J.B. Hunt Transport Services, Inc. Reports Earnings for the Third Quarter 2016

  • Third Quarter 2016 Revenue: $1.69 billion; up 7%
  • Third Quarter 2016 Operating Income: $183 million; down 6%
  • Third Quarter 2016 EPS: 97 cents vs. 99 cents

LOWELL, Ark.--()--J.B. Hunt Transport Services, Inc., (NASDAQ:JBHT) announced third quarter 2016 net earnings of $109.4 million, or diluted earnings per share of 97 cents vs. third quarter 2015 net earnings of $115.1 million, or 99 cents per diluted share.

Total operating revenue for the current quarter was $1.69 billion, compared with $1.59 billion for the third quarter 2015. Load growth of 7% in Intermodal (JBI), a 2.9% increase in revenue producing trucks and improved asset productivity in Dedicated Contract Services (DCS)™, an 88% increase in load volume in Integrated Capacity Solutions (ICS) and a 4% increase in truck count in our Truck (JBT) business segment, partially offset by lower customer rates in JBI, ICS and JBT and tepid customer demand, contributed to the increase in consolidated revenue compared to prior year. Current quarter total operating revenue, excluding fuel surcharges, increased 8.4% vs. the comparable quarter 2015.

Operating income for the current quarter totaled $183 million vs. $194 million for the third quarter 2015. Operating income decreased from third quarter 2015 primarily from lower customer rates in JBI, ICS and JBT, increased rail purchase transportation rates, lower box turns, increases in driver wages and recruiting costs, losses on the sale of used equipment (versus gains in 2015), increased legal and consulting costs and higher equipment maintenance and ownership costs.

Interest expense in the current quarter decreased primarily from the timing effect of the issuance of the senior notes that occurred in the third quarter 2015. The effective income tax rate for the current quarter is 38%, compared to 38.1% in the third quarter 2015. We expect our 2016 annual tax rate to be approximately 38%.

Segment Information:

Intermodal (JBI)

  • Third Quarter 2016 Segment Revenue: $970 million; up 2%
  • Third Quarter 2016 Operating Income: $116.9 million; down 7%

Overall volumes increased 7% over the same period in 2015. The Eastern network realized load growth of 5% and Transcontinental loads grew 8% over the third quarter 2015 as west coast outbound freight growth outpaced the rest of the network and western rail service continued a year over year improvement trend. Revenue increased 2% reflecting the 7% volume growth and an approximate 4.2% decrease in revenue per load, which is the combination of changes in customer rate, freight mix and fuel surcharges. Revenue per load excluding fuel surcharges decreased approximately 2% compared to third quarter 2015.

Operating income decreased 7% over prior year. Benefits from improved volumes, improved operating efficiencies from network balance and reduced reliance on third party dray carriers were offset by lower customer rates, increases in rail purchased transportation rates, equipment ownership costs including lower box utilization, increased insurance and claims costs and increased costs to attract and retain drivers. The current period ended with approximately 82,800 units of trailing capacity and 5,280 power units assigned to the dray fleet.

Dedicated Contract Services (DCS)

  • Third Quarter 2016 Segment Revenue: $394 million; up 6%
  • Third Quarter 2016 Operating Income: $52.5 million; up 16%

DCS revenue increased 6% during the current quarter over the same period in 2015. Productivity (revenue per truck per week) increased by approximately 3% vs. 2015. Productivity excluding fuel surcharge revenue increased approximately 4% from a year ago primarily from improved integration of assets between customer accounts, fewer unseated trucks, increased customer supply chain fluidity and customer rate increases. A year-over-year net addition of 205 revenue producing trucks, 50 net additions sequentially from second quarter 2016, were in the fleet by the end of the quarter. Approximately 75% of these additions represent private fleet conversions versus traditional dedicated capacity services and primarily reflect new contract implementations in this and prior periods. Customer retention rates remain above 98%.

Operating income increased by 16% from a year ago primarily from the increased revenue and improved asset utilization partially offset by higher driver wages and recruiting costs, increased salaries and benefits costs and higher equipment ownership costs compared to the same period in 2015.

Integrated Capacity Solutions (ICS)

  • Third Quarter 2016 Segment Revenue: $233 million; up 35%
  • Third Quarter 2016 Operating Income: $8.5 million; down 26%

ICS revenue increased 35% in the current quarter vs. the third quarter 2015. Load volume increased 88% while revenue per load decreased 28.5% due to lower fuel prices, freight mix changes driven by customer demand and lower customer rates on contractual business. Contractual volumes represented approximately 75% of total load volume and 64% of total revenue in the current quarter compared to 66% and 60%, respectively, in third quarter 2015.

