Form 8-K
0000940942 False 0000940942 2020-04-30 2020-04-30 iso4217:USD xbrli:shares iso4217:USD xbrli:shares
 

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):  April 30, 2020

_______________________________

Hub Group, Inc.

(Exact name of registrant as specified in its charter)

_______________________________

Delaware0-2775436-4007085
(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)

(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))

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

Title of each classTrading Symbol(s)Name of each exchange on which registered
Class A Common StockHUBGNASDAQ

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 April 30, 2020, Hub Group, Inc. issued a press release announcing its first quarter 2020 results from continuing operations. 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.

 
 

EXHIBIT INDEX

 

Exhibit No.  
   
99.1 Press release issued on April 30, 2020, announcing first quarter 2020 operating results for Hub Group, Inc.
104 The cover page from this Current Report on Form 8-K, formatted in Inline XBRL
 
 

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: April 30, 2020By: /s/ Terri A. Pizzuto        
  Terri A. Pizzuto
  Executive Vice President, Chief Financial Officer and Treasurer
  


 

EdgarFiling

EXHIBIT 99.1

Hub Group, Inc. Reports First Quarter 2020 Results

Highlights: 

OAK BROOK, Ill., April 30, 2020 (GLOBE NEWSWIRE) -- Hub Group, Inc. (NASDAQ:HUBG) announced first quarter 2020 net income of $13.2 million, or diluted earnings per share of $0.40.  Included in net income was $2.5 million, or $0.07 per share, of severance expense ($1.6 million), consulting expense ($0.7 million) and donation expense ($0.2 million).  Net income for the first quarter 2019 was $23.9 million, or $0.71 per diluted share.

Update on Recent Performance and Liquidity

“As an essential business, Hub Group is working aggressively to manage through the impact of the COVID-19 pandemic. We have maintained our focus on providing a world-class customer experience, while ensuring the health and safety of our employees,” said Dave Yeager, Hub Group’s Chairman and Chief Executive Officer.  “Logistics is a foundational part of the economy and our team is doing an amazing job during this challenging period, particularly in servicing our customers whose businesses have been impacted by the pandemic.  Some of our top customers include retailers and consumer goods companies who have experienced strong demand for their essential products, while other customers have closed their businesses, which we hope will be temporary.  We have been intensely focused on driving efficiency in our organization and improving our cost structure, including by decreasing our headcount by 4% since year-end 2019 and reducing discretionary operating expenses.  In addition, we’ve taken several important steps to enhance liquidity, including borrowing $100 million on our revolving credit line in late March, suspending the completion of our headquarters campus expansion and more carefully managing our working capital.  Hub is well-positioned to manage through the current economic environment, with $277 million of cash and cash equivalents, and $219 million of unused and available borrowings under our revolving line of credit as of March 31, 2020.  Finally, we are proud to have been able to support COVID-19 emergency responders by donating approximately $5 million of equipment during March and April,” continued Mr. Yeager.

“Our operating model and focus on cost control resulted in net cash from operating activities of $41 million during the quarter, and EBITDA (non-GAAP)1 of $50 million for the quarter.  We continue to execute on our profit improvement initiatives, and we remain on track to realize $40 million of annualized savings in 2020.  A key area of focus for 2020 is improving the profitability and cost structure of our drayage and dedicated trucking operations, including enhanced asset utilization, improved network optimization, greater driver productivity, and efficiencies in maintenance and procurement,” said Mr. Yeager.

Q1 2020 Results

Revenue for the first quarter of 2020 decreased by 10% to $839 million compared with $933 million for first quarter 2019.  Operating income for the quarter was $19.8 million versus $35.6 million for first quarter 2019.  Operating income included $3.3 million of expenses for severance, consulting and donations. 

First quarter intermodal revenue decreased 8% to $495 million due primarily to a 7% decline in volume. Volume was down compared to the prior year due to a soft demand environment and increased truckload and intermodal competition.  Intermodal gross margin decreased compared to the prior year primarily due to the decline in volume, lower prices, higher insurance and claims costs, and rail cost increases, partially offset by the benefits from operational improvements and better purchasing.

Truck brokerage handled 10% fewer loads in the quarter as compared to the prior year, while fuel, price and mix combined were down 7% due primarily to the soft demand environment.  Truck brokerage revenue declined 17% to $98 million in the quarter.  Contractual truckload volume represented 90% of total truckload volume compared to 85% in the prior year.  Truck brokerage gross margin as a percent of revenue increased by 150 basis points as a result of the benefits from the transformation of our operating model, an enhanced technology platform and a deeper engagement with our carrier network.  

First quarter logistics gross margin as a percentage of revenue expanded by 70 basis points despite a 10% decline in revenue to $183 million due to our continuous improvement initiatives, revenue management, and strong growth at CaseStack.

Dedicated revenue decreased 18% to $62 million compared to the prior year due to the impact of business we exited, partially offset by growth with new accounts.  Dedicated gross margin declined compared to the prior year primarily due to business we exited, idle equipment costs, start-up costs and maintenance costs, partially offset by revenue management initiatives.  We ended the quarter with approximately 1,200 tractors and 5,400 trailers for Dedicated. 

