Form 10-Q
Table of Contents

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

 

 

FORM 10-Q

 

 

 

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES AND EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2013

or

 

¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                      to                     

Commission file number: 0-27754

 

 

HUB GROUP, INC.

(Exact name of registrant as specified in its charter)

 

 

 

Delaware   36-4007085
(State or other jurisdiction of   (I.R.S. Employer
incorporation or organization)   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)

 

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.     Yes  x    No  ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).     Yes  x     No  ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See definition of “large accelerated filer”, “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

 

Large Accelerated Filer   x    Accelerated Filer   ¨
Non-Accelerated Filer   ¨    Smaller Reporting Company   ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12-b-2 of the Exchange Act).     Yes  ¨    No  x

On October 24, 2013, the registrant had 36,979,841 outstanding shares of Class A common stock, par value $.01 per share, and 662,296 outstanding shares of Class B common stock, par value $.01 per share.

 

 

 


Table of Contents

HUB GROUP, INC.

INDEX

 

     Page  

PART I. Financial Information:

  

Hub Group, Inc. – Registrant

  

Consolidated Balance Sheets – September 30, 2013 (unaudited) and December 31, 2012

     3   

Unaudited Consolidated Statements of Income and Comprehensive Income – Three Months and Nine Months Ended September 30, 2013 and 2012

     4   

Unaudited Consolidated Statements of Cash Flows – Nine Months Ended September 30, 2013 and 2012

     5   

Notes to Unaudited Consolidated Financial Statements

     6   

Management’s Discussion and Analysis of Financial Condition and Results of Operations

     12   

Quantitative and Qualitative Disclosures about Market Risk

     20   

Controls and Procedures

     20   

PART II. Other Information

     21   

 

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Table of Contents

HUB GROUP, INC.

CONSOLIDATED BALANCE SHEETS

(in thousands, except share amounts)

 

     September 30,
2013
    December 31,
2012
 
     (unaudited)        

ASSETS

    

CURRENT ASSETS:

    

Cash and cash equivalents

   $ 92,150      $ 70,760   

Accounts receivable trade, net

     408,279        346,917   

Accounts receivable other

     21,894        25,945   

Prepaid taxes

     589        139   

Deferred taxes

     5,884        4,965   

Prepaid expenses and other current assets

     10,432        10,619   
  

 

 

   

 

 

 

TOTAL CURRENT ASSETS

     539,228        459,345   

Restricted investments

     19,142        17,218   

Property and equipment, net

     220,210        157,584   

Other intangibles, net

     18,957        20,068   

Goodwill, net

     263,087        263,251   

Other assets

     3,182        2,387   
  

 

 

   

 

 

 

TOTAL ASSETS

   $ 1,063,806      $ 919,853   
  

 

 

   

 

 

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

    

CURRENT LIABILITIES:

    

Accounts payable trade

   $ 259,863      $ 206,497   

Accounts payable other

     26,487        22,925   

Accrued payroll

     17,085        17,210   

Accrued other

     41,243        28,633   

Current portion of capital lease

     2,390        2,120   

Current portion of long term debt

     1,763        —     
  

 

 

   

 

 

 

TOTAL CURRENT LIABILITIES

     348,831        277,385   

Long term debt

     6,921        —     

Non-current liabilities

     20,841        20,041   

Long term portion of capital lease

     19,096        21,099   

Deferred taxes

     112,298        100,431   

STOCKHOLDERS’ EQUITY:

    

Preferred stock, $.01 par value; 2,000,000 shares authorized; no shares issued or outstanding in 2013 and 2012

     —          —     

Common stock

    

Class A: $.01 par value; 97,337,700 shares authorized and 41,224,792 shares issued in 2013 and 2012; 36,979,841 shares outstanding in 2013 and 36,767,485 shares outstanding in 2012

     412        412   

Class B: $.01 par value; 662,300 shares authorized; 662,296 shares issued and outstanding in 2013 and 2012

     7        7   

Additional paid-in capital

     165,243        167,765   

Purchase price in excess of predecessor basis, net of tax benefit of $10,306

     (15,458     (15,458

Retained earnings

     521,715        469,141   

Accumulated other comprehensive (loss) income

     (106     1   

Treasury stock; at cost 4,244,951 shares in 2013 and 4,457,307 shares in 2012

     (115,994     (120,971
  

 

 

   

 

 

 

TOTAL STOCKHOLDERS’ EQUITY

     555,819        500,897   
  

 

 

   

 

 

 

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY

   $ 1,063,806      $ 919,853   
  

 

 

   

 

 

 

See notes to unaudited consolidated financial statements.

 

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Table of Contents

HUB GROUP, INC.

UNAUDITED CONSOLIDATED STATEMENTS OF INCOME

AND COMPREHENSIVE INCOME

(in thousands, except per share amounts)

 

     Three Months     Nine Months  
     Ended September 30,     Ended September 30,  
     2013     2012     2013     2012  

Revenue

   $ 882,981      $ 804,888      $ 2,488,646      $ 2,323,085   

Transportation costs

     789,857        713,301        2,212,711        2,060,398   
  

 

 

   

 

 

   

 

 

   

 

 

 

Gross margin

     93,124        91,587        275,935        262,687   

Costs and expenses:

        

Salaries and benefits

     31,888        31,385        101,473        96,120   

Agent fees and commissions

     14,557        13,810        41,517        41,106   

General and administrative

     13,757        14,430        41,676        39,741   

Depreciation and amortization

     1,627        1,611        4,773        5,008   
  

 

 

   

 

 

   

 

 

   

 

 

 

Total costs and expenses

     61,829        61,236        189,439        181,975   

Operating income

     31,295        30,351        86,496        80,712   
  

 

 

   

 

 

   

 

 

   

 

 

 

Other income (expense):

        

Interest expense

     (323     (300     (918     (908

Interest and dividend income

     25        37        69        104   

Other, net

     (35     (17     (23     (58
  

 

 

   

