SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 8-K
CURRENT REPORT PURSUANT
TO SECTION 13
OR 15(D) OF THE
SECURITIES AND EXCHANGE
ACT OF 1934
Date of Report (Date of Earliest Event Reported) February 8, 2005
HUB GROUP, INC.
(Exact name of
registrant as specified in its charter)
DELAWARE
(State or Other Jurisdiction of
Incorporation)
| 0-27754 | 36-4007085 |
|---|---|
| (Commission File Number) | (I.R.S. Employer Identification No.) |
3050 Highland Parkway,
Suite 100
Downers Grove,
Illinois 60515
(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 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))
Item 2.02 - RESULTS OF OPERATIONS AND FINANCIAL CONDITION
On February 8, 2005 Hub Group, Inc. issued a press release announcing its fourth quarter and year end 2004 operating results. The press release is furnished as Exhibit 99.1 to this Form-8K.
Item 9.01 - FINANCIAL STATEMENTS AND EXHIBITS
The following documents are filed as part of the report:
(a) Financial Statements of Business Acquired
Not Applicable.
(b) Pro Forma Financial Information
Not Applicable.
(c) Exhibits
A list of exhibits filed herewith or incorporated by reference herein is
contained on the Exhibit Index immediately preceding such exhibits,
and is incorporated herein by reference.
SIGNATURES
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 thereunto duly authorized.
HUB GROUP, INC.
| DATE: February 11, 2005 | /s/ Thomas M. White |
| By: Thomas M. White | |
| Its: Senior Vice President | |
| Chief Financial Officer and Treasurer | |
| (Principal Financial Officer) |
EXHIBIT INDEX
Exhibit No.
| 99.1 | Press release issued on February 8, 2005 announcing operating results for Hub Group, Inc. for the fourth quarter 2004 and stock buy back plan. |
DOWNERS GROVE, IL, February 8, 2005, — 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.
SOURCE: HUB GROUP, INC.
CONTACT: Amy Lisek of Hub Group, Inc., +1-630-795-2214
HUB GROUP, INC.
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except share amounts)
| December 31, 2004 |
December 31, 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 OPERATIONS
(in thousands, except per share amounts)
| Unaudited Three Months Ended December 31, |
Years Ended 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 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 activity: | |||||
| 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 on 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 extinquishment 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 extinquishment 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 reconciliation
is to reflect as adjusted earnings excluding the one time costs associated with
prepaying our debt.
HUB GROUP, INC.
MODAL
REVENUE SUMMARY
(in thousnds)
| 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.