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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):  July 30, 2019

_______________________________

Hub Group, Inc.

(Exact name of registrant as specified in its charter)

_______________________________

Delaware 0-27754 36-4007085
(State or Other Jurisdiction of Incorporation) (Commission File Number) (I.R.S. Employer Identification No.)

2000 Clearwater Drive
Oak Brook, Illinois 60523

(Address of Principal Executive Offices) (Zip Code)

Registrant's telephone number, including area code: (630) 271-3600

_______________________________

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))

Securities registered pursuant to Section 12(b) of the Act:

Title of each class Trading Symbol(s) Name of each exchange on which registered
Class A Common Stock HUBG NASDAQ

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

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 30, 2019, Hub Group, Inc. issued a press release announcing its second quarter 2019 operating results. The press release is furnished as Exhibit 99.1 to this Form 8-K.

 

 

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 31, 2019 By:  /s/ Terri A. Pizzuto
    Terri A. Pizzuto
    Executive Vice President, Chief Financial Officer and Treasurer

 

 

 

 

 
 

 

 

EXHIBIT INDEX

 

 

 

Exhibit No.

 

99.1    Press release issued on July 30, 2019, announcing second quarter 2019 operating results for Hub Group, Inc.

 

 

 

 

 

EXHIBIT 99.1

Hub Group, Inc. Reports Record Second Quarter 2019 Results

Highlights of the quarter

OAK BROOK, Ill., July 30, 2019 (GLOBE NEWSWIRE) -- Hub Group, Inc. (NASDAQ:HUBG) announced second quarter 2019 net income of $29.2 million, or diluted earnings per share of $0.87. Income from continuing operations for the second quarter 2018 was $17.2 million, or $0.51 per diluted share.   

Results of Continuing Operations

Revenue for the current quarter increased by 3% to $921.2 million compared with $894.7 million for the second quarter 2018 as a result of our success in providing multimodal solutions to our customers and the addition of the CaseStack business in December 2018.  Operating income for the current quarter increased 60% to $40.7 million versus $25.4 million for the second quarter 2018, primarily as a result of improved yield management and our intense focus on reducing costs while maintaining the highest levels of service. Operating margin expanded to 4.4% for the current quarter, as compared to 2.8% in the prior year quarter.

Second quarter intermodal revenue increased 1% to $542.9 million due primarily to a continued focus on yield management and enhanced efficiency, partially offset by a 7% decline in volume. Volume was down compared to the prior year due to a softening demand environment, increased truckload and intermodal competition, and a 2% volume decrease from lane cancellations and weather disruption. Intermodal gross margin increased compared to the second quarter of 2018 primarily due to our yield management strategy, improved efficiency and better purchasing, partially offset by decreased volumes and rail cost increases.

Truck brokerage revenue decreased 7% to $107.1 million in the second quarter of 2019 compared to the same quarter of last year.  Truck brokerage handled 18% more loads while fuel, price and mix combined were down 25% due primarily to the addition of the CaseStack LTL brokerage business.  Contractual truckload volume represented 86% of total truckload volume compared to 81% in the second quarter of 2018.   Truck brokerage gross margin increased due to a higher load count, further benefits from our new operating model and yield management strategy, as well as our new technology platform.    

Second quarter logistics revenue grew 15% to $193.5 million.  Revenue and gross margin expanded due to the addition of CaseStack, benefits from continuous improvements and cross selling to our customers and improved yield management. 

Dedicated revenue increased 5% to $77.7 million compared to the same quarter in the prior year due to improved pricing and growth with new accounts which was offset partially by lost business.  Dedicated gross margin improved compared to the second quarter of 2018 due to implementation of our yield management processes and improved operational discipline.  We ended the quarter with approximately 1,300 tractors and 5,200 trailers for Dedicated. 

Costs and expenses increased to $92.0 million in the second quarter of 2019 compared to $75.6 million in the second quarter of 2018 due primarily to costs and expenses of $12.7 million related to CaseStack (which includes $2.3 million of non-cash amortization expense), the absence of a $3.6 million Dedicated contingent earn out adjustment in the prior year, partially offset by a decrease of $1.0 million in compensation expense. Costs and expenses include a total of $3.4 million of non-cash amortization expense related to CaseStack and Hub Group Dedicated and $0.6 million of compensation expense associated with restricted stock issued to CaseStack management in connection with the acquisition.