 

 

   

 

 

   

 

 

 

Total other expense

     (333     (280     (872     (862

Income before provision for income taxes

     30,962        30,071        85,624        79,850   

Provision for income taxes

     12,362        11,576        33,050        30,741   
  

 

 

   

 

 

   

 

 

   

 

 

 

Net income

   $ 18,600      $ 18,495      $ 52,574      $ 49,109   
  

 

 

   

 

 

   

 

 

   

 

 

 

Other comprehensive loss:

        

Foreign currency translation adjustments

     (74     —          (107     (2
  

 

 

   

 

 

   

 

 

   

 

 

 

Total comprehensive income

   $ 18,526      $ 18,495      $ 52,467      $ 49,107   
  

 

 

   

 

 

   

 

 

   

 

 

 

Basic earnings per common share

   $ 0.50      $ 0.50      $ 1.43      $ 1.32   
  

 

 

   

 

 

   

 

 

   

 

 

 

Diluted earnings per common share

   $ 0.50      $ 0.50      $ 1.42      $ 1.32   
  

 

 

   

 

 

   

 

 

   

 

 

 

Basic weighted average number of shares outstanding

     36,873        37,079        36,866        37,064   
  

 

 

   

 

 

   

 

 

   

 

 

 

Diluted weighted average number of shares outstanding

     37,050        37,206        36,996        37,180   
  

 

 

   

 

 

   

 

 

   

 

 

 

See notes to unaudited consolidated financial statements.

 

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Table of Contents

HUB GROUP, INC.

UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

 

     Nine Months Ended
September 30,
 
     2013     2012  

Cash flows from operating activities:

    

Net income

   $ 52,574      $ 49,109   

Adjustments to reconcile net income to net cash provided by operating activities:

    

Depreciation and amortization

     15,479        16,300   

Deferred taxes

     10,945        7,693   

Compensation expense related to share-based compensation plans

     5,638        4,826   

(Gain) loss on sale of assets

     (345     42   

Excess tax benefits from share-based compensation

     (11     (97

Changes in operating assets and liabilities:

    

Restricted investments

     (1,924     (2,206

Accounts receivable, net

     (57,439     (57,417

Prepaid taxes

     (504     2,253   

Prepaid expenses and other current assets

     156        (1,913

Other assets

     (803     685   

Accounts payable

     55,641        38,386   

Accrued expenses

     1,330        8,917   

Non-current liabilities

     1,164        1,210   
  

 

 

   

 

 

 

Net cash provided by operating activities

     81,901        67,788   
  

 

 

   

 

 

 

Cash flows from investing activities:

    

Proceeds from sale of equipment

     1,788        819   

Purchases of property and equipment

     (66,079     (34,671

Cash used in acquisitions

     —          (425
  

 

 

   

 

 

 

Net cash used in investing activities

     (64,291     (34,277
  

 

 

   

 

 

 

Cash flows from financing activities:

    

Proceeds from issuance of debt

     9,120        —     

Repayments of long term debt

     (436     —     

Proceeds from stock options exercised

     42        46   

Stock tendered for payments of withholding taxes

     (2,621     (1,800

Purchase of treasury stock

     (903     —     

Capital lease payments

     (1,733     (1,697

Excess tax benefits from share-based compensation

     310        443   
  

 

 

   

 

 

 

Net cash provided by (used in) financing activities

     3,779        (3,008
  

 

 

   

 

 

 

Effect of exchange rate changes on cash and cash equivalents

     1        (9
  

 

 

   

 

 

 

Net increase in cash and cash equivalents

     21,390        30,494   

Cash and cash equivalents beginning of period

     70,760        49,091   
  

 

 

   

 

 

 

Cash and cash equivalents end of period

   $ 92,150      $ 79,585   
  

 

 

   

 

 

 

Supplemental disclosures of cash paid for:

    

Interest

   $ 887      $ 917   

Income taxes

   $ 24,372      $ 20,286   

See notes to unaudited consolidated financial statements.

 

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HUB GROUP, INC.

NOTES TO UNAUDITED

CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1. Interim Financial Statements

Our accompanying unaudited consolidated financial statements of Hub Group, Inc. (“we”, “us” or “our”) have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in annual financial statements have been omitted pursuant to those rules and regulations. However, we believe that the disclosures contained herein are adequate to make the information presented not misleading.

The financial statements reflect, in our opinion, all material adjustments (which include only normal recurring adjustments) necessary to fairly present our financial position as of September 30, 2013 and results of operations for the three months and nine months ended September 30, 2013 and 2012.

These unaudited consolidated financial statements and notes thereto should be read in conjunction with the consolidated financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2012. Results of operations in interim periods are not necessarily indicative of results to be expected for a full year due partially to seasonality.

NOTE 2. Business Segments

We report two business segments, Hub and Mode, based on the way we manage, evaluate and internally report our business activities.

Hub offers comprehensive intermodal, truck brokerage and logistics services. Our employees operate the freight through a network of operating centers located in the United States and Mexico. Each operating center is strategically located in a market with a significant concentration of shipping customers and one or more railheads. Hub has full time employees located throughout the United States and Mexico.

Mode has independent business owners who sell and operate the business throughout North America, as well as sales only agents. Mode also has a company managed operation and corporate offices in Dallas, TX, a temperature protected services division, Temstar, located in Downers Grove, IL and corporate offices in Memphis, TN.

Mode markets and operates its freight transportation services, consisting of intermodal, truck brokerage and logistics, primarily through agents who enter into contractual arrangements with Mode.