Operating income decreased 26% over the same period 2015. Gross profit margin decreased to 12.8% in the current quarter vs. 15.9% in the prior year primarily from new customer rates implemented during the quarter on contractual business and lower customer spot rates compared to third quarter 2015. Personnel costs increased compared to a year ago as the total branch count grew to 40 compared to 33 at the end of third quarter last year. ICS’s carrier base increased 14% and the employee count increased 18% vs. third quarter 2015.

Truck (JBT)

  • Third Quarter 2016 Segment Revenue: $97 million; flat
  • Third Quarter 2016 Operating Income: $5.1 million; down 55%

JBT revenue was flat from the same period in 2015. Revenue excluding fuel surcharge increased 2%, primarily from a 4% increased truck count and a 2% increase in utilization offset with an approximate 4% decrease in rate per mile excluding fuel mostly from customer driven freight mix changes. Core customer rates were flat compared to the same period in 2015. At the end of the period, JBT operated 2,183 tractors compared to 2,100 a year ago.

Operating income decreased by 55% compared to third quarter 2015. Favorable changes from an increased fleet count and improved utilization were more than offset by lower customer rates per mile, increased equipment maintenance costs, higher safety and insurance costs and increased driver hiring costs compared to third quarter 2015.

Cash Flow and Capitalization:

At September 30, 2016, we had a total of $944 million outstanding on various debt instruments compared to $989 million at September 30, 2015 and $998 million at December 31, 2015.

Our net capital expenditures for the nine months ended September 30, 2016 approximated $359 million compared to $431 million for the same period 2015. At September 30, 2016, we had cash and cash equivalents of approximately $5.5 million.

We purchased approximately 922,000 shares of our common stock during the quarter for $74.8 million. At September 30, 2016 we had approximately $276 million remaining under our share repurchase authorization. Shares outstanding at September 30, 2016 approximated 112.2 million.

This press release may contain forward-looking statements, which are based on information currently available. Actual results may differ materially from those currently anticipated due to a number of factors, including, but not limited to, those discussed in Item 1A of our Annual Report filed on Form 10-K for the year ended December 31, 2015. We assume no obligation to update any forward-looking statement to the extent we become aware that it will not be achieved for any reason. This press release and additional information will be available immediately to interested parties on our web site, www.jbhunt.com.

 
J.B. HUNT TRANSPORT SERVICES, INC.
Condensed Consolidated Statements of Earnings
(in thousands, except per share data)
(unaudited)
 
  Three Months Ended September 30
2016   2015
    % Of     % Of
Amount     Revenue Amount     Revenue
 
Operating revenues, excluding fuel surcharge revenues $ 1,538,701 $ 1,419,451
Fuel surcharge revenues 151,958 167,043
Total operating revenues 1,690,659 100.0 % 1,586,494 100.0 %
 
Operating expenses
Rents and purchased transportation 846,238 50.1 % 770,148 48.5 %
Salaries, wages and employee benefits 374,517 22.2 % 351,651 22.2 %
Depreciation and amortization 91,001 5.4 % 86,201 5.4 %
Fuel and fuel taxes 74,179 4.4 % 76,755 4.8 %
Operating supplies and expenses 62,191 3.7 % 57,299 3.6 %
General and administrative expenses, net of asset dispositions 21,025 1.1 % 14,866 1.0 %
Insurance and claims 21,862 1.3 % 20,078 1.3 %
Operating taxes and licenses 11,665 0.7 % 10,683 0.7 %
Communication and utilities 5,004 0.3 % 4,967 0.3 %
Total operating expenses 1,507,682 89.2 % 1,392,648 87.8 %
Operating income 182,977 10.8 % 193,846 12.2 %
Net interest expense 6,485 0.4 % 7,838 0.5 %
Earnings before income taxes 176,492 10.4 % 186,008 11.7 %
Income taxes 67,067 3.9 % 70,869 4.4 %
Net earnings $ 109,425 6.5 % $ 115,139 7.3 %
Average diluted shares outstanding 113,363 116,282
Diluted earnings per share $ 0.97 $ 0.99
 
           
J.B. HUNT TRANSPORT SERVICES, INC.
Condensed Consolidated Statements of Earnings
(in thousands, except per share data)
(unaudited)
 
Nine Months Ended September 30
2016 2015
% Of % Of
Amount     Revenue Amount     Revenue
 
Operating revenues, excluding fuel surcharge revenues $ 4,448,709 $ 4,043,991
Fuel surcharge revenues 385,688 522,640
Total operating revenues 4,834,397 100.0 % 4,566,631 100.0 %
 
