J.B. Hunt Transport Services, Inc. Reports Earnings for the Second Quarter 2017 and Updates Full Year 2017 Expectations

  • Second Quarter 2017 Revenue: $1.73 billion; up 7%
  • Second Quarter 2017 Operating Income: $164 million; down 7%
  • Second Quarter 2017 EPS: 88 cents vs. 92 cents

LOWELL, Ark.--()--J.B. Hunt Transport Services, Inc., (NASDAQ: JBHT) announced second quarter 2017 net earnings of $97.9 million, or diluted earnings per share of 88 cents vs. second quarter 2016 net earnings of $105 million, or 92 cents per diluted share.

Total operating revenue for the current quarter was $1.73 billion, compared with $1.62 billion for the second quarter 2016, an increase of 7%. Current quarter total operating revenue, excluding fuel surcharges, increased 5% vs. the comparable quarter 2016. Load growth of 5% in Intermodal (JBI), a 5% increase in revenue producing trucks in Dedicated Contract Services (DCS) and a 20% increase in volume in Integrated Capacity Solutions (ICS) contributed to the increase in consolidated revenue compared to prior year.

Operating income for the current quarter totaled $164 million versus $176 million for the second quarter 2016. The benefits of volume growth and increases in revenue producing truck counts were substantially offset by lower customer rates, increases in rail and over the road purchased transportation costs, start-up costs associated with new DCS contracts, higher driver wages and recruiting costs, increased insurance and claims costs, increased equipment and facility maintenance costs and increased technology costs.

Interest expense in the current quarter increased due to higher interest rates compared to the same period last year. The effective income tax rate for the quarter was 37.4% versus 38.0% for the second quarter 2016. The 2017 annual tax rate is expected to be approximately 35.0% primarily from the one-time tax benefit recognized in the first quarter 2017.

The Company posted revised full year 2017 Financial Expectations on its website under the Investors tab at www.jbhunt.com.

Segment Information:

Intermodal (JBI)

  • Second Quarter 2017 Segment Revenue: $1.0 billion; up 7%
  • Second Quarter 2017 Operating Income: $110 million; up 4%

JBI load volumes grew 5% over the same period in 2016. Transcontinental loads grew 10% while Eastern network volumes were down 2% compared to a year ago. Revenue increased 7% reflecting the 5% volume growth and an approximate 2% increase in revenue per load, which is the combination of customer rate changes, fuel surcharges and freight mix. Revenue per load, excluding fuel surcharge revenue decreased 1% from second quarter 2016.

Operating income increased 4% from prior year. Benefits from volume growth and dray fleet productivity were offset by cost increases in rail purchased transportation, driver pay and retention costs, driver recruiting costs, technology development and modernization costs and equipment ownership costs. The current period ended with approximately 85,600 units of trailing capacity and 5,300 power units assigned to the dray fleet.

Dedicated Contract Services (DCS)

  • Second Quarter 2017 Segment Revenue: $412 million; up 8%
  • Second Quarter 2017 Operating Income: $49 million; down 4%

DCS revenue increased 8% during the current quarter over the same period in 2016. Productivity, defined as revenue per truck per week, increased approximately 2% vs. 2016. Productivity excluding fuel surcharges was flat over a year ago. Increased revenue from better integration of assets between customer accounts and customer rate increases was partially offset by lower productivity at new contracts implemented during the current quarter. A net additional 486 revenue producing trucks, 226 net additions compared to first quarter 2017, were in the fleet by the end of the quarter compared to prior year. Approximately 71% of these additions represent private fleet conversions versus traditional dedicated capacity fleets. Customer retention rates remain above 98%.

Operating income decreased 4% over the prior year quarter primarily from increases in driver wages, increased accident frequency driving higher insurance and claims costs and higher start-up expenses for new customer contracts compared to the second quarter 2016.