 

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Table of Contents

The following is a summary of operating results and certain other financial data for our business segments (in thousands):

 

    Three Months     Three Months  
    Ended September 30, 2013     Ended September 30, 2012  
                Inter-     Hub                 Inter-     Hub  
                Segment     Group                 Segment     Group  
    Hub     Mode     Elims     Total     Hub     Mode     Elims     Total  

Revenue

  $ 678,573      $ 217,424      $ (13,016   $ 882,981      $ 619,336      $ 199,903      $ (14,351   $ 804,888   

Transportation costs

    611,344        191,529        (13,016     789,857        552,071        175,581        (14,351     713,301   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Gross margin

    67,229        25,895        —          93,124        67,265        24,322        —          91,587   

Costs and expenses:

               

Salaries and benefits

    28,274        3,614        —          31,888        27,852        3,533        —          31,385   

Agent fees and commissions

    425        14,132        —          14,557        401        13,409        —          13,810   

General and administrative

    12,065        1,692        —          13,757        12,566        1,864        —          14,430   

Depreciation and amortization

    1,088        539        —          1,627        1,118        493        —          1,611   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total costs and expenses

    41,852        19,977        —          61,829        41,937        19,299        —          61,236   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Operating income

  $ 25,377      $ 5,918      $ —        $ 31,295      $ 25,328      $ 5,023      $ —        $ 30,351   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Capital expenditures

  $ 26,834      $ 43      $ —        $ 26,877      $ 11,853      $ 1,775      $ —        $ 13,628   

The following tables summarize our revenue by segment and business line (in thousands):

 

    Three Months     Three Months  
    Ended September 30, 2013     Ended September 30, 2012  
                Inter-     Hub                 Inter-     Hub  
                Segment     Group                 Segment     Group  
    Hub     Mode     Elims     Total     Hub     Mode     Elims     Total  

Intermodal

  $ 466,849      $ 102,105      $ (11,962   $ 556,992      $ 444,760      $ 92,552      $ (13,240   $ 524,072   

Truck brokerage

    88,281        81,708        (549     169,440        87,782        79,746        (717     166,811   

Logistics

    123,443        33,611        (505     156,549        86,794        27,605        (394     114,005   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total revenue

  $ 678,573      $ 217,424      $ (13,016   $ 882,981      $ 619,336      $ 199,903      $ (14,351   $ 804,888   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

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Table of Contents
    Nine Months     Nine Months  
    Ended September 30, 2013     Ended September 30, 2012  
                Inter-     Hub                 Inter-     Hub  
                Segment     Group                 Segment     Group  
    Hub     Mode     Elims     Total     Hub     Mode     Elims     Total  

Revenue

  $ 1,916,149      $ 608,802      $ (36,305   $ 2,488,646      $ 1,778,436      $ 581,378      $ (36,729   $ 2,323,085   

Transportation costs

    1,712,314        536,702        (36,305     2,212,711        1,584,844        512,283        (36,729     2,060,398   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Gross margin

    203,835        72,100        —          275,935        193,592        69,095        —          262,687   

Costs and expenses:

               

Salaries and benefits

    90,259        11,214        —          101,473        84,523        11,597        —          96,120   

Agent fees and commissions

    1,223        40,294        —          41,517        1,526        39,580        —          41,106   

General and administrative

    37,101        4,575        —          41,676        34,004        5,737        —          39,741   

Depreciation and amortization

    3,169        1,604        —          4,773        3,338        1,670        —          5,008   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total costs and expenses

    131,752        57,687        —          189,439        123,391        58,584        —          181,975   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Operating income

  $ 72,083      $ 14,413      $ —        $ 86,496      $ 70,201      $ 10,511      $ —        $ 80,712   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Capital expenditures

  $ 64,989      $ 1,090      $ —        $ 66,079      $ 32,175      $ 2,496      $ —        $ 34,671   

The following tables summarize our revenue by segment and business line (in thousands):

 

    Nine Months     Nine Months  
    Ended September 30, 2013     Ended September 30, 2012  
                Inter-     Hub                 Inter-     Hub  
                Segment     Group                 Segment     Group  
    Hub     Mode     Elims     Total     Hub     Mode     Elims     Total  

Intermodal

  $ 1,342,656      $ 284,056      $ (34,280   $ 1,592,432      $ 1,280,825      $ 260,823      $ (33,414   $ 1,508,234   

Truck brokerage

    255,688        234,551        (1,110     489,129        247,900        241,062        (2,259     486,703   

Logistics

    317,805        90,195        (915     407,085        249,711        79,493        (1,056     328,148   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total revenue

  $ 1,916,149      $ 608,802      $ (36,305   $ 2,488,646      $ 1,778,436      $ 581,378      $ (36,729   $ 2,323,085   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

    As of September 30, 2013     As of December 31, 2012  
                Inter-     Hub                 Inter-     Hub  
                Segment     Group                 Segment     Group  
    Hub     Mode     Elims     Total     Hub     Mode     Elims     Total  

Total assets

  $ 898,806      $ 168,822      $ (3,822   $ 1,063,806      $ 759,797      $ 163,719      $ (3,663   $ 919,853   

Goodwill

  $ 233,698      $ 29,389      $ —        $ 263,087      $ 233,862      $ 29,389      $ —        $ 263,251   

 

 

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Table of Contents

NOTE 3. Earnings Per Share

The following is a reconciliation of our earnings per share (in thousands, except for per share data):

 

     Three Months Ended,
September 30,
     Nine Months Ended,
September 30,
 
     2013      2012      2013      2012  

Net income for basic and diluted earnings per share

   $ 18,600       $ 18,495       $ 52,574       $ 49,109   
  

 

 

    

 

 

    

 

 

    

 

 

 

Weighted average shares outstanding – basic

     36,873         37,079         36,866         37,064   

Dilutive effect of stock options and restricted stock

     177         127         130         116   
  

 

 

    

 

 

    

 

 

    

 

 

 

Weighted average shares outstanding – diluted

     37,050         37,206         36,996         37,180   
  

 

 

    

 

 

    

 

 

    

 

 

 

Earnings per share – basic

   $ 0.50       $ 0.50       $ 1.43       $ 1.32   
  

 

 

    

 

 

    

 

 

    

 

 

 

Earnings per share – diluted

   $ 0.50       $ 0.50       $ 1.42       $ 1.32   
  

 

 

    

 

 

    

 

 

    

 

 

 

NOTE 4. Fair Value Measurement

The carrying value of cash and cash equivalents, accounts receivable and accounts payable approximated fair value as of September 30, 2013 and December 31, 2012 due to their short-term nature.

