LOWELL, Ark.--(BUSINESS WIRE)--J.B. Hunt Transport Services, Inc., (NASDAQ: JBHT) announced first quarter 2017 net earnings of $102.7 million, or diluted earnings per share of 92 cents vs. first quarter 2016 net earnings of $100.1 million, or 88 cents per diluted share.
Total operating revenue for the current quarter was $1.63 billion, compared with $1.53 billion for the first quarter 2016. Current quarter total operating revenue, excluding fuel surcharges, increased 2% vs. first quarter 2016. Intermodal (JBI) load growth was 2% over first quarter 2016 levels. Dedicated Contract Services (DCS) segment revenue increased by 10% over prior year primarily from additional customer contracts from a year ago and customer rate increases. Integrated Capacity Solutions (ICS) load growth was 36% over the same period in 2016. Truck (JBT) segment revenue decreased 2% primarily from a lower revenue per load.
Operating income for the current quarter totaled $149 million vs. $168 million for the first quarter 2016. Benefits from volume growth and new customer contracts were more than offset by lower customer rates from competitive pricing, increased purchased transportation costs, higher driver wages, continuing branch network expansion, increased equipment ownership costs and increased insurance and claims costs.
Net interest expense for the current quarter increased 6% from the same period in 2016 due to higher effective interest rates on our debt.
The effective income tax rate decreased to 28.0% in the current quarter compared to 38.0% in the first quarter 2016 due to a one-time after tax benefit of $13.6 million or 12 cents per diluted share from the claiming of research and development tax credits and domestic production tax deductions incurred during the 2012 through 2016 tax years. The annual tax rate for 2017 is expected to be 35% and the normalized annual tax rate, excluding one-time benefits or costs, is expected to be 37%.
Segment Information:
Intermodal (JBI)
- First Quarter 2017 Segment Revenue: $937 million; up 5%
- First Quarter 2017 Operating Income: $95 million; down 8%
JBI load volumes grew 2% over the same period 2016. Transcontinental loads grew 7% while the Eastern network load volume was down 6% compared to prior year. Competitive truckload pricing in the shorter length of haul Eastern network from the 2016 bid season has carried over into 2017 and continues to pressure intermodal rates and conversion. Revenue grew approximately 5% reflecting the 2% volume growth and a 3% increase in revenue per load, which is determined by the combination of customer rates, fuel surcharges and freight mix. Revenue per load excluding fuel surcharge revenue decreased 1% year over year due to a continuing competitive pricing environment from truckload operators, intermodal operators and Lead Logistics Providers (4PLs).
Operating income decreased 8% from prior year. Benefits from volume growth were more than offset by lower revenue per load excluding fuel surcharges, increases in rail purchased transportation costs, reduced Eastern network utilization and lower dray efficiency created from a reduction in Eastern network volumes, higher equipment ownership costs, increased driver wages and recruiting costs and increased insurance and claims costs. The current period ended with approximately 85,200 units of trailing capacity and 5,170 power units assigned to the dray fleet.
Dedicated Contract Services (DCS)
- First Quarter 2017 Segment Revenue: $392 million; up 10%
- First Quarter 2017 Operating Income: $45 million; flat
DCS revenue increased 10% during the current quarter over the same period 2016. Productivity (revenue per truck per week) increased approximately 6% vs. 2016. Productivity excluding fuel surcharges was up approximately 1% from improved integration of assets between customer accounts and customer rate increases partially offset by a more impactful winter weather season compared to 2016. A net additional 392 revenue producing trucks, 181 net additions compared to fourth quarter 2016, were in the fleet by the end of the quarter compared to prior year. Approximately 83% of these additions represent private fleet conversions versus traditional dedicated capacity fleets that were implemented in the current and prior periods. Customer retention rates remain above 98%.
Operating income was flat from a year ago. The increased revenue and improved asset integration was offset by higher driver wages, increased insurance and claims cost primarily from weather related accidents, higher health insurance costs and increased start up expenditures for new customer contracts compared to the same period a year ago.
