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Hub Group, Inc. Reports First Quarter 2021 Results

Highlights:

  • Strong freight market conditions and continued growth with strategic customers led to 10% revenue growth in the quarter despite weather challenges in February

  • Revenue growth and focus on operating efficiency resulted in first quarter net income of $17 million or $0.51 of diluted earnings per share

  • Generated EBITDA (non-GAAP)1 of $56 million in the quarter, with over $226 million in cash and cash equivalents at quarter end

  • Celebrated our 50th anniversary on April 19th

OAK BROOK, Ill., May 05, 2021 (GLOBE NEWSWIRE) -- Hub Group, Inc. (NASDAQ:HUBG) announced first quarter 2021 net income of $17.2 million, or diluted earnings per share of $0.51. Net income for first quarter 2020 was $13.2 million, or $0.40 per diluted share.

“Strong freight market conditions, growth with our strategic customers, and our focus on providing a world-class customer experience resulted in 10% revenue growth in the quarter. Hub Group is well positioned for 2021 and beyond due to demand in the marketplace for high service levels and cost-effective solutions. In April we celebrated our 50th anniversary, and I want to thank all who have been part of this outstanding accomplishment, including our customers, employees, drivers, vendors, and carriers. We are excited about the future and look forward to the next 50 years,” said Dave Yeager, Hub Group’s Chairman and Chief Executive Officer.

Q1 2021 Results

Revenue for the first quarter of 2021 increased by 10% to $920 million compared with $839 million for the first quarter of 2020. Operating income for the quarter was $24 million versus $20 million for the first quarter of 2020. Revenue growth in the first quarter, combined with our ongoing focus on cost control, led to EBITDA1 (non-GAAP) of $56 million.

First quarter intermodal revenue increased 6% to $506 million due to a 2% increase in volume and a 4% increase in revenue per load. We estimate that winter storms impacted our volume growth by approximately 600 basis points. Intermodal gross margin declined compared to the prior year due to increased purchased transportation costs, the impact of winter storms and higher equipment repositioning costs, partially offset by volume growth and higher prices.

First quarter logistics revenue increased 8% to $217 million due to growth of our retail supplier solutions services and the addition of NonstopDelivery (“NSD”), partially offset by the impact of lost customers. Gross margin increased due to actions we have taken to drive improved profitability, higher revenue and the acquisition of NSD, partially offset by higher warehousing costs.

Truck brokerage revenue grew 30% in the quarter to $127 million despite a 6% decline in volume. Contractual freight represented 51% of total brokerage volume in the first quarter of 2021 as compared to 64% in 2020. Truck brokerage gross margin increased relative to first quarter 2020 due to revenue per load growth in both contractual and transactional freight, partially offset by the impact of higher purchased transportation costs.

Dedicated revenue increased 11% compared to the prior year to $69 million due to growth from existing and new customers, partially offset by the impact of business we exited. Dedicated gross margin increased primarily due to our profit improvement actions and growth in revenue, partially offset by higher driver costs.

Costs and expenses decreased slightly to $85 million in the first quarter of 2021 due primarily to lower professional fees, higher gains on the sale of equipment and a reduction in travel expense, partially offset by increased costs resulting from the acquisition of NSD and an increase in salaries and benefits expense related to variable compensation.

Capital expenditures for the first quarter of 2021 totaled $10 million. At March 31, 2021, we had cash and cash equivalents of $226 million.

2021 Outlook

We expect that our 2021 diluted earnings per share will range from $3.20 to $3.40. We estimate revenue will grow in the mid-teens percentage range for 2021, and that gross margin as a percentage of revenue will range from 12.5% to 13.0%. We estimate our costs and expenses will range from $365 million to $380 million for the year. We project our effective tax rate for 2021 will range from 24% to 25%.

We expect capital expenditures for fiscal year 2021 to range from $165 to $175 million and primarily consist of investments to support growth in the business, including containers, tractors and technology. For 2021 we expect to add 3,000 containers, which will result in net growth of approximately 2,750 after retirements of containers that have reached end of life. We are also planning to add approximately 700 tractors to replace older units and support growth in our drayage and dedicated fleets.

Non-GAAP Financial Measure

In this press release, we present EBITDA, a non-GAAP financial measure defined as earnings before interest, taxes, depreciation and amortization. As required by the rules of the Securities and Exchange Commission (“SEC”), we have provided herein a reconciliation of the non-GAAP financial measure contained in this press release to the most directly comparable measure under GAAP. Management believes that EBITDA provides relevant and useful information, which is used by our management as well as by many analysts, investors and competitors in our industry. By providing this non-GAAP measure, management intends to provide investors with a meaningful, consistent comparison of the Company’s profitability for the periods presented. EBITDA should be viewed in addition to, and not as an alternative to or substitute for, measures determined in accordance with GAAP, and is not necessarily comparable to non-GAAP measures that may be presented by other companies.