We consider as cash equivalents all highly liquid instruments with an original maturity of three months or less. As of September 30, 2013 and December 31, 2012, our cash is with high quality financial institutions in DDAs (Demand Deposit Accounts).

Restricted investments included $19.1 million and $17.2 million as of September 30, 2013 and December 31, 2012, respectively, of mutual funds which are reported at fair value.

The fair value measurement of these securities is based on quoted prices in active markets for identical assets which are defined as “Level 1” of the fair value hierarchy in the Fair Value Measurements and Disclosures Topic of the Codification.

NOTE 5. Guarantees

As a recruiting tool for our owner-operators, we are guaranteeing certain owner-operators’ lease payments for tractors. The guarantees expire at various dates beginning in 2013 through 2020.

The potential maximum exposure under these lease guarantees was approximately $42.2 million and $48.2 million as of September 30, 2013 and December 31, 2012, respectively. The potential maximum exposure represents the amount of the remaining lease payments on all outstanding guaranteed leases as of September 30, 2013 and December 31, 2012. However, upon default, we have the option to purchase the tractors. We could then sell the tractors and use the proceeds to recover all or a portion of the amounts paid under the guarantees. Alternatively, we can contract with another owner-operator who would assume the lease. There were no material defaults during the periods ended September 30, 2013 and December 31, 2012 and no potential material defaults.

We had a liability of approximately $0.8 million as of September 30, 2013 and $1.0 million as of December 31, 2012, representing the fair value for estimated defaults of the guarantees, based on a discounted cash-flow analysis which is included in current and non-current liabilities in our Consolidated Balance Sheets. We are amortizing the amounts over the remaining lives of the respective guarantees.

 

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NOTE 6. Commitments and Contingencies

During the first half of 2013, we entered into equipment purchase contracts for the acquisition of 4,029 53’ containers. We expect the total cost of purchasing the containers to be approximately $45.7 million. As of September 30, 2013, $11.3 million of the remaining $25.8 million to be paid is accrued in our current liabilities. As of October 14, 2013, 3,258 containers have been delivered with the remaining 771 containers to be delivered by the end of 2013.

During the fourth quarter of 2012, we exercised our purchase option on approximately 4,000 containers that are currently leased. In addition, during the second quarter of 2013, we exercised our purchase option on another 200 containers that are currently leased. The purchases, totaling approximately $14.8 million, will occur as the leases expire throughout 2013. As of October 14, 2013, we have purchased 3,193 containers for approximately $11.4 million.

NOTE 7.

We entered into a Master Loan and Security Agreement on April 29, 2013 containing various Equipment Notes (Notes). The Notes provided financing for eighty 2014 Peterbilt tractors. The Notes have terms that expire between May 14, 2018 and June 19, 2018 and bear fixed interest rates between 1.9% and 2.0%. The Notes require quarterly principal and interest payments of $480,000.

Our outstanding debt is as follows (in thousands):

 

     Period Ended  
     September 30,
2013
    December 31,
2012
 

Equipment Notes due by June 19, 2018 with quarterly principal and interest payments of $480,000 commencing on August 14, 2013; interest is paid quarterly at a fixed rate between 1.9% and 2.0%

   $ 8,684      $ —     
  

 

 

   

 

 

 

Less current portion

     (1,763     —     
  

 

 

   

 

 

 

Total long-term debt

   $ 6,921      $ —     
  

 

 

   

 

 

 

Aggregate principal payments, in thousands, due subsequent to September 30, 2013, are as follows:

 

2013

   $ 437   

2014

     1,771   

2015

     1,806   

2016

     1,841   

2017

     1,877   

2018 and thereafter

     952   
  

 

 

 
   $ 8,684   
  

 

 

 

We have standby letters of credit that expire on various dates in 2013 and 2014. As of September 30, 2013, our letters of credit were $4.2 million.

Our unused and available borrowings under our bank revolving line of credit were $45.8 million as of September 30, 2013 and $46.3 million as of December 31, 2012. We were in compliance with our debt covenants as of September 30, 2013.

 

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NOTE 8. Legal Matters

We are a party to litigation incident to our business, including claims for personal injury and/or property damage, bankruptcy preference claims, claims regarding freight lost or damaged in transit, improperly shipped or improperly billed. Some of the lawsuits to which we are party are covered by insurance and are being defended by our insurance carriers. Some of the lawsuits are not covered by insurance and we defend those ourselves. We do not believe that the outcome of this litigation will have a material adverse effect on our financial position or results of operations.

On January 25, 2013, a complaint was filed in the U.S. District Court for the Eastern District of California (Sacramento Division) by Salvador Robles against our subsidiary, Comtrak Logistics, Inc. Mr. Robles drove a truck for Comtrak in California, first as an independent contractor and then as an employee. The action seeks class certification on behalf of a class comprised of present and former California-based truck drivers for Comtrak who were classified as independent contractors, from January 2009 to the present. The complaint alleges Comtrak has misclassified such drivers as independent contractors and that such drivers were employees. The complaint asserts various violations of the California Labor Code and claims that Comtrak has engaged in unfair competition practices. The complaint seeks, among other things, declaratory and injunctive relief, compensatory damages and attorney’s fees. In May 2013, the complaint was amended to add similar claims based on Mr. Robles’ status as an employed company driver. These additional claims are only on behalf of Mr. Robles and not a proposed class. In August 2013, the court stayed proceedings in the case pending decisions by the Court of Appeals for the 9th Circuit to decide whether two similar cases should be dismissed on federal preemption grounds. We cannot reasonably estimate at this time the possible loss or range of loss, if any, that may arise from this lawsuit.