Operating expenses
Rents and purchased transportation 2,381,547 49.3 % 2,194,683 48.1 %
Salaries, wages and employee benefits 1,108,997 22.9 % 1,030,438 22.6 %
Depreciation and amortization 269,717 5.6 % 251,239 5.5 %
Fuel and fuel taxes 205,082 4.2 % 243,459 5.3 %
Operating supplies and expenses 173,222 3.6 % 164,497 3.6 %
General and administrative expenses, net of asset dispositions 61,570 1.3 % 56,471 1.3 %
Insurance and claims 58,384 1.2 % 55,714 1.2 %
Operating taxes and licenses 34,156 0.7 % 31,505 0.7 %
Communication and utilities 15,063 0.3 % 15,824 0.3 %
Total operating expenses 4,307,738 89.1 % 4,043,830 88.6 %
Operating income 526,659 10.9 % 522,801 11.4 %
Net interest expense 19,347 0.4 % 21,202 0.4 %
Earnings before income taxes 507,312 10.5 % 501,599 11.0 %
Income taxes 192,778 4.0 % 191,109 4.2 %
Net earnings $ 314,534 6.5 % $ 310,490 6.8 %
Average diluted shares outstanding 113,709 117,293
Diluted earnings per share $ 2.77 $ 2.65
 
 
Financial Information By Segment
(in thousands)
(unaudited)
           
 
Three Months Ended September 30
2016 2015
% Of % Of
Amount     Total Amount     Total
 

Revenue

 
Intermodal $ 969,654 57 % $ 948,779 60 %
Dedicated 393,770 23 % 370,360 23 %
Integrated Capacity Solutions 233,022 14 % 172,894 11 %
Truck 97,154   6 % 97,521   6 %
Subtotal 1,693,600 100 % 1,589,554 100 %
Intersegment eliminations (2,941 ) (0 %) (3,060 ) (0 %)
Consolidated revenue $ 1,690,659   100 % $ 1,586,494   100 %
 
 

Operating income

 
Intermodal $ 116,885 64 % $ 126,077 65 %
Dedicated 52,463 28 % 45,123 23 %
Integrated Capacity Solutions 8,516 5 % 11,453 6 %
Truck 5,080 3 % 11,244 6 %
Other (1) 33   0 % (51 ) (0 %)
Operating income $ 182,977   100 % $ 193,846   100 %
 
 
 
 
 
Nine Months Ended September 30    
2016 2015
% Of % Of
Amount     Total Amount     Total

Revenue

 
Intermodal $ 2,798,284 58 % $ 2,697,537 59 %
Dedicated 1,134,861 23 % 1,082,264 24 %
Integrated Capacity Solutions 619,956 13 % 509,985 11 %
Truck 291,468   6 % 286,218   6 %
Subtotal 4,844,569 100 % 4,576,004 100 %
Intersegment eliminations (10,172 ) (0 %) (9,373 ) (0 %)
Consolidated revenue $ 4,834,397   100 % $ 4,566,631   100 %
 
 

Operating income

 
Intermodal $ 325,625 62 % $ 348,955 67 %
Dedicated 147,700 28 % 121,511 23 %
Integrated Capacity Solutions 30,186 6 % 22,974 4 %
Truck 23,112 4 % 29,448 6 %
Other (1) 36   0 % (87 ) (0 %)
Operating income $ 526,659   100 % $ 522,801   100 %
 
 
 
 
 

(1) Includes corporate support activity

 
 
Operating Statistics by Segment
(unaudited)
 
  Three Months Ended September 30
2016   2015
 

Intermodal

 
Loads 489,109 458,584
Average length of haul 1,662 1,660
Revenue per load $ 1,983 $ 2,069
Average tractors during the period * 5,279 4,977
 
Tractors (end of period)
Company-owned 4,568 4,292
Independent contractor 714   750  
Total tractors 5,282 5,042
 
Net change in trailing equipment during the period 1,578 1,658
Trailing equipment (end of period) 82,821 77,937
Average effective trailing equipment usage 79,107 74,669
 
 

Dedicated

 
Loads 607,876 578,628
Average length of haul 177 174
Revenue per truck per week** $ 4,120 $ 3,998
Average trucks during the period*** 7,357 7,098
 
Trucks (end of period)
Company-owned 6,936 6,758
Independent contractor 22 9
Customer-owned (Dedicated operated) 414   400  
Total trucks 7,372 7,167
 
Trailing equipment (end of period) 22,391 21,141
Average effective trailing equipment usage 22,939 22,420
 
 

Integrated Capacity Solutions

 
Loads 239,399 127,016
Revenue per load $ 973 $ 1,361
Gross profit margin 12.8 % 15.9 %
Employee count (end of period) 769 650
Approximate number of third-party carriers (end of period) 50,100 44,000
 
 