CONFERENCE CALL

Hub Group, Inc. will hold a conference call at 5:00 p.m. Eastern Time on May 5, 2021 to discuss our first quarter 2021 results.

Hosting the conference call will be Dave Yeager, Chairman and Chief Executive Officer. Also participating on the call will be Phil Yeager, President and Chief Operating Officer, and Geoff DeMartino, Executive Vice President, Chief Financial Officer and Treasurer.

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:

https://www.yourconferencecenter.com/confcenter/PinCode/Pin_Code.aspx?100374&o=UWogBCHMijVtPy

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 may express or imply projections of revenues or expenditures, statements of plans and objectives or future operations or statements of future economic performance. Forward-looking statements are inherently uncertain and subject to risks, uncertainties and other factors that might cause the actual performance of Hub Group, Inc. to differ materially from those expressed or implied by this discussion and, therefore, should be viewed with caution. All forward-looking statements and information are provided pursuant to the safe harbor established under the Private Securities Litigation Reform Act of 1995 and should be evaluated in the context of these factors. Forward-looking statements generally may be identified by the use of forward-looking terminology such as “trends”, “assumptions”, “target”, “guidance”, “outlook”, “opportunity”, “future”, “plans”, “goals”, “objectives”, “expects”, “anticipate”, “expected”, “may”, “will”, “would”, “could”, “intend”, “believe”, “potential”, “projected”, “estimate” (or the negative or derivative of each of these terms), or similar words, and include our statements regarding our outlook, profit improvement initiatives and capital expenditures. These forward-looking statements are based on management's experience and perception of 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. Factors that could cause actual results to differ materially include general or regional economic conditions and health concerns; the effect of the COVID-19 pandemic, including on our business operations, as well as its impact on general economic and financial market conditions and on our customers, counterparties, employees and third-party service providers; our ability to sustain or the effects of plans intended to improve operational execution and performance; changes in or implementation of governmental or regulatory rules and interpretations affecting tax, wage and hour matters, health and safety, labor and employment, insurance or other undeterminable areas; intermodal costs and prices, the integration of NSD and any other 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 and other customers encountering adverse economic conditions and other factors described from time to time in Hub Group's SEC reports, press releases and other communications. Hub Group assumes no liability to update any such forward-looking statements.

SOURCE: Hub Group, Inc.

See the “Non-GAAP Financial Measure” section of this release for the definition of EBITDA and a discussion of this non-GAAP financial measure.


HUB GROUP, INC.

CONSOLIDATED STATEMENTS OF EARNINGS

(in thousands, except per share amounts)

(unaudited)

Three Months Ended March 31,

2021

2020

% of

% of

Amount

Revenue

Amount

Revenue

Revenue

$

919,553

100.0%

$

838,859

100.0%

Transportation costs

810,806

88.2%

734,265

87.5%

Gross margin

108,747

11.8%

104,594

12.5%

Costs and expenses:

Salaries and benefits

56,951

6.2%

50,876

6.1%

General and administrative

19,243

2.1%

26,336

3.1%

Depreciation and amortization

8,502

0.9%

7,623

0.9%

Total costs and expenses

84,696

9.2%

84,835

10.1%

Operating income

24,051

2.6%

19,759

2.4%

Other income (expense):

Interest expense, net

(1,904

)

-0.2%

(2,052

)

-0.3%

Other, net

(93

)

-0.0%

(222

)

-0.0%

Total other expense

(1,997

)

-0.2%

(2,274

)

-0.3%

Income before provision for income taxes

22,054

2.4%

17,485

2.1%

Provision for income taxes

4,824

0.5%

4,249

0.5%

Net income

$

17,230

$

13,236

Earnings per share

Basic

$

0.52

$

0.40

Diluted

$

0.51

$

0.40

Basic weighted average number of shares outstanding

33,419

33,159

Diluted weighted average number of shares outstanding

33,775

33,488


HUB GROUP, INC.