NOTE 9. New Pronouncements

In July 2012, the FASB issued an update to Topic 350 – Intangibles – Goodwill and Other of the Accounting Standards Codification. The objective of this update is to simplify how entities test indefinite lived intangibles for impairment. The amendments in the update permit an entity to first assess qualitative factors to determine whether it is more likely than not that the fair value of the indefinite lived intangible asset is less than its carrying amount as a basis for determining whether it is necessary to perform the quantitative test described in Topic 350. The more-likely-than-not threshold is defined as having a likelihood of more than 50 percent. We adopted this guidance effective January 1, 2013 as required, and the adoption did not impact our consolidated financial statements.

NOTE 10. Subsequent Event

In October 2013, we entered into an equipment purchase contract for the acquisition of 200 Freightliner tractors. We expect the cost of purchasing the tractors to be approximately $25.5 million.

 

 

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HUB GROUP, INC.

 

Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The information contained in this quarterly report contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Words such as “expects,” “hopes,” “believes,” “intends,” “estimates,” “anticipates,” and variations of these words and similar expressions are intended to identify these forward-looking statements. 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. We assume no liability to update any such forward-looking statements contained in this quarterly report. Factors that could cause our actual results to differ materially include:

 

    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;

 

    inability to successfully protect our data against cyber attacks;

 

    significant deterioration in our customers’ financial condition, particularly in the retail, consumer products 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 regulations;

 

    significant increases to health insurance costs due to the Affordable Care Act;

 

    loss of several of our largest customers and Mode agents;

 

    inability to recruit and retain key personnel and Mode sales agents and IBOs;

 

    inability to recruit and maintain 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.

 

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EXECUTIVE SUMMARY

Hub Group, Inc. (“we”, “us” or “our”) reports two distinct business segments, Hub and Mode. The Mode segment includes only the business we acquired on April 1, 2011. The Hub segment includes all businesses other than Mode. Hub Group (as opposed to just Hub), refers to the consolidated results for the whole company, including both the Mode and Hub segments. For the segment financial results, refer to Note 2 of the consolidated financial statements.

We are the largest intermodal marketing company (“IMC”) in the United States and a full service transportation provider offering intermodal, truck brokerage and logistics services. We operate through a nationwide network of operating centers and independent business owners.

As an IMC, we arrange for the movement of our customers’ freight in containers and trailers over long distances. We contract with railroads to provide transportation for the long-haul portion of the shipment and with local trucking companies, known as “drayage companies,” for local pickup and delivery. As part of the intermodal services, we negotiate rail and drayage rates, electronically track shipments in transit, consolidate billing and handle claims for freight loss or damage on behalf of our customers.

As of September 30, 2013, approximately 66% of Hub’s drayage needs were met by our subsidiary, Comtrak Logistics, Inc. (“Comtrak”), which assists us in providing reliable, cost effective intermodal services to our customers. Comtrak has terminals in Atlanta, Birmingham, Charlotte, Chattanooga, Chicago, Cleveland, Columbus (OH), Dallas, Harrisburg, Huntsville, Indianapolis, Jacksonville, Kalamazoo, Kansas City, Milwaukee, Memphis, Nashville, Newark, Los Angeles, Perry (FL), Philadelphia, Portland (OR), Savannah, Seattle, St. Louis, Stockton, and Titusville (FL). As of September 30, 2013, Comtrak leased or owned 333 tractors, leased or owned 448 trailers, employed 405 drivers and contracted with 2,290 owner-operators.

We also arrange for the transportation of freight by truck, providing customers with another option for their transportation needs. We match the customers’ needs with carriers’ capacity to provide the most effective service and price combinations. As part of our truck brokerage services, we negotiate rates, track shipments in transit and handle claims for freight loss or damage on behalf of our customers.

Our logistics service consists of complex transportation management services, including load consolidation, mode optimization and carrier management. These service offerings are designed to take advantage of the increasing trend for shippers to outsource all or a greater portion of their transportation needs.

Hub has full time marketing representatives throughout North America who service local, regional and national accounts. We believe that fostering long-term customer relationships is critical to our success and allows us to better understand our customers’ needs and specifically tailor our transportation services to them.

Hub’s yield management group works with pricing and operations to enhance Hub’s customer margins. We are working on margin enhancement projects including matching up inbound and outbound loads, reducing empty miles, improving our recovery of accessorial costs, using Comtrak more, and reviewing and improving low margin loads.

Hub’s top 50 customers represent approximately 63% of the Hub segment revenue for the nine months ended September 30, 2013. We use various performance indicators to manage our business. We closely monitor margin and gains and losses for our top 50 customers. We also evaluate on-time performance, cost per load and daily sales outstanding by customer account. Vendor cost changes and vendor service issues are also monitored closely.

 

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Mode has approximately 235 agents, consisting of 96 sales/operating agents, known as Independent Business Owners (“IBOs”), who sell and operate the business throughout North America and 139 sales only agents. Mode also has a company managed operation and corporate offices in Dallas, a temperature protected services division, Temstar, located in Downers Grove, IL and corporate offices in Memphis. Mode’s top 20 customers represent approximately 36% of the Mode segment revenue for the nine months ended September 30, 2013. We closely monitor revenue and margin for these customers. We believe Mode brings us highly complementary service offerings, more scale and a talented sales channel that allows us to better reach small and midsize customers.

RESULTS OF OPERATIONS

Three Months Ended September 30, 2013 Compared to the Three Months Ended September 30, 2012

The following table summarizes our revenue by segment and business line (in thousands) for the three months ended September 30:

 

     Three Months      Three Months  
     Ended September 30, 2013      Ended September 30, 2012  
                   Inter-     Hub                    Inter-     Hub  
                   Segment     Group                    Segment     Group  
     Hub      Mode      Elims     Total      Hub      Mode      Elims     Total  

Intermodal

   $ 466,849       $ 102,105       $ (11,962   $ 556,992       $ 444,760       $ 92,552       $ (13,240   $ 524,072   

Truck brokerage

     88,281         81,708         (549     169,440         87,782         79,746         (717     166,811   

Logistics

     123,443         33,611         (505     156,549         86,794         27,605         (394     114,005   
  

 

 

    

 

 

    

 

 

   

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 

Total revenue

   $ 678,573       $ 217,424       $ (13,016   $ 882,981       $ 619,336       $ 199,903       $ (14,351   $ 804,888   
  

 

 

    

 

 

    

 

 

   

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 

Revenue

Hub Group’s revenue increased 9.7% to $883.0 million in 2013 from $804.9 million in 2012.