Integrated Capacity Solutions (ICS)
- First Quarter 2017 Segment Revenue: $209 million; up 14%
- First Quarter 2017 Operating Income: $4.5 million; down 59%
ICS revenue increased 14% vs. first quarter 2016. Volumes increased 36% while revenue per load decreased 16% primarily due to freight mix changes driven by customer demand. Spot volumes increased 22%, primarily in the fledgling flatbed and temperature controlled services, and contractual business load counts increased 42% from a year ago. Contractual business represents approximately 76% of total load volume and 63% of total revenue in the current period compared to 73% and 64%, respectively, in first quarter 2016.
Operating income decreased 59% over the same period in 2016 primarily from a lower gross profit margin, increased claims costs and an increased number of branches less than 2 years old (Start-up branches). Start-up branches typically produce less revenue and lower gross margins than Mature branches (more than two years old) and therefore have a higher proportion of personnel costs to both total and net revenue. ICS had 18 Start-up branches in 11 locations in first quarter 2017 compared to 9 in first quarter 2016. Gross profit margin decreased to 14.3% in the current quarter vs. 17.3% last year primarily due to increased third party transportation costs and lower spot rates. Total branch count grew to 42 locations compared to 35 at the end of the comparable period last year. ICS’s carrier base increased over 10% and employee count increased 27% compared to first quarter 2016.
Truck (JBT)
- First Quarter 2017 Segment Revenue: $94 million; down 2%
- First Quarter 2017 Operating Income: $4.9 million; down 46%
JBT revenue decreased 2% from the same quarter 2016. Revenue excluding fuel surcharge decreased 6% primarily from a 7% decrease in revenue per load partially offset by a 1% increase in load count. The decrease in revenue per load compared to the prior year is due to a 6% decrease in length of haul and a 1% decrease in rates per loaded mile. Customer contract rates were down 1.5% compared to the same period in 2016. At the end of the current quarter JBT operated 2,144 tractors compared to 2,270 in 2016.
Operating income for the current quarter decreased by 46% compared to first quarter 2016. Benefits from the increased load count and fewer empty miles were more than offset by lower customer rates per mile, increased equipment maintenance cost and higher insurance and claims cost compared to first quarter 2016.
Cash Flow and Capitalization:
At March 31, 2017, we had a total of $951 million outstanding on various debt instruments compared to $961 million at March 31, 2016, and $986 million at December 31, 2016. At March 31, 2017, we had cash and cash equivalents of $12 million.
Our net capital expenditures for the first quarter 2017 approximated $91 million compared to $114 million for the first quarter 2016.
We purchased approximately 1.33 million shares of our common stock during the quarter for approximately $130 million. At March 31, 2017, we had approximately $71 million remaining under our share repurchase authorization. Actual shares outstanding at March 31, 2017 approximated 110 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, 2016. 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 March 31 | |||||||||||||||||||
| 2017 | 2016 | ||||||||||||||||||
| % Of | % Of | ||||||||||||||||||
| Amount | Revenue | Amount | Revenue | ||||||||||||||||
| Operating revenues, excluding fuel surcharge revenues | $ | 1,461,768 | $ | 1,426,654 | |||||||||||||||
| Fuel surcharge revenues | 167,390 | 102,058 | |||||||||||||||||
| Total operating revenues | 1,629,158 | 100.0 | % | 1,528,712 | 100.0 | % | |||||||||||||