Integrated Capacity Solutions (ICS)

  • Second Quarter 2017 Segment Revenue: $222 million; up 9%
  • Second Quarter 2017 Operating Loss: $(0.2) million; down 102%

ICS revenue was up 9% compared to the second quarter 2016. Volumes increased 20% while revenue per load decreased 9%, primarily due to freight mix changes driven by customer demand, compared to second quarter 2016. Spot volumes increased 20% and contractual volumes increased 22% from a year ago. Contractual volumes represented approximately 73% of total load volume and 58% of total revenue compared to 72% and 65%, respectively, in second quarter 2016.

Operating income decreased 102% over the same period 2016 primarily from lower gross profit margins, increased claims cost, a higher number of branches open less than two years (16 vs. 10 in 2016), and higher technology development costs. Gross profit margins decreased to 11.6% in the current quarter versus 15.0% in the same period last year. The decrease in gross margin percentage is primarily the result of higher purchased transportation costs on dry van volumes that outpaced customer rate increases implemented on contractual business compared to second quarter 2016. Total branch count increased to 42 from 35 at second quarter 2016. The carrier base increased 9% and the employee count increased 21% vs. second quarter 2016.

Truck (JBT)

  • Second Quarter 2017 Segment Revenue: $95 million; down 4%
  • Second Quarter 2017 Operating Income: $5.6 million; down 37%

JBT revenue for the current quarter was down 4% compared to the same period in 2016. Revenue excluding fuel surcharges decreased 6% from a year ago. Rate per loaded mile excluding fuel surcharges was up approximately 0.9% primarily from customer driven freight mix changes, including a 6.3% decrease in length of haul. Customer contract rates decreased approximately 0.4% compared to the same period in 2016. At the end of the period, JBT operated 2,072 tractors compared to 2,186 a year ago.

Operating income decreased 37% compared to the same quarter 2016. The benefit from higher customer rates per mile was more than offset by increased driver pay and hiring costs, higher independent contractor cost per mile and increased tractor maintenance costs compared to the second quarter 2016.

Cash Flow and Capitalization:

At June 30, 2017, we had a total of $943 million outstanding on various debt instruments compared to $958 million at June 30, 2016 and $986 million at December 31, 2016.

Our net capital expenditures for the six months ended June 30, 2017 approximated $165 million compared to $258 million for the same period 2016. At June 30, 2017, we had cash and cash equivalents of $7.3 million.

We purchased approximately 564,000 shares of our common stock during the second quarter 2017 for approximately $50 million. At June 30, 2017, we had approximately $521 million remaining under our combined current and new share repurchase authorizations. Actual shares outstanding at June 30, 2017 approximated 109.4 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 website, www.jbhunt.com.

 
 
 
 
 
J.B. HUNT TRANSPORT SERVICES, INC.
Condensed Consolidated Statements of Earnings
(in thousands, except per share data)
(unaudited)
 
      Three Months Ended June 30
2017     2016
    % Of     % Of
Amount     Revenue Amount     Revenue
 
Operating revenues, excluding fuel surcharge revenues $ 1,551,051 $ 1,483,354
Fuel surcharge revenues   175,864     131,672  
Total operating revenues 1,726,915 100.0 % 1,615,026 100.0 %
 
Operating expenses
Rents and purchased transportation 871,122 50.4 % 794,907 49.2 %
Salaries, wages and employee benefits 389,873 22.6 % 371,969 23.0 %
Depreciation and amortization 93,050 5.4 % 90,364 5.6 %
Fuel and fuel taxes 79,072 4.6 % 71,489 4.4 %
Operating supplies and expenses 64,486 3.7 % 56,495 3.5 %
Insurance and claims 27,461 1.6 % 19,094 1.2 %
General and administrative expenses, net of asset dispositions 21,728 1.3 % 18,711 1.2 %
Operating taxes and licenses 10,905 0.6 % 11,365 0.7 %
Communication and utilities   5,603   0.3 %   4,840   0.3 %
Total operating expenses   1,563,300   90.5 %   1,439,234   89.1 %
Operating income 163,615 9.5 % 175,792 10.9 %
Net interest expense   7,393   0.4 %   6,420   0.4 %
Earnings before income taxes 156,222 9.1 % 169,372 10.5 %
Income taxes   58,353   3.4 %   64,361   4.0 %
Net earnings $ 97,869   5.7 % $ 105,011   6.5 %
Average diluted shares outstanding   110,822     113,761  
Diluted earnings per share $ 0.88   $ 0.92  
 