The Hub segment revenue increased 9.6% to $678.6 million. Hub intermodal revenue increased 5% to $466.8 million due to a 5% increase in loads. Price was up, but was offset by the impact of lower fuel surcharges and unfavorable mix. Hub truck brokerage revenue increased 1% to $88.3 million due primarily to a 4% increase in loads partially offset by unfavorable mix, which was primarily due to a 6% decrease in length of haul. Hub logistics revenue increased 42% to $123.4 million related primarily to new customer growth.

Mode’s revenue increased 8.8% to $217.4 million in 2013 from $199.9 million in 2012. Mode intermodal revenue increased 10% while Mode truck brokerage and logistics revenues increased 2% and 22%, respectively. Mode’s intermodal loads increased 16% while logistics revenue increased due to 19% growth in less than truckload business.

Gross Margin

Hub Group’s gross margin increased 1.7% to $93.1 million in 2013 from $91.6 million in 2012.

The Hub segment gross margin decreased 0.1% to $67.2 million. Logistics’ gross margin increased but was offset by a decline in truck brokerage gross margin. Intermodal gross margin was flat. Logistics’ gross margin is up due to new customer growth. Truck brokerage gross margin is down because of unfavorable traffic mix, including growth in short-haul lanes. Intermodal margin was flat as volume and modest price increases were offset by higher transportation costs and unfavorable mix. Hub’s gross margin as a percentage of sales decreased to 9.9% as compared to last year’s 10.9% margin. This decrease is due to lower yields in all three business lines.

 

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Mode’s gross margin increased 6.5% to $25.9 million in 2013 from $24.3 million in 2012 due primarily to growth in intermodal. Mode’s gross margin as a percentage of revenue decreased to 11.9% in 2013 from 12.2% in 2012.

CONSOLIDATED OPERATING EXPENSES

The following table includes certain items in the consolidated statements of income as a percentage of revenue:

 

     Three Months Ended  
     September 30,  
     2013     2012  

Revenue

     100.0     100.0

Transportation costs

     89.5        88.6   
  

 

 

   

 

 

 

Gross margin

     10.5        11.4   

Costs and expenses:

    

Salaries and benefits

     3.6        3.9   

Agent fees and commissions

     1.6        1.7   

General and administrative

     1.6        1.8   

Depreciation and amortization

     0.2        0.2   
  

 

 

   

 

 

 

Total costs and expenses

     7.0        7.6   

Operating income

     3.5        3.8   

Salaries and Benefits

Hub Group’s salaries and benefits increased to $31.9 million in 2013 from $31.4 million in 2012. As a percentage of revenue, Hub Group’s salaries and benefits decreased to 3.6% in 2013 from 3.9% in 2012 due to increased revenue.

The Hub segment increase of $0.4 million was due to increases in salaries of $2.2 million, due to higher headcount and merit increases, compensation related to restricted stock awards of $0.2 million and employee benefits of $0.1 million. These increases were offset by a decrease in employee bonuses of $2.1 million.

Mode’s salaries and benefits expense increased to $3.6 million in 2013 from $3.5 million in 2012. The increase was due primarily to increases in salaries of $0.1 million and compensation related to restricted stock awards of $0.1 million, offset by a decrease in employee bonuses of $0.1 million.

Hub Group’s headcount as of September 30, 2013 was 1,413, which excludes drivers, as driver costs are included in transportation costs. As of September 30, 2013, Mode had 129 employees.

Agent Fees and Commissions

Hub Group’s agent fees and commissions expenses increased to $14.6 million in 2013 from $13.8 million in 2012. These expenses as a percentage of revenue decreased to 1.6% in 2013 from 1.7% in 2012.

The Hub segment agent fees and commissions expense remained consistent at $0.4 million in both 2013 and 2012.

The Mode segment agent fees and commissions expense increase of $0.7 million was due to the increase in gross margin.

 

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General and Administrative

Hub Group’s general and administrative expenses decreased to $13.8 million in 2013 from $14.4 million in 2012. As a percentage of revenue, these expenses decreased to 1.6% in 2013 from 1.8% in 2012.

The Hub segment decrease of $0.5 million was due primarily to a decrease in claims expense of $1.5 million and a decrease in outside consultant expenses of $0.7 million. These decreases were partially offset by increases in bad debt expense of $0.4 million, repairs and maintenance expense of $0.4 million, general insurance expense of $0.3 million, rent expense of $0.2 million and meals and entertainment, office expense, temporary labor and employee training each for $0.1 million.

Mode’s general and administrative expenses decreased to $1.7 million in 2013 from $1.9 million in 2012. The decrease was primarily due to a decrease in outside consultant expense of $0.2 million.

Depreciation and Amortization

Hub Group’s depreciation and amortization remained consistent at $1.6 million in both 2013 and 2012.

The Hub segment’s depreciation expense was consistent at $1.1 million in both 2013 and 2012.

Mode’s depreciation expense was consistent at $0.5 million in both 2013 and 2012

Other Income (Expense)

Hub Group’s interest expense remained consistent at $0.3 million in both 2013 and 2012.

Provision for Income Taxes

The provision for income taxes increased to $12.4 million in 2013 from $11.6 million in 2012. This increase was the combined result of greater income in 2013 and the enactment of Pennsylvania income tax changes in July 2013 which increased our effective rate to 39.9% in 2013 from 38.5% in 2012.

