Hub revenue up 30%, rebranding campaign planned

Broker network Hub International Ltd. (TSX, NYSE: HBG) saw its revenues rise to a record US$286.4 million in 2003, up 30% from the US$220.0 million recorded for 2002.
Net earnings for the year were US$38.5 million, or US$1.14 per share, up from US$31.9 million, or US$1.06 per share the year prior.
Both Canadian and U.S. operations fared well, with Canada posting revenue of US$109.1 million (2002: US$85.8 million) and organic growth of 12%. U.S. brokerages combined for revenue of US$177.2 million (2002: US$134.1 million) and organic growth of 3%.
The company closed 2003 with cash and cash equivalents of US$82.1 million, an increase of 102% over the end of 2002.
Despite these strong results, Hub International chairman and CEO Martin P. Hughes says the company did not achieve an increase in its net margin, or its goals for acquisition in 2003. “While we are proud of the growth delivered by many of our brokerages in 2003, we also believe that we can and must achieve more for our shareholders and employees,” Hughes says. “Our goal is to achieve sustainable growth and margin expansion on a long-term basis and we are increasing our efforts to accelerate the pace of improvement.”
In the fourth quarter ending December 31, 2003, the company saw revenue of US$78.7 million, up 24% from US$63.6 million in the last quarter of 2002. Net earnings for the most recent period were US$11.2 million, or US$0.33 per share, up from US$8.8 million, or US$0.26 per share for the same period a year earlier.
Hub declared a quarterly dividend of US$0.05 per share on its outstanding common shares, payable on April 30, 2004.
For 2004, the company is reporting initial earnings guidance of US$1.13-$1.17 per diluted share.
It also has big plans for rebranding and controlling compensation costs, which grew 35% in 2003.
During the spring and summer of 2004, all Hub brokerages will be rebranded to operate under the Hub name, a move which will result in a US$2.6 million per-tax charge on its first quarter 2004 results. “While some of our brokerages have operated under trade names that date back several decades, we recognize that a common name and marketing identity can be a powerful driver of awareness, sales growth and corporate culture,” Hughes says.
Also, the company has begun to implement a plan to reduce compensation, including the transfer of approximately US$15.1 million of restricted share units to management in lieu of cash.