| Operating expenses | |||||||||||||||||||
| Rents and purchased transportation | 806,439 | 49.5 | % | 740,402 | 48.4 | % | |||||||||||||
| Salaries, wages and employee benefits | 380,311 | 23.3 | % | 362,511 | 23.7 | % | |||||||||||||
| Depreciation and amortization | 92,189 | 5.7 | % | 88,352 | 5.8 | % | |||||||||||||
| Fuel and fuel taxes | 80,646 | 5.0 | % | 59,414 | 3.9 | % | |||||||||||||
| Operating supplies and expenses | 58,022 | 3.6 | % | 54,537 | 3.6 | % | |||||||||||||
| General and administrative expenses, net of asset dispositions | 23,481 | 1.3 | % | 21,833 | 1.5 | % | |||||||||||||
| Insurance and claims | 23,005 | 1.4 | % | 17,428 | 1.1 | % | |||||||||||||
| Operating taxes and licenses | 10,680 | 0.7 | % | 11,126 | 0.7 | % | |||||||||||||
| Communication and utilities | 4,996 | 0.3 | % | 5,219 | 0.3 | % | |||||||||||||
| Total operating expenses | 1,479,769 | 90.8 | % | 1,360,822 | 89.0 | % | |||||||||||||
| Operating income | 149,389 | 9.2 | % | 167,890 | 11.0 | % | |||||||||||||
| Net interest expense | 6,817 | 0.4 | % | 6,442 | 0.4 | % | |||||||||||||
| Earnings before income taxes | 142,572 | 8.8 | % | 161,448 | 10.6 | % | |||||||||||||
| Income taxes | 39,870 | 2.5 | % | 61,350 | 4.1 | % | |||||||||||||
| Net earnings | $ | 102,702 | 6.3 | % | $ | 100,098 | 6.5 | % | |||||||||||
| Average diluted shares outstanding | 112,026 | 114,003 | |||||||||||||||||
| Diluted earnings per share | $ | 0.92 | $ | 0.88 | |||||||||||||||
| Financial Information By Segment | |||||||||||||||||||
| (in thousands) | |||||||||||||||||||
| (unaudited) | |||||||||||||||||||
| Three Months Ended March 31 | |||||||||||||||||||
| 2017 | 2016 | ||||||||||||||||||
| % Of | % Of | ||||||||||||||||||
| Amount | Total | Amount | Total | ||||||||||||||||
|
Revenue |
|||||||||||||||||||
| Intermodal | $ | 937,118 | 57 | % | $ | 895,200 | 59 | % | |||||||||||
| Dedicated | 392,461 | 24 | % | 358,370 | 23 | % | |||||||||||||
| Integrated Capacity Solutions | 209,419 | 13 | % | 183,168 | 12 | % | |||||||||||||
| Truck | 93,688 | 6 | % | 96,051 | 6 | % | |||||||||||||
| Subtotal | 1,632,686 | 100 | % | 1,532,789 | 100 | % | |||||||||||||
| Intersegment eliminations | (3,528 | ) | (0 | %) | (4,077 | ) | (0 | %) | |||||||||||
| Consolidated revenue | $ | 1,629,158 | 100 | % | $ | 1,528,712 | 100 | % | |||||||||||
|
Operating income |
|||||||||||||||||||
| Intermodal | $ | 95,261 | 64 | % | $ | 103,127 | 61 | % | |||||||||||
| Dedicated | 44,754 | 30 | % | 44,770 | 27 | % | |||||||||||||
| Integrated Capacity Solutions | 4,469 | 3 | % | 10,795 | 6 | % | |||||||||||||
| Truck | 4,941 | 3 | % | 9,179 | 6 | % | |||||||||||||
| Other (1) | (36 | ) | (0 | %) | 19 | 0 | % | ||||||||||||
| Operating income | $ | 149,389 | 100 | % | $ | 167,890 | 100 | % | |||||||||||
| (1) Includes corporate support activity | |||||||||||||||||||
| Operating Statistics by Segment | ||||||||||||||||||
| (unaudited) | ||||||||||||||||||
| Three Months Ended March 31 | ||||||||||||||||||
| 2017 | 2016 | |||||||||||||||||
|
Intermodal |
||||||||||||||||||
| Loads | 466,840 | 459,526 | ||||||||||||||||
| Average length of haul | 1,680 | 1,641 | ||||||||||||||||
| Revenue per load | $ | 2,007 | $ | 1,948 | ||||||||||||||
|
Average tractors during the period* |
5,222 | 5,107 | ||||||||||||||||
| Tractors (end of period) | ||||||||||||||||||
| Company-owned | 4,506 | 4,404 | ||||||||||||||||
| Independent contractor | 664 | 755 | ||||||||||||||||
| Total tractors | 5,170 | 5,159 | ||||||||||||||||
| Net change in trailing equipment during the period | 624 | 909 | ||||||||||||||||
| Trailing equipment (end of period) | 85,218 | 79,866 | ||||||||||||||||