Net Income

Net income increased to $18.6 million in 2013 from $18.5 million in 2012 due primarily to higher gross margin.

Earnings Per Common Share

Basic earnings per share were $0.50 in both 2013 and 2012.

Diluted earnings per share were $0.50 in both 2013 and 2012.

 

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Nine Months Ended September 30, 2013 Compared to the Nine Months Ended September 30, 2012

The following table summarizes our revenue by segment and business line (in thousands) for the nine months ended September 30:

 

     Nine Months      Nine Months  
     Ended September 30, 2013      Ended September 30, 2012  
                   Inter-     Hub                    Inter-     Hub  
                   Segment     Group                    Segment     Group  
     Hub      Mode      Elims     Total      Hub      Mode      Elims     Total  

Intermodal

   $ 1,342,656       $ 284,056       $ (34,280   $ 1,592,432       $ 1,280,825       $ 260,823       $ (33,414   $ 1,508,234   

Truck brokerage

     255,688         234,551         (1,110     489,129         247,900         241,062         (2,259     486,703   

Logistics

     317,805         90,195         (915     407,085         249,711         79,493         (1,056     328,148   
  

 

 

    

 

 

    

 

 

   

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 

Total revenue

   $ 1,916,149       $ 608,802       $ (36,305   $ 2,488,646       $ 1,778,436       $ 581,378       $ (36,729   $ 2,323,085   
  

 

 

    

 

 

    

 

 

   

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 

Revenue

Hub Group’s revenue increased 7.1% to $2.5 billion in 2013 from $2.3 billion in 2012.

The Hub segment revenue increased 7.7% to $1.9 billion. Hub’s intermodal revenue increased 5% to $1.3 billion due to a 3% increase in loads and an increase in price partially offset by slightly lower fuel surcharges. Hub truck brokerage revenue increased 3% to $255.7 million primarily due to a 5% increase in loads partially offset by unfavorable mix, which was primarily due to a 5% reduction in length of haul. Hub logistics revenue increased 27% to $317.8 million related primarily to new customer growth.

Mode’s revenue increased 4.7% to $608.8 million in 2013 from $581.4 million in 2012. Mode’s intermodal revenue increased 9% while Mode’s truck brokerage revenue decreased by 3%. Mode’s logistics revenue increased by 13%. Mode’s` intermodal loads increased 13% while logistics revenue increased due to 11% growth in less than truckload business.

Gross Margin

Hub Group’s gross margin increased 5.0% to $275.9 million in 2013 from $262.7 million in 2012.

The Hub segment gross margin increased 5.3% to $203.8 million. Hub’s $10.2 million gross margin increase came primarily from intermodal and logistics. Intermodal margin grew primarily due to 3% volume growth. Logistics margin growth was driven primarily by new customers. As a percentage of Hub segment revenue, gross margin decreased to 10.6% in 2013 from 10.9% in 2012. This decrease is due to lower yield in intermodal and truck brokerage.

Mode’s gross margin increased 4.3% to $72.1 million in 2013 from $69.1 million in 2012 due primarily to growth in intermodal gross margin. Mode’s gross margin as a percentage of revenue decreased slightly to 11.8% in 2013 from 11.9% in 2012.

 

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CONSOLIDATED OPERATING EXPENSES

The following table includes certain items in the consolidated statements of income as a percentage of revenue:

 

     Nine Months Ended  
     September 30,  
     2013     2012  

Revenue

     100.0     100.0

Transportation costs

     88.9        88.7   
  

 

 

   

 

 

 

Gross margin

     11.1        11.3   

Costs and expenses:

    

Salaries and benefits

     4.1        4.1   

Agent fees and commissions

     1.6        1.8   

General and administrative

     1.7        1.7   

Depreciation and amortization

     0.2        0.2   
  

 

 

   

 

 

 

Total costs and expenses

     7.6        7.8   

Operating income

     3.5        3.5   

Salaries and Benefits

Hub Group’s salaries and benefits increased to $101.5 million in 2013 from $96.1 million in 2012. As a percentage of revenue, salaries and benefits remained consistent at 4.1% in both 2013 and 2012.

The Hub segment salaries and benefits increase of $5.7 million was due primarily to increases in salaries of $4.3 million, compensation related to restricted stock awards of $0.6 million, employee benefits of $0.5 million, payroll taxes of $0.4 million and employee bonuses of $0.1 million. These increases were partially offset by a decrease in commissions of $0.2 million.

Mode’s salaries and benefits decrease of $0.4 million was due primarily to a decrease in salaries of $0.4 million and employee benefits of $0.2 million partially offset by increases in employee bonuses and compensation related to restricted stock awards of $0.1 million each.

Agent Fees and Commissions

Hub Group’s agent fees and commissions expenses increased to $41.5 million in 2013 from $41.1 million in 2012. These expenses as a percentage of revenue decreased to 1.6% in 2013 from 1.8% in 2012.

The Hub segment agent fees and commissions decrease of $0.3 million was due to a smaller Hub agent program.

The Mode segment agent fees and commissions increase of $0.7 million was due to the increase in Mode’s gross margin.

General and Administrative

Hub Group’s general and administrative expenses increased to $41.7 million in 2013 from $39.7 million in 2012. As a percentage of revenue, these expenses remained consistent at 1.7% in both 2013 and 2012.

The Hub segment increase of $3.1 million was due primarily to increases in; professional fees associated with an unsuccessful acquisition of $1.0 million, rent expense of $0.9 million, bad debt expense of $0.7 million, general insurance expense of $0.6 million, repairs and maintenance expense of $0.5 million and meals and entertainment, equipment leases and other taxes of $0.2 million each. These increases were partially offset by a decrease in claims expense of $1.5 million in 2013.

 

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Mode’s general and administrative expenses decreased by $1.2 million to $4.6 million in 2013. The decrease was primarily due to a decrease in outside consultant expense of $0.7 million and an increase in the gain on the sale of equipment of $0.5 million.