 
 
 
 
 
J.B. HUNT TRANSPORT SERVICES, INC.
Condensed Consolidated Statements of Earnings
(in thousands, except per share data)
(unaudited)
 
Six Months Ended June 30
2017 2016
% Of % Of
Amount     Revenue Amount     Revenue
 
Operating revenues, excluding fuel surcharge revenues $ 3,012,820 $ 2,910,008
Fuel surcharge revenues   343,253     233,730  
Total operating revenues 3,356,073 100.0 % 3,143,738 100.0 %
 
Operating expenses
Rents and purchased transportation 1,677,562 50.0 % 1,535,310 48.8 %
Salaries, wages and employee benefits 770,184 22.9 % 734,480 23.4 %
Depreciation and amortization 185,238 5.5 % 178,716 5.7 %
Fuel and fuel taxes 159,719 4.8 % 130,903 4.2 %
Operating supplies and expenses 122,507 3.7 % 111,031 3.5 %
Insurance and claims 50,466 1.5 % 36,522 1.2 %
General and administrative expenses, net of asset dispositions 45,209 1.4 % 40,545 1.3 %
Operating taxes and licenses 21,585 0.6 % 22,491 0.7 %
Communication and utilities   10,599   0.3 %   10,058   0.3 %
Total operating expenses   3,043,069   90.7 %   2,800,056   89.1 %
Operating income 313,004 9.3 % 343,682 10.9 %
Net interest expense   14,211   0.4 %   12,862   0.4 %
Earnings before income taxes 298,793 8.9 % 330,820 10.5 %
Income taxes   98,222   2.9 %   125,711   4.0 %
Net earnings $ 200,571   6.0 % $ 205,109   6.5 %
Average diluted shares outstanding   111,420     113,882  
Diluted earnings per share $ 1.80   $ 1.80  
 
 
 
 
 
 
 
Financial Information By Segment
(in thousands)
(unaudited)
 
Three Months Ended June 30
2017 2016
% Of % Of
Amount     Total Amount     Total
 

Revenue

 
Intermodal $ 1,001,441 58 % $ 933,430 58 %
Dedicated 411,917 24 % 382,721 24 %
Integrated Capacity Solutions 222,465 13 % 203,767 12 %
Truck   94,575   5 %   98,264   6 %
Subtotal 1,730,398 100 % 1,618,182 100 %
Intersegment eliminations   (3,483 ) (0 %)   (3,156 ) (0 %)
Consolidated revenue $ 1,726,915   100 % $ 1,615,026   100 %
 
 

Operating income

 
Intermodal $ 109,714 67 % $ 105,614 60 %
Dedicated 48,574 30 % 50,467 29 %
Integrated Capacity Solutions (239 ) (0 %) 10,875 6 %
Truck 5,563 3 % 8,853 5 %
Other (1)   3   0 %   (17 ) (0 %)
Operating income $ 163,615   100 % $ 175,792   100 %
 
 
 
Six Months Ended June 30
2017 2016
% Of % Of
Amount     Total Amount     Total

Revenue

 
Intermodal $ 1,938,559 58 % $ 1,828,630 58 %
Dedicated 804,378 24 % 741,091 24 %
Integrated Capacity Solutions 431,884 13 % 386,934 12 %
Truck   188,263   5 %   194,315   6 %
Subtotal 3,363,084 100 % 3,150,970 100 %
Intersegment eliminations   (7,011 ) (0 %)   (7,232 ) (0 %)
Consolidated revenue $ 3,356,073   100 % $ 3,143,738   100 %
 
 