Costs and expenses decreased to $84.8 million in the first quarter of 2020 compared to $91.7 million in the prior year due primarily to a decline in Salaries and Benefits expense, partially offset by an increase in consulting expense, IT development and implementation costs, and depreciation and amortization expense related to our technology initiatives.   Costs and expenses included $2.1 million of severance expense, $1.0 million of consulting expense and $0.2 million related to donations of Hub equipment in support of COVID-19 emergency efforts.  Costs and expenses also 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.

Cash Flow and Capitalization

Net cash provided by operating activities was $41 million for the quarter.  Capital expenditures for the first quarter of 2020 totaled $25 million, primarily for refrigerated containers, trailers, technology investments and construction of our new office building on our Oak Brook, IL campus.  At March 31, 2020, we had cash and cash equivalents of $277 million and unused and available borrowings under our revolving line of credit of $219 million.

2020 Capital Expenditure Outlook

Capital expenditures for the remainder of fiscal year 2020 are expected to range from $50 million to $80 million, and primarily consist of investments in tractors, trailers and containers to support growth in our business, as well as IT hardware and software.

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 measures contained in this press release to the most directly comparable measure under GAAP, which is set forth on page 7 of this press release.  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 these non-GAAP profitability measures, management intends to provide investors with a meaningful, consistent comparison of the Company’s profitability measures for the periods presented. These measures, however, should be viewed in addition to, and not as an alternative to or substitute for, measures determined in accordance with GAAP, and are not necessarily comparable to non-GAAP measures that may be presented by other companies.   

CONFERENCE CALL

Hub will hold a conference call at 5:00 p.m. Eastern Time on April 30, 2020 to discuss its first quarter 2020 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=UvnUiIHxmHDeJX.

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”, “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 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 operation execution and performance; changes in or implementation of additional governmental or regulatory rules and interpretations affecting tax, wage and hour matters, health and safety, insurance or other undeterminable areas; 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 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. 

______________________
1 For all non-GAAP measures presented, please see the reconciliations contained in this press release.


SOURCE:  Hub Group, Inc.

HUB GROUP, INC. 
CONSOLIDATED STATEMENTS OF EARNINGS 
(in thousands, except per share amounts) 
(unaudited) 
            
      Three Months Ended March 31, 
       2020   2019  
       % of  % of 
      AmountRevenue AmountRevenue 
Revenue  $838,859 100.0% $932,998 100.0% 
            
Transportation costs   734,265 87.5%  805,709 86.4% 
 Gross margin   104,594 12.5%  127,289 13.6% 
            
Costs and expenses:        
 Salaries and benefits   50,876 6.1%  62,028 6.6% 
 General and administrative   26,336 3.1%  22,918 2.5% 
 Depreciation and amortization   7,623 0.9%  6,754 0.7% 
  Total costs and expenses   84,835 10.1%  91,700 9.8% 
            
Operating income   19,759 2.4%  35,589 3.8% 
            
Other income (expense):        
 Interest expense   (2,455)-0.3%  (3,056)-0.3% 
 Interest and dividend income   403 0.0%  373 0.0% 
 Other expense, net   (222)-0.0%  (40)-0.0% 
  Total other expense   (2,274)-0.3%  (2,723)-0.3% 
            
Income before provision for income taxes   17,485 2.1%  32,866 3.5% 
            
Provision for income taxes   4,249 0.5%  8,972 0.9% 
            
Net income  $13,236   $23,894   
            
Earnings per share        
 Basic  $0.40   $0.71   
 Diluted  $0.40   $0.71   
            
Basic weighted average number of shares outstanding   33,159    33,569   
Diluted weighted average number of shares outstanding  33,488    33,585   
            

 


HUB GROUP, INC. 
CONSOLIDATED BALANCE SHEETS 
(in thousands, except share data) 
(unaudited) 
            
        March 31, December 31, 
         2020   2019  
            
ASSETS       
 CURRENT ASSETS:      
  Cash and cash equivalents $276,880  $168,729  
  Accounts receivable trade, net  462,813   450,451  
  Allowance for doubtful accounts  (7,795)  (6,912) 
  Accounts receivable other  1,297   3,237  
  Prepaid taxes   673   630  
  Prepaid expenses and other current assets 14,993   24,086  
    TOTAL CURRENT ASSETS  748,861   640,221  
            
 Restricted investments   18,192   22,601  
 Property and equipment, net  668,398   663,165  
 Right-of-use assets - operating leases 33,332   35,548  
 Right-of-use assets - financing leases 5,298   5,865  
 Other intangibles, net   117,511   120,967  
 Goodwill, net   484,404   484,459  
 Other assets   18,611   18,748  
    TOTAL ASSETS $2,094,607  $1,991,574  
            