Depreciation and Amortization

Hub Group’s depreciation and amortization decreased to $4.8 million in 2013 from $5.0 million in 2012. This expense as a percentage of revenue remained constant at 0.2% in both 2013 and 2012.

The Hub segment expense was $3.2 million for 2013 and $3.3 million in 2012.

Mode’s depreciation expense was $1.6 million for 2013 and $1.7 million in 2012.

Other Income (Expense)

Hub Group’s interest expense remained consistent at $0.9 million in both 2013 and 2012.

Provision for Income Taxes

The provision for income taxes increased to $33.1 million in 2013 from $30.7 million in 2012. Our effective rate was 38.6% in 2013 and 38.5% in 2012. The 2013 rate was higher primarily due to the enactment of Pennsylvania income tax changes in July 2013.

Net Income

Net income increased to $52.6 million in 2013 from $49.1 million in 2012 due primarily to higher gross margin.

Earnings Per Common Share

Basic earnings per share increased to $1.43 in 2013 from $1.32 in 2012. Basic earnings per share increased primarily due to the increase in net income.

Diluted earnings per share increased to $1.42 in 2013 from $1.32 in 2012. Diluted earnings per share increased primarily due to the increase in net income.

LIQUIDITY AND CAPITAL RESOURCES

During the first nine months of 2013, we funded operations, capital expenditures, purchase of treasury stock and stock buy backs related to employee withholding upon vesting of restricted stock through cash flows from operations, cash on hand and proceeds from the issuance of long-term debt. We believe that our cash, cash flow from operations and borrowings available under our Credit Agreement will be sufficient to meet our cash needs for at least the next twelve months.

Cash provided by operating activities for the nine months ended September 30, 2013 was approximately $81.9 million, which resulted primarily from income of $52.6 million and adjustments for non-cash charges of $31.7 million partially offset by the change in operating assets and liabilities of $2.4 million.

Net cash used in investing activities for the nine months ended September 30, 2013 was $64.3 million, which includes proceeds from the sale of equipment of $1.8 million. Capital expenditures of $66.1 million related primarily to the construction of our new corporate headquarters of $15.0 million, computer hardware and software of $6.9 million, containers and transportation equipment of $42.7 million and leasehold improvements of $1.3 million. We expect capital expenditures to be between $40 million and $60 million in the fourth quarter of 2013. Fourth quarter capital expenditures will primarily consist of our new corporate headquarters, which should be completed by the end of 2013, containers and technology related investments.

 

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Net cash provided by financing activities for the nine months ended September 30, 2013 was $3.8 million. We used $2.6 million of cash for stock tendered for payments of withholding taxes, $1.7 million for capital lease payments, $0.9 million to purchase treasury stock and $0.4 million for repayment of long term debt. These payments were offset by proceeds from the issuance of debt of $9.1 million and excess tax benefits from share-based compensation of $0.3 million as a financing cash in-flow.

We have standby letters of credit that expire at various dates in 2013 and 2014. As of September 30, 2013, our letters of credit were $4.2 million.

Our unused and available borrowings under our bank revolving line of credit were $45.8 million as of September 30, 2013. We were in compliance with our debt covenants as of September 30, 2013.

We believe that our cash, cash flow from operations and borrowings available under our Credit Agreement will be sufficient to meet our cash needs for at least the next twelve months.

 

Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We are exposed to market risk related to changes in interest rates on our bank line of credit which may adversely affect our results of operations and financial condition. We have no significant exposure to foreign currency exchange rate changes. No derivative financial instruments were outstanding as of September 30, 2013 and December 31, 2012. We do not use financial instruments for trading purposes.

As of September 30, 2013 and December 31, 2012, other than our outstanding letters of credit, the Company had no outstanding obligations under its bank line of credit arrangement.

 

Item 4. CONTROLS AND PROCEDURES

As of September 30, 2013, an evaluation was carried out under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of our disclosure controls and procedures. Based upon this evaluation, the Chief Executive Officer and Chief Financial Officer concluded that these disclosure controls and procedures were effective as of September 30, 2013. There have been no changes in our internal control over financial reporting identified in connection with such evaluation that occurred during the last fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

 

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PART II. OTHER INFORMATION

 

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

On November 26, 2012, our Board of Directors authorized the purchase of up to $25.0 million of our Class A Common Stock. This authorization expires December 31, 2013. We purchased 26,593 shares during the nine months ended September 30, 2013. We may make purchases from time to time as market conditions warrant, and any repurchased shares are expected to be held in treasury for future use.

The following table displays the number of shares purchased during the quarter and the maximum value of shares that may yet be purchased under the plan:

 

     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)
 

January 1 to March 31

     26,593       $ 33.94         26,593       $ 12,888   

April 1 to June 30

     —         $ —           —         $ 12,888   

July 1 to September 30

     —         $ —           —         $ 12,888   
  

 

 

    

 

 

    

 

 

    

 

 

 

Total

     26,593       $ 33.94         26,593       $ 12,888   
  

 

 

    

 

 

    

 

 

    

 

 

 

This table excludes 75,626 shares we purchased for $2.6 million during the nine months ended September 30, 2013 related to employee withholding upon vesting of restricted stock.

 

Item 6. EXHIBITS

The exhibits included as part of the Form 10-Q are set forth in the Exhibit Index immediately preceding such Exhibits and are incorporated herein by reference.

 

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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: October 31, 2013

   

/s/ Terri A. Pizzuto

    Terri A. Pizzuto
    Executive Vice President, Chief Financial
    Officer and Treasurer
    (Principal Financial Officer)

 

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EXHIBIT INDEX

 

Exhibit No.    Description
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, 2013 formatted in XBRL: (i) Consolidated Balance Sheets; (ii) Unaudited Consolidated Statements of Income and Comprehensive Income; (iii) Unaudited Consolidated Statements of Cash Flows; and (iv) Notes to Unaudited Consolidated Financial Statements.

 

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