Hub Group, Inc. - Quarter Report: 2010 September (Form 10-Q)

 

 

 

Delaware	36-4007085
(State or other jurisdiction of	(I.R.S. Employer
incorporation or organization)	Identification No.)

 

 

 

 Large Accelerated Filer  X      Accelerated Filer             Non-Accelerated Filer          Smaller Reporting Company      

 

	Page
PART I.  Financial Information:
Hub Group, Inc. - Registrant
Consolidated Balance Sheets – September 30, 2010 (unaudited) and December 31, 2009	3
Unaudited Consolidated Statements of Income - Three Months and Nine Months Ended September 30, 2010 and 2009	4
Unaudited Consolidated Statements of Cash Flows - Nine Months Ended September 30, 2010 and 2009	5
Notes to Unaudited Consolidated Financial Statements	6
Management’s Discussion and Analysis of Financial Condition and Results of Operations	9
Quantitative and Qualitative Disclosures about Market Risk	14
Controls and Procedures	14
PART II.  Other Information	15

 

HUB GROUP, INC.
CONSOLIDATED BALANCE SHEETS
(in thousands, except share amounts)
		September 30, 2010				December 31, 2009
ASSETS		(unaudited)
CURRENT ASSETS:
Cash and cash equivalents		$	118,043			$	126,863
Accounts receivable trade, net			210,134				145,317
Accounts receivable other			13,561				11,932
Prepaid taxes			129				593
Deferred taxes			2,260				2,874
Prepaid expenses and other current assets			6,285				6,801
TOTAL CURRENT ASSETS			350,412				294,380
Restricted investments			10,521				9,583
Property and equipment, net			43,184				28,510
Other intangibles, net			5,830				6,164
Goodwill, net			232,727				232,892
Other assets			2,310				1,819
TOTAL ASSETS		$	644,984			$	573,348
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable trade		$	148,057			$	110,626
Accounts payable other			9,958				7,695
Accrued payroll			13,420				8,253
Accrued other			28,233				18,958
TOTAL CURRENT LIABILITIES			199,668				145,532
Non-current liabilities			12,997				12,002
Deferred taxes			68,401				61,973
STOCKHOLDERS' EQUITY:
Preferred stock, $.01 par value;  2,000,000 shares authorized;  no shares issued or outstanding in 2010 and 2009			-				-
Common stock
Class A:  $.01 par value;  97,337,700 shares authorized and 41,224,792 shares issued in 2010 and 2009;  36,652,858 shares outstanding in 2010 and 37,253,330 shares outstanding in 2009			412				412
Class B:  $.01 par value; 662,300 shares authorized; 662,296 shares issued and outstanding in 2010 and 2009			7				7
Additional paid-in capital			169,181				171,470
Purchase price in excess of predecessor basis, net of tax benefit of $10,306			(15,458	)			(15,458	)
Retained earnings			330,501				299,552
Accumulated other comprehensive income (loss)			5				(9	)
Treasury stock; at cost, 4,571,934 shares in 2010 and 3,971,462 shares in 2009			(120,730	)			(102,133	)
TOTAL STOCKHOLDERS' EQUITY			363,918				353,841
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY		$	644,984			$	573,348
See notes to unaudited consolidated financial statements.

HUB GROUP, INC.
UNAUDITED CONSOLIDATED STATEMENTS OF INCOME
(in thousands, except per share amounts)
		Three Months								Nine Months
		Ended September 30,								Ended September 30,
		2010				2009				2010				2009
Revenue		$	478,417			$	388,781			$	1,353,824			$	1,103,089
Transportation costs			421,020				340,581				1,197,033				963,958
Gross margin			57,397				48,200				156,791				139,131
Costs and expenses:
Salaries and benefits			25,547				22,237				72,868				67,514
General and administrative			10,205				9,122				30,414				28,374
Depreciation and amortization			938				949				2,845				3,229
Total costs and expenses			36,690				32,308				106,127				99,117
Operating income			20,707				15,892				50,664				40,014
Other income (expense):
Interest expense			(12	)			(26	)			(38	)			(76	)
Interest and dividend income			35				29				83				120
Other, net			(68	)			116				84				188
Total other (expense) income			(45	)			119				129				232
Income before provision for income taxes			20,662				16,011				50,793				40,246
Provision for income taxes			8,045				6,180				19,844				15,932
Net income		$	12,617			$	9,831			$	30,949			$	24,314
Basic earnings per common share		$	0.34			$	0.26			$	0.83			$	0.65
Diluted earnings per common share		$	0.34			$	0.26			$	0.83			$	0.65
Basic weighted average number of shares outstanding			37,118				37,373				37,358				37,346
Diluted weighted average number of shares outstanding			37,288				37,550				37,504				37,481
See notes to unaudited consolidated financial statements.

HUB GROUP, INC.
UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
		Nine Months Ended September 30,
		2010				2009
Cash flows from operating activities:
Net income		$	30,949			$	24,314
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization			6,078				6,282
Deferred taxes			7,325				4,465
Compensation expense related to share-based compensation plans			2,720				3,218
Loss (gain) on sale of assets			46				(21	)
Changes in operating assets and liabilities:
Restricted investments			(938	)			(2,833	)
Accounts receivable, net			(66,443	)			(12,555	)
Prepaid taxes			464				(9	)
Prepaid expenses and other current assets			517				(1,809	)
Other assets			(491	)			99
Accounts payable			39,692				20,542
Accrued expenses			6,497				(3,544	)
Non-current liabilities			847				1,601
Net cash provided by operating activities			27,263				39,750
Cash flows from investing activities:
Proceeds from sale of equipment			871				72
Purchases of property and equipment			(13,362	)			(2,534	)
Net cash used in investing activities			(12,491	)			(2,462	)
Cash flows from financing activities:
Proceeds from stock options exercised			18				155
Purchase of treasury stock			(23,822	)			(1,096	)
Excess tax benefits from share-based compensation			198				660
Net cash used in financing activities			(23,606	)			(281	)
Effect of exchange rate changes on cash and cash equivalents			14				2
Net (decrease) increase in cash and cash equivalents			(8,820	)			37,009
Cash and cash equivalents beginning of period			126,863				85,799
Cash and cash equivalents end of period		$	118,043			$	122,808
Supplemental disclosures of cash paid for:
Interest		$	38			$	76
Income taxes		$	9,937			$	11,676
See notes to unaudited consolidated financial statements.