            
LIABILITIES AND STOCKHOLDERS' EQUITY    
 CURRENT LIABILITIES:     
  Accounts payable trade $270,384  $257,247  
  Accounts payable other  18,085   11,585  
  Accrued payroll   23,663   45,540  
  Accrued other   84,748   86,686  
  Lease liability - operating leases  8,244   8,567  
  Lease liability - financing leases  3,064   3,048  
  Current portion of long term debt  94,620   94,691  
    TOTAL CURRENT LIABILITIES 502,808   507,364  
            
 Long term debt   284,076   186,934  
 Non-current liabilities   35,577   36,355  
 Lease liability - operating leases  26,564   28,518  
 Lease liability - financing leases  1,051   1,820  
 Deferred taxes   155,822   155,304  
            
 STOCKHOLDERS' EQUITY:     
  Preferred stock, $.01 par value; 2,000,000 shares authorized;    
   no shares issued or outstanding in 2020 and 2019 -   -  
  Common stock      
   Class A: $.01 par value; 97,337,700 shares authorized and    
    41,224,792 shares issued in 2020 and 2019; 33,544,287 shares    
    outstanding in 2020 and 33,353,904 shares outstanding in 2019 412   412  
   Class B: $.01 par value; 662,300 shares authorized;    
    662,296 shares issued and outstanding in 2020 and 2019 7   7  
  Additional paid-in capital  175,370   179,637  
  Purchase price in excess of predecessor basis, net of tax    
   benefit of $10,306   (15,458)  (15,458) 
  Retained earnings   1,192,837   1,179,601  
  Accumulated other comprehensive loss (320)  (186) 
  Treasury stock; at cost, 7,680,505 shares in 2020    
   and 7,870,888 shares in 2019  (264,139)  (268,734) 
   TOTAL STOCKHOLDERS' EQUITY 1,088,709   1,075,279  
    TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY$2,094,607  $1,991,574  
            

 


HUB GROUP, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
          
         Three Months Ended March 31,
          2020   2019 
            
            
Cash flows from operating activities:     
 Net income   $13,236  $23,894 
 Adjustments to reconcile net income    
  to net cash provided by operating activities:    
   Depreciation and amortization  30,576   28,383 
   Deferred taxes    696   6,335 
   Compensation expense related to share-based compensation plans  4,097   4,933 
   Loss (gain) on sale of assets   121   (835)
   Donated equipment   240   - 
 Changes in operating assets and liabilities:    
   Restricted investments   4,409   (1,841)
   Accounts receivable, net   (9,480)  32,906 
   Prepaid taxes    (50)  447 
   Prepaid expenses and other current assets  9,054   12,560 
   Other assets    (477)  (819)
   Accounts payable   19,657   (14,389)
   Accrued expenses   (28,551)  (30,123)
   Non-current liabilities   (2,875)  1,982 
    Net cash provided by operating activities  40,653   63,433 
            
Cash flows from investing activities:     
 Proceeds from sale of equipment   497   3,799 
 Purchases of property and equipment  (25,467)  (17,057)
 Proceeds from the disposition of discontinued operations  -   19,439 
    Net cash (used in) provided by investing activities  (24,970)  6,181 
            
Cash flows from financing activities:     
 Proceeds from issuance of debt   121,444   10,456 
 Repayments of long term debt   (24,373)  (25,780)
 Stock tendered for payments of withholding taxes  (3,769)  (2,578)
 Finance lease payments   (747)  (740)
    Net cash provided by (used in) financing activities  92,555   (18,642)
            
            
 Effect of exchange rate changes on cash and cash equivalents  (87)  (5)
            
Net increase in cash and cash equivalents  108,151   50,967 
Cash and cash equivalents beginning of period  168,729   61,435 
Cash and cash equivalents end of period $276,880  $112,402 
            

 


HUB GROUP, INC. 
FINANCIAL INFORMATION BY BUSINESS LINE 
(in thousands) 
(unaudited) 
      
 Three Months 
 Ended March 31, 
      
  2020  2019  
      
Intermodal$495,324 $536,032  
      
Truck brokerage 98,017  117,587  
      
Logistics 183,255  203,263  
      
Dedicated 62,263  76,116  
      
Total Revenue$838,859 $932,998  
      

 


HUB GROUP, INC. 
RECONCILIATION OF NET INCOME TO EBITDA 
(in thousands) 
(unaudited) 
          
 Three Months  
 Ended March 31,  
     Change Change  
  2020   2019  $  %  
          
Net income$13,236  $23,894  $(10,658) -44.6%  
          
Interest expense 2,455   3,056   (601) -19.7%  
          
Interest and dividend income (403)  (373)  (30) 8.0%  
          
Other expense, net 222   40   182  455.0%  
          
Depreciation and amortization 30,576   28,383   2,193  7.7%  
          
Provision for income taxes 4,249   8,972   (4,723) -52.6%  
          
EBITDA$50,335  $63,972  $(13,637) -21.3%  
          

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

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Apr. 30, 2020
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Entity Registrant Name Hub Group, Inc.
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