| Average effective trailing equipment usage | 77,370 | 73,244 | ||||||||||||||||
|
Dedicated |
||||||||||||||||||
| Loads | 596,740 | 579,478 | ||||||||||||||||
| Average length of haul | 180 | 175 | ||||||||||||||||
| Revenue per truck per week** | $ | 4,113 | $ | 3,875 | ||||||||||||||
| Average trucks during the period*** | 7,438 | 7,196 | ||||||||||||||||
| Trucks (end of period) | ||||||||||||||||||
| Company-owned | 7,041 | 6,734 | ||||||||||||||||
| Independent contractor | 12 | 14 | ||||||||||||||||
| Customer-owned (Dedicated operated) | 529 | 442 | ||||||||||||||||
| Total trucks | 7,582 | 7,190 | ||||||||||||||||
| Trailing equipment (end of period) | 22,963 | 21,818 | ||||||||||||||||
| Average effective trailing equipment usage | 23,564 | 22,436 | ||||||||||||||||
|
Integrated Capacity Solutions |
||||||||||||||||||
| Loads | 238,058 | 175,623 | ||||||||||||||||
| Revenue per load | $ | 880 | $ | 1,043 | ||||||||||||||
| Gross profit margin | 14.3 | % | 17.3 | % | ||||||||||||||
| Employee count (end of period) | 853 | 674 | ||||||||||||||||
| Approximate number of third-party carriers (end of period) | 52,100 | 47,500 | ||||||||||||||||
|
Truck |
||||||||||||||||||
| Loads | 95,636 | 94,410 | ||||||||||||||||
| Average length of haul | 438 | 468 | ||||||||||||||||
| Loaded miles (000) | 41,886 | 44,083 | ||||||||||||||||
| Total miles (000) | 50,018 | 52,146 | ||||||||||||||||
| Average nonpaid empty miles per load | 85.0 | 85.4 | ||||||||||||||||
| Revenue per tractor per week** | $ | 3,411 | $ | 3,411 | ||||||||||||||
|
Average tractors during the period* |
2,151 | 2,211 | ||||||||||||||||
| Tractors (end of period) | ||||||||||||||||||
| Company-owned | 1,379 | 1,467 | ||||||||||||||||
| Independent contractor | 765 | 803 | ||||||||||||||||
| Total tractors | 2,144 | 2,270 | ||||||||||||||||
| Trailers (end of period) | 7,514 | 6,970 | ||||||||||||||||
| Average effective trailing equipment usage | 7,163 | 6,670 | ||||||||||||||||
| * 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) | |||||||||
| March 31, 2017 | December 31, 2016 | ||||||||
| ASSETS | |||||||||
| Current assets: | |||||||||
| Cash and cash equivalents | $ | 12,261 | $ | 6,377 | |||||
| Accounts Receivable | 707,433 | 745,288 | |||||||
| Prepaid expenses and other | 173,647 | 194,016 | |||||||
| Total current assets | 893,341 | 945,681 | |||||||
| Property and equipment | 4,331,100 | 4,258,915 | |||||||
| Less accumulated depreciation | 1,500,472 | 1,440,124 | |||||||
| Net property and equipment | 2,830,628 | 2,818,791 | |||||||
| Other assets | 46,426 | 64,516 | |||||||
| $ | 3,770,395 | $ | 3,828,988 | ||||||
| LIABILITIES & STOCKHOLDERS' EQUITY | |||||||||
| Current liabilities: | |||||||||
| Trade accounts payable | $ | 369,763 | $ | 384,308 | |||||
| Claims accruals | 106,835 | 109,745 | |||||||
| Accrued payroll | 57,083 | 51,929 | |||||||
| Other accrued expenses | 52,844 | 27,152 | |||||||
| Total current liabilities | 586,525 | 573,134 | |||||||
| Long-term debt | 950,558 | 986,278 | |||||||
| Other long-term liabilities | 68,457 | 64,881 | |||||||
| Deferred income taxes | 792,561 | 790,634 | |||||||
| Stockholders' equity | 1,372,294 | 1,414,061 | |||||||
| $ | 3,770,395 | $ | 3,828,988 | ||||||
| Supplemental Data | |||||||||
| (unaudited) | |||||||||
|
March 31, 2017 |
December 31, 2016 |
||||||||
| Actual shares outstanding at end of period (000) | 109,983 | 111,305 | |||||||
| Book value per actual share outstanding at end of period | $ | 12.48 | $ | 12.70 | |||||
| Three Months Ended March 31 | |||||||||
| 2017 | 2016 | ||||||||
| Net cash provided by operating activities (000) | $ | 285,633 | $ | 304,896 | |||||
| Net capital expenditures (000) | $ | 91,007 | $ | 114,458 | |||||