Truck

 
Loads 97,052 91,639
Average length of haul 453 454
Loaded miles (000) 43,865 41,376
Total miles (000) 52,317 49,213
Average nonpaid empty miles per load 87.2 85.6
Revenue per tractor per week** $ 3,468 $ 3,630
Average tractors during the period * 2,162 2,080
 
Tractors (end of period)
Company-owned 1,384 1,471
Independent contractor 799   629  
Total tractors 2,183 2,100
 
Trailers (end of period) 7,572 7,740
Average effective trailing equipment usage 7,083 6,610
 
 
* Includes company-owned and independent contractor tractors
** Using weighted workdays
*** Includes company-owned, independent contractor, and customer-owned trucks
 
       
                 
Operating Statistics by Segment
(unaudited)
 
Nine Months Ended September 30
2016 2015
 

Intermodal

 
Loads 1,424,733 1,305,347
Average length of haul 1,648 1,648
Revenue per load $ 1,964 $ 2,067
Average tractors during the period * 5,206 4,903
 
Tractors (end of period)
Company-owned 4,568 4,292
Independent contractor 714   750  
Total tractors 5,282 5,042
 
Net change in trailing equipment during the period 3,864 4,639
Trailing equipment (end of period) 82,821 77,937
Average effective trailing equipment usage 75,702 71,395
 
 

Dedicated

 
Loads 1,794,432 1,671,407
Average length of haul 175 175
Revenue per truck per week** $ 4,021 $ 4,021
Average trucks during the period*** 7,280 6,957
 
Trucks (end of period)
Company-owned 6,936 6,758
Independent contractor 22 9
Customer-owned (Dedicated operated) 414   400  
Total trucks 7,372 7,167
 
Trailing equipment (end of period) 22,391 21,141
Average effective trailing equipment usage 22,657 22,324
 
 

Integrated Capacity Solutions

 
Loads 614,334 371,060
Revenue per load $ 1,009 $ 1,374
Gross profit margin 14.9 % 15.0 %
Employee count (end of period) 769 650
Approximate number of third-party carriers (end of period) 50,100 44,000
 
 

Truck

 
Loads 288,392 271,107
Average length of haul 460 446
Loaded miles (000) 132,562 120,366
Total miles (000) 157,526 142,419
Average nonpaid empty miles per load 86.6 81.3
Revenue per tractor per week** $ 3,432 $ 3,711
Average tractors during the period* 2,202 2,015
 
Tractors (end of period)
Company-owned 1,384 1,471
Independent contractor 799   629  
Total tractors 2,183 2,100
 
Trailers (end of period) 7,572 7,740
Average effective trailing equipment usage 6,846 6,342
 
 
* Includes company-owned and independent contractor tractors
** Using weighted workdays
*** Includes company-owned, independent contractor, and customer-owned trucks
 
     
J.B. HUNT TRANSPORT SERVICES, INC.
Condensed Consolidated Balance Sheets
(in thousands)
(unaudited)
 
     

September 30, 2016

       

December 31, 2015

ASSETS
Current assets:
Cash and cash equivalents $ 5,481 $ 5,566
Accounts Receivable 775,020 654,542
Prepaid expenses and other     61,900         197,817
Total current assets     842,401         857,925
Property and equipment 4,209,080 4,019,451
Less accumulated depreciation     1,400,339         1,318,122
Net property and equipment     2,808,741         2,701,329
Other assets     78,852         70,290
    $ 3,729,994       $ 3,629,544
 
 
LIABILITIES & STOCKHOLDERS' EQUITY
Current liabilities:
Trade accounts payable $ 402,913 $ 340,332
Claims accruals 104,243 104,220
Accrued payroll 72,920 59,420
Other accrued expenses     20,769         28,445
Total current liabilities     600,845         532,417
 
Long-term debt 943,696 998,003
Other long-term liabilities 69,302 58,552
Deferred income taxes 731,068 740,220
Stockholders' equity     1,385,083         1,300,352
    $ 3,729,994       $ 3,629,544
 
 
 
Supplemental Data
(unaudited)
                 
      September 30, 2016   December 31, 2015
 
Actual shares outstanding at end of period (000)     112,185         113,948
 
Book value per actual share outstanding at end of period   $ 12.35       $ 11.41
 
 
                 
Nine Months Ended September 30
2016 2015
 
Net cash provided by operating activities (000)   $ 683,963       $ 696,960
 
Net capital expenditures (000)   $ 358,754       $ 430,660
 

Contacts

J.B. Hunt Transport Services, Inc.
David G. Mee, 479-820-8363
Executive Vice President, Finance/Administration
and Chief Financial Officer

Contacts

J.B. Hunt Transport Services, Inc.
David G. Mee, 479-820-8363
Executive Vice President, Finance/Administration
and Chief Financial Officer