CONSOLIDATED BALANCE SHEETS

(in thousands, except share data)

(unaudited)

March 31,

December 31,

2021

2020

ASSETS

CURRENT ASSETS:

Cash and cash equivalents

$

226,264

$

124,506

Accounts receivable trade,net

507,377

518,975

Accounts receivable other

3,364

1,265

Prepaid taxes

985

1,336

Prepaid expenses and other current assets

17,898

26,753

TOTAL CURRENT ASSETS

755,888

672,835

Restricted investments

21,735

23,353

Property and equipment, net

641,858

671,101

Right-of-use assets - operating leases

42,859

43,573

Right-of-use assets - financing leases

2,973

3,557

Other intangibles, net

150,857

163,953

Goodwill, net

520,592

508,555

Other assets

18,005

18,469

TOTAL ASSETS

$

2,154,767

$

2,105,396

LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES:

Accounts payable trade

$

317,798

$

285,320

Accounts payable other

17,019

12,680

Accrued payroll

33,395

23,044

Accrued other

111,942

102,613

Lease liability - operating leases

10,233

10,093

Lease liability - financing leases

1,023

1,793

Current portion of long term debt

89,531

93,562

TOTAL CURRENT LIABILITIES

580,941

529,105

Long term debt

154,341

176,797

Non-current liabilities

41,085

42,910

Lease liability - operating leases

35,037

36,328

Lease liability - financing leases

6

8

Deferred taxes

166,856

162,325

STOCKHOLDERS' EQUITY:

Preferred stock, $.01 par value; 2,000,000 shares authorized;

no shares issued or outstanding in 2021 and 2020

-

-

Common stock

Class A: $.01 par value; 97,337,700 shares authorized and

41,224,792 shares issued in 2021 and 2020; 33,755,036 shares

outstanding in 2021 and 33,549,708 shares outstanding in 2020

412

412

Class B: $.01 par value; 662,300 shares authorized;

662,296 shares issued and outstanding in 2021 and 2020

7

7

Additional paid-in capital

182,005

186,058

Purchase price in excess of predecessor basis, net of tax

benefit of $10,306

(15,458

)

(15,458

)

Retained earnings

1,270,390

1,253,160

Accumulated other comprehensive loss

(201

)

(191

)

Treasury stock; at cost, 7,469,756 shares in 2021

and 7,675,084 shares in 2020

(260,654

)

(266,065

)

TOTAL STOCKHOLDERS' EQUITY

1,176,501

1,157,923

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY

$

2,154,767

$

2,105,396


HUB GROUP, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

(unaudited)

Three Months Ended March 31,

2021

2020

Cash flows from operating activities:

Net income

$

17,230

$

13,236

Adjustments to reconcile net income

to net cash provided by operating activities:

Depreciation and amortization

32,111

30,576

Deferred taxes

4,325

696

Compensation expense related to share-based compensation plans

5,117

4,097

(Gain) loss on sale of assets

(1,924

)

121

Other operating activities

-

240

Changes in operating assets and liabilities, net of acquisitions:

Restricted investments

1,618

4,409

Accounts receivable, net

8,389

(9,480

)

Prepaid taxes

350

(50

)

Prepaid expenses and other current assets

8,825

9,054

Other assets

(189

)

(477

)

Accounts payable

36,820

19,657

Accrued expenses

18,695

(28,551

)

Non-current liabilities

(3,994

)

(2,875

)

Net cash provided by operating activities

127,373

40,653

Cash flows from investing activities:

Proceeds from sale of equipment

14,933

497

Purchases of property and equipment

(9,522

)

(25,467

)

Net cash provided by (used in) investing activities

5,411

(24,970

)

Cash flows from financing activities:

Repayments of long term debt

(33,381

)

(24,373

)

Stock withheld for payments of withholding taxes

(3,759

)

(3,769

)

Finance lease payments

(772

)

(747

)

Proceeds from issuance of debt

6,894

121,444

Net cash (used in) provided by financing activities

(31,018

)

92,555

Effect of exchange rate changes on cash and cash equivalents

(8

)

(87

)

Net increase in cash and cash equivalents

101,758

108,151

Cash and cash equivalents beginning of period

124,506

168,729

Cash and cash equivalents end of period

$

226,264

$

276,880


HUB GROUP, INC.

FINANCIAL INFORMATION BY BUSINESS LINE

(in thousands)

(unaudited)

Three Months

Ended March 31,

2021

2020

Intermodal

$

506,004

$

478,034

Logistics

217,035

200,202

Truck brokerage

127,262

98,017

Dedicated

69,252

62,606

-

-

Total Revenue

$

919,553

$

838,859


HUB GROUP, INC.

RECONCILIATION OF NET INCOME TO EBITDA1

(in thousands)

(unaudited)

Three Months

Ended March 31,

Change

Change

2021

2020

$

%

Net income

$

17,230

$

13,236

$

3,994

30.2%

Interest expense

1,905

2,455

(550

)

-22.4%

Depreciation and amortization

32,111

30,576

1,535

5.0%

Provision for income taxes

4,824

4,249

575

13.5%

EBITDA

$

56,070

$

50,516

$

5,554

11.0%

1 See the “Non-GAAP Financial Measure” section of this release for the definition of EBITDA and a discussion of this non-GAAP financial measure.

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