, net of tax    
   benefit of $10,306     (15,458)    (15,458) 
  Retained earnings     870,716     735,563  
  Accumulated other comprehensive loss   (194)    (273) 
  Treasury stock; at cost, 7,777,722 shares in 2017    
   and 8,031,810 shares in 2016    (258,622)    (265,637) 
   TOTAL STOCKHOLDERS' EQUITY   769,872     628,179  
    TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY$  1,670,941  $  1,360,259  
            


HUB GROUP, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
          
         Twelve Months Ended December 31,
          2017   2016 
            
            
Cash flows from operating activities:     
 Net income   $  135,153  $  74,805 
 Adjustments to reconcile net income    
  to net cash provided by operating activities:    
   Depreciation and amortization      62,173     44,712 
   Deferred taxes      (41,351)    13,801 
   Compensation expense related to share-based compensation plans    9,873     8,479 
   Loss (gain) on sale of assets     441     (573)
   Excess tax benefits from share-based compensation    -      (733)
 Changes in operating assets and liabilities:    
   Restricted investments     (3,304)    231 
   Accounts receivable, net     (84,775)    (87,629)
   Prepaid taxes      (11,794)    66 
   Prepaid expenses and other current assets    (7,543)    1,099 
   Other assets      56     570 
   Accounts payable     71,459     35,709 
   Accrued expenses     (7,164)    9,238 
   Non-current liabilities     1,996     2,698 
     Net cash provided by operating activities    125,220     102,473 
            
Cash flows from investing activities:     
 Proceeds from sale of equipment     5,327     2,061 
 Purchases of property and equipment    (74,541)    (107,409)
 Cash used in acquisition     (165,933)    -  
     Net cash used in investing activities      (235,147)    (105,348)
            
Cash flows from financing activities:     
 Proceeds from issuance of debt     98,544     62,155 
 Repayments of long term debt     (79,869)    (34,767)
 Stock tendered for payments of withholding taxes    (3,412)    (2,489)
 Purchase of treasury stock     -      (100,000)
 Capital lease payments     (2,800)    (2,634)
 Excess tax benefits from share-based compensation    -      372 
 Payment of debt issuance costs     (1,397)    -  
     Net cash provided by (used in) financing activities      11,066     (77,363)
            
            
 Effect of exchange rate changes on cash and cash equivalents    14     (107)
            
Net decrease in cash and cash equivalents    (98,847)    (80,345)
Cash and cash equivalents beginning of period    127,404     207,749 
Cash and cash equivalents end of period $  28,557  $  127,404 
            

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