Results of Discontinued Operations

Income from discontinued operations related to the sale of our Mode segment for the second quarter of 2018 was $4.9 million, or $0.15 per diluted share. 

Cash Flow and Capitalization

Our capital expenditures for the second quarter 2019 totaled $11.7 million, primarily for tractors and technology investments.  At June 30, 2019, we had cash and cash equivalents of $150 million.    

2019 Outlook

We expect that our 2019 diluted earnings per share will range from $3.30 to $3.40. We estimate mid-single digit revenue growth for the full year. We expect gross margin as a percentage of sales to range from 13.9% to 14.3% in the second half of the year. We estimate our quarterly costs and expenses will range from $96 million to $98 million in the back half of the year.  We expect annual amortization expense associated with the CaseStack and Hub Group Dedicated acquisitions will be approximately $13.6 million and compensation expense related to restricted stock issued to CaseStack management in connection with the acquisition will be approximately $2.5 million in 2019. We project our effective tax rate for 2019 will range from 25% to 26%.  We forecast we will spend between $100 million and $110 million on capital expenditures in 2019.

Non-GAAP Financial Measure

As required by the rules of the Securities and Exchange Commission (“SEC”), we provide a reconciliation of the non-GAAP financial measure contained in this press release to the most directly comparable measure under GAAP, which is set forth in the attached table.

CONFERENCE CALL

Hub will hold a conference call at 5:00 p.m. Eastern Time on Tuesday, July 30, 2019 to discuss its second quarter 2019 results.

Hosting the conference call will be Dave Yeager, Chief Executive Officer.  Also participating on the call will be Phil Yeager, 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=USsertzOHdGtXM. 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.

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 Logistics business lines, driver shortages, the amount and timing of strategic investments or divestitures by Hub, the failure to implement and integrate critical information technology systems, cyber security incidents, 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, 2018.  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 June 30,
     2019
 2018
      % of  % of
     AmountRevenue AmountRevenue
Revenue  $921,163 100.0% $894,734 100.0%
          
Transportation costs   788,460 85.6%  793,743 88.7%
 Gross margin   132,703 14.4%  100,991 11.3%
          
Costs and expenses:       
 Salaries and benefits   60,859 6.6%  54,068 6.1%
 General and administrative   24,028 2.6%  17,794 2.0%
 Depreciation and amortization   7,095 0.8%  3,723 0.4%
  Total costs and expenses   91,982 10.0%  75,585 8.5%
          
Operating income   40,721 4.4%  25,406 2.8%
          
Other income (expense):       
 Interest expense   (2,690)-0.3%  (2,187)-0.2%
 Interest and dividend income   595 0.1%  14 0.0%
 Other, net   (30)0.0%  (182)0.0%
  Total other expense   (2,125)-0.2%  (2,355)-0.2%
          
Income from continuing operations before income taxes   38,596 4.2%  23,051 2.6%
          
Provision for income taxes   9,379 1.0%  5,897 0.7%
          
Income from continuing operations   29,217 3.2%  17,154 1.9%
          
Income from discontinued operations, net of income taxes  -    4,897  
          
Net income  $29,217   $22,051  
          
Earnings per share from continuing operations       
 Basic  $0.87   $0.51  
 Diluted  $0.87   $0.51  
          
Earnings per share from discontinued operations       
 Basic  $-   $0.15  
 Diluted  $-   $0.15  
          
Earnings per share net income       
 Basic  $0.87   $0.66  
 Diluted  $0.87   $0.66  
          
Basic weighted average number of shares outstanding   33,552    33,389  
Diluted weighted average number of shares outstanding   33,715    33,562  
          

 

 
HUB GROUP, INC.
CONSOLIDATED STATEMENTS OF EARNINGS
(in thousands, except per share amounts)
(unaudited)
          
     Six Months Ended June 30,
     2019
 2018
      % of  % of
     AmountRevenue AmountRevenue
Revenue  $1,854,161 100.0% $1,732,076 100.0%
          
Transportation costs   1,594,169 86.0%  1,540,046 88.9%
 Gross margin   259,992 14.0%  192,030 11.1%
          
Costs and expenses:       
 Salaries and benefits   122,887 6.7%  106,373 6.2%
 General and administrative   46,946 2.5%  36,230 2.1%
 Depreciation and amortization   13,849 0.7%  7,486 0.4%
  Total costs and expenses   183,682 9.9%  150,089 8.7%
          