 
 

		Three Months Ended, September 30,								Nine Months Ended, September 30,
		2010				2009				2010				2009
Net income for basic and diluted earnings per share		$	12,617			$	9,831			$	30,949			$	24,314
Weighted average shares outstanding – basic			37,118				37,373				37,358				37,346
Dilutive effect of  stock options and restricted stock			170				177				146				135
Weighted average shares outstanding – diluted			37,288				37,550				37,504				37,481
Earnings per share – basic		$	0.34			$	0.26			$	0.83			$	0.65
Earnings per share – diluted		$	0.34			$	0.26			$	0.83			$	0.65

 
 

·	the degree and rate of market growth in the domestic intermodal, truck brokerage and logistics markets served by us;

·	deterioration in our relationships with existing railroads or adverse changes to the railroads’ operating rules;

·	changes in rail service conditions or adverse weather conditions;

·	further consolidation of railroads;

·	the impact of competitive pressures in the marketplace, including entry of new competitors, direct marketing efforts by the railroads or marketing efforts of asset-based carriers;

·	changes in rail, drayage and trucking company capacity;

·	railroads moving away from ownership of intermodal assets;

·	equipment shortages or equipment surplus;

·	changes in the cost of services from rail, drayage, truck or other vendors;

·	increases in costs for independent contractors due to regulatory, judicial and legal changes;

·	labor unrest in the rail, drayage or trucking company communities;

·	general economic and business conditions;

·	significant deterioration in our customer’s financial condition, particularly in the retail and durable goods sectors;

·	fuel shortages or fluctuations in fuel prices;

·	increases in interest rates;

·	changes in homeland security or terrorist activity;

·	difficulties in maintaining or enhancing our information technology systems;

·	changes to or new governmental regulation including CSA 2010;

·	significant increases to health insurance costs due to the Health Care and Education Reconciliation Act of 2010;

·	loss of several of our largest customers;

·	inability to recruit and retain key personnel;

·	inability to recruit and retain drivers and owner operators;

·	changes in insurance costs and claims expense;

·	changes to current laws which will aid union organizing efforts; and

·	inability to close and successfully integrate any future business combinations.

		Three Months Ended												Nine Months Ended
		September 30,												September 30,
										%												%
		2010				2009				Change				2010				2009				Change
Revenue
Intermodal		$	337,920			$	270,104				25.1	%		$	945,005			$	769,745				22.8	%
Truck brokerage			85,771				74,161				15.7				255,707				213,600				19.7
Logistics			54,726				44,516				22.9				153,112				119,744				27.9
Total revenue		$	478,417			$	388,781				23.1	%		$	1,353,824			$	1,103,089				22.7	%

 

 

 

		Three Months Ended								Nine Months Ended
		September 30,								September 30,
		2010				2009				2010				2009
Revenue			100.0	%			100.0	%			100.0	%			100.0	%
Transportation costs			88.0				87.6				88.4				87.4
Gross margin			12.0				12.4				11.6				12.6
Costs and expenses:
Salaries and benefits			5.3				5.7				5.4				6.1
General and administrative			2.2				2.4				2.2				2.6
Depreciation and amortization			0.2				0.2				0.2				0.3
Total costs and expenses			7.7				8.3				7.8				9.0
Operating income			4.3				4.1				3.8				3.6
Other income:
Interest and dividend income			0.0				0.0				0.0				0.0
Total other income			0.0				0.0				0.0				0.0
Income before provision for income taxes			4.3				4.1				3.8				3.6
Provision for income taxes			1.7				1.6				1.5				1.4
Net income			2.6	%			2.5	%			2.3	%			2.2	%

 

 
 

Net Income

Diluted earnings per share increased to $0.83 in 2010 from $0.65 in 2009.  Diluted earnings per share increased due to the increase in net income.

		Total Number of Shares Purchased				Average Price Paid Per Share				Total Number of Shares Purchased as Part of Publicly Announced Plan				Maximum Value of Shares that May Yet Be Purchased Under the Plan (in 000’s)
July 1-31			-			$	-				-			$	18,486
August 1-31			28,233			$	26.76				28,233			$	17,731
September 1-30			339,714			$	29.67				339,714			$	7,653
Total			367,947			$	29.44				367,947			$	7,653

31.1	Certification of David P. Yeager, Chairman and Chief Executive Officer, Pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934.

31.2	Certification of Terri A. Pizzuto, Executive Vice President, Chief Financial Officer and Treasurer, Pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934.

32.1	Certification of David P. Yeager and Terri A. Pizzuto, Chief Executive Officer and Chief Financial Officer, respectively, Pursuant to 18 U.S.C. Section 1350.

101

The following financial statements and footnotes from the Hub Group Quarterly Report on Form 10-Q for the quarter ended September 30, 2010 formatted in XBRL: (i) Consolidated Balance Sheets; (ii) Unaudited Consolidated Statements of Income; (iii) Unaudited Consolidated Statements of Cash Flows; and (iv) Notes to Unaudited Consolidated Financial Statements.