Operating income   76,310 4.1%  41,941 2.4%
          
Other income (expense):       
 Interest expense   (5,746)-0.3%  (4,291)-0.2%
 Interest and dividend income   968 0.1%  25 0.0%
 Other, net   (70)0.0%  (231)0.0%
  Total other expense   (4,848)-0.2%  (4,497)-0.2%
          
Income from continuing operations before income taxes   71,462 3.9%  37,444 2.2%
          
Provision for income taxes   18,351 1.0%  9,221 0.6%
          
Income from continuing operations   53,111 2.9%  28,223 1.6%
          
Income from discontinued operations, net of income taxes  -    9,995  
          
Net income  $53,111   $38,218  
          
Earnings per share from continuing operations       
 Basic  $1.58   $0.84  
 Diluted  $1.58   $0.84  
          
Earnings per share from discontinued operations       
 Basic  $-   $0.30  
 Diluted  $-   $0.30  
          
Earnings per share net income       
 Basic  $1.58   $1.14  
 Diluted  $1.58   $1.14  
          
Basic weighted average number of shares outstanding   33,560    33,382  
Diluted weighted average number of shares outstanding   33,650    33,520  
          

 

 
HUB GROUP, INC.
CONSOLIDATED BALANCE SHEETS
(in thousands, except share data)
(unaudited)
         
      June 30, December 31,
      2019 2018
ASSETS     
 CURRENT ASSETS:    
  Cash and cash equivalents $149,863  $61,435 
  Accounts receivable trade, net  421,139   477,088 
  Other receivables  3,282   22,021 
  Prepaid taxes  1,038   616 
  Prepaid expenses and other current assets 11,602   27,533 
    TOTAL CURRENT ASSETS  586,924   588,693 
         
 Restricted investments  21,972   19,236 
 Property and equipment, net  651,057   681,859 
 Right-of-use assets - operating leases 32,165   - 
 Right-of-use assets - financing leases 7,021   - 
 Other intangibles, net  127,878   134,788 
 Goodwill, net  484,568   483,584 
 Other assets  18,534   16,738 
    TOTAL ASSETS $1,930,119  $1,924,898 
         
         
LIABILITIES AND STOCKHOLDERS' EQUITY   
 CURRENT LIABILITIES:    
  Accounts payable trade $233,399  $272,859 
  Accounts payable other  11,974   10,906 
  Accrued payroll  41,402   55,535 
  Accrued other  80,271   82,900 
  Lease liability - operating leases  8,468   - 
  Lease liability - financing leases  3,004   2,845 
  Current portion of long term debt  98,601   101,713 
    TOTAL CURRENT LIABILITIES 477,119   526,758 
         
 Long term debt  199,194   229,071 
 Non-current liabilities  34,537   29,619 
 Lease liability - operating leases  25,351   - 
 Lease liability - financing leases  3,384   4,739 
 Deferred taxes  157,952   153,877 
         
 STOCKHOLDERS' EQUITY:    
  Preferred stock, $.01 par value; 2,000,000 shares authorized;   
   no shares issued or outstanding in 2019 and 2018 -   - 
  Common stock    
   Class A: $.01 par value; 97,337,700 shares authorized and   
    41,224,792 shares issued in 2019 and 2018; 33,855,740 shares   
    outstanding in 2019 and 33,793,709 shares outstanding in 2018 412   412 
   Class B:  $.01 par value; 662,300 shares authorized;   
    662,296 shares issued and outstanding in 2019 and 2018 7   7 
  Additional paid-in capital  170,619   172,220 
  Purchase price in excess of predecessor basis, net of tax   
   benefit of $10,306  (15,458)  (15,458)
  Retained earnings  1,125,541   1,072,456 
  Accumulated other comprehensive loss (178)  (182)
  Treasury stock; at cost, 7,369,052 shares in 2019   
   and 7,431,083 shares in 2018  (248,361)  (248,621)
   TOTAL STOCKHOLDERS' EQUITY 1,032,582   980,834 
    TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY$1,930,119  $1,924,898 
         

 

 
HUB GROUP, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
       
      Six Months Ended June 30,
      2019 2018
         
         
Cash flows from operating activities:    
 Net income $53,111  $38,218 
 Adjustments to reconcile net income    
  to net cash provided by operating activities:    
   Depreciation and amortization  57,029   38,251 
   Deferred taxes  4,272   11,767 
   Compensation expense related to share-based compensation plans  8,687   6,982 
   Contingent consideration adjustment  -   (3,571)
   Gain on sale of assets  (1,526)  (90)
 Changes in operating assets and liabilities:    
   Restricted investments  (2,736)  74 
   Accounts receivable, net  55,089   (29,748)
   Prepaid taxes  (422)  6,820 
   Prepaid expenses and other current assets  15,932   9,935 
   Other assets  (2,349)  1,869 
   Accounts payable  (38,391)  9,878 
   Accrued expenses  (14,620)  4,857 
   Non-current liabilities  1,187   2,382 
    Net cash provided by operating activities  135,263   97,624 
         
Cash flows from investing activities:    
 Proceeds from sale of equipment  7,664   1,234 
 Purchases of property and equipment  (28,712)  (69,261)
 Proceeds from the disposition of discontinued operations  19,439   - 
 Cash used in acquisitions  (734)  - 
    Net cash used in investing activities  (2,343)  (68,027)
         
Cash flows from financing activities:    
 Purchase of treasury stock  (7,282)  - 
 Proceeds from issuance of debt  18,335   58,161 
 Repayments of long term debt  (51,324)  (84,051)
 Stock tendered for payments of withholding taxes  (2,746)  (4,017)
 Finance lease payments  (1,465)  (1,483)
    Net cash used in financing activities  (44,482)  (31,390)
         
         
 Effect of exchange rate changes on cash and cash equivalents  (10)  (11)
         
Net increase (decrease) in cash and cash equivalents  88,428   (1,804)
Cash and cash equivalents beginning of period  61,435   28,557 
Cash and cash equivalents end of period $149,863  $26,753 
         

 

 
HUB GROUP, INC.
FINANCIAL INFORMATION BY BUSINESS LINE
(in thousands)
(unaudited)
          
   Three Months Six Months
   Ended June 30, Ended June 30,
   2019 2018 2019 2018
Intermodal $542,890 $538,123 $1,078,923 $1,032,575
Truck brokerage  107,081  114,936  224,669  234,955
Logistics  193,463  167,822  396,725  330,297
Dedicated  77,729  73,853  153,844  134,249
 Total Revenue $921,163 $894,734 $1,854,161 $1,732,076
          

 

 
HUB GROUP, INC.
UNAUDITED RECONCILIATION OF NET INCOME TO EBITDA
(in thousands)
(unaudited)
        
 Three Months
 Ended, June 30,
     Change Change
 2019
 2018
 $  %
        
Net income from continuing operations$29,217  $17,154  $12,063  70.3%
        
Interest expense 2,690   2,187   503  23.0%
        
Interest and dividend income (595)  (14)  (581) 4150.0%
        
Other income, net 30   182   (152) -83.5%
        
Depreciation and amortization 28,646   19,414   9,232  47.6%
        
Provision for income taxes 9,379   5,897   3,482  59.0%
        
EBITDA$69,367  $44,820  $24,547  54.8%
        

 

 
HUB GROUP, INC.
UNAUDITED RECONCILIATION OF NET INCOME TO EBITDA
(in thousands)
(unaudited)
        
 Six Months
 Ended, June 30,
     Change Change
 2019
 2018
 $  %
        
Net income from continuing operations$53,111  $28,223  $24,888  88.2%
        
Interest expense 5,746   4,291   1,455  33.9%
        
Interest and dividend income (968)  (25)  (943) 3772.0%
        
Other income, net 70   231   (161) -69.7%
        
Depreciation and amortization 57,029   37,772   19,257  51.0%
        
Provision for income taxes 18,351   9,221   9,130  99.0%
        
EBITDA$133,339  $79,713  $53,626  67.3%
        

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

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Jul. 30, 2019
Document Type 8-K
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Document Period End Date Jul. 30, 2019
Entity File Number 0-27754
Entity Registrant Name Hub Group, Inc.
Entity Central Index Key 0000940942
Entity Tax Identification Number 36-4007085
Entity Incorporation, State or Country Code DE
Entity Address, Address Line One 2000 Clearwater Drive
Entity Address, City or Town Oak Brook
Entity Address, State or Province IL
Entity Address, Postal Zip Code 60523
City Area Code 630
Local Phone Number 271-3600
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Title of 12(b) Security Class A Common Stock
Trading Symbol HUBG
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