Operating income

 
Intermodal $ 204,975 66 % $ 208,740 61 %
Dedicated 93,328 30 % 95,237 28 %
Integrated Capacity Solutions 4,230 1 % 21,670 6 %
Truck 10,504 3 % 18,032 5 %
Other (1)   (33 ) (0 %)   3   0 %
Operating income $ 313,004   100 % $ 343,682   100 %
 
 
(1) Includes corporate support activity
 
 
 
 
 
 
 
Operating Statistics by Segment
(unaudited)
             
Three Months Ended June 30
2017 2016
 

Intermodal

 
Loads 501,038 476,098
Average length of haul 1,677 1,640
Revenue per load $ 1,999 $ 1,961
Average tractors during the period * 5,220 5,232
 
Tractors (end of period)
Company-owned 4,621 4,519
Independent contractor 680   725  
Total tractors 5,301 5,244
 
Net change in trailing equipment during the period 363 1,377
Trailing equipment (end of period) 85,581 81,243
Average effective trailing equipment usage 81,073 74,751
 
 

Dedicated

 
Loads 636,149 607,078
Average length of haul 178 174
Revenue per truck per week** $ 4,156 $ 4,062
Average trucks during the period*** 7,669 7,286
 
Trucks (end of period)
Company-owned 7,207 6,833
Independent contractor 9 17
Customer-owned (Dedicated operated) 592   472  
Total trucks 7,808 7,322
 
Trailing equipment (end of period) 23,387 21,914
Average effective trailing equipment usage 23,899 22,597
 
 

Integrated Capacity Solutions

 
Loads 240,069 199,312
Revenue per load $ 927 $ 1,022
Gross profit margin 11.6 % 15.0 %
Employee count (end of period) 876 721
Approximate number of third-party carriers (end of period) 53,400 48,900
 
 

Truck

 
Loads 96,897 96,929
Average length of haul 431 460
Loaded miles (000) 41,678 44,614
Total miles (000) 49,917 53,063
Average nonpaid empty miles per load 85.1 87.2
Revenue per tractor per week** $ 3,518 $ 3,419
Average tractors during the period * 2,102 2,234
 
Tractors (end of period)
Company-owned 1,337 1,401
Independent contractor 735   785  
Total tractors 2,072 2,186
 
Trailers (end of period) 7,604 7,249
Average effective trailing equipment usage 7,232 6,784
 
 
* Includes company-owned and independent contractor tractors
** Using weighted workdays
*** Includes company-owned, independent contractor, and customer-owned trucks
 
 
 
 
 
 
 
Operating Statistics by Segment
(unaudited)
 
Six Months Ended June 30
2017 2016
 

Intermodal

 
Loads 967,878 935,624
Average length of haul 1,678 1,641
Revenue per load $ 2,003 $ 1,954
Average tractors during the period * 5,221 5,169
 
Tractors (end of period)
Company-owned 4,621 4,519
Independent contractor 680   725  
Total tractors 5,301 5,244
 
Net change in trailing equipment during the period 987 2,286
Trailing equipment (end of period) 85,581 81,243
Average effective trailing equipment usage 79,221 73,998
 
 

Dedicated

 
Loads 1,232,889 1,186,556
Average length of haul 179 174
Revenue per truck per week** $ 4,135 $ 3,969
Average trucks during the period*** 7,553 7,241
 
Trucks (end of period)
Company-owned 7,207 6,833
Independent contractor 9 17
Customer-owned (Dedicated operated) 592   472  
Total trucks 7,808 7,322
 
Trailing equipment (end of period) 23,387 21,914
Average effective trailing equipment usage 23,732 22,517
 
 

Integrated Capacity Solutions

 
Loads 478,127 374,935
Revenue per load $ 903 $ 1,032
Gross profit margin 12.9 % 16.1 %
Employee count (end of period) 876 721
Approximate number of third-party carriers (end of period) 53,400 48,900
 
 

Truck

 
Loads 192,533 191,339
Average length of haul 434 464
Loaded miles (000) 83,564 88,697
Total miles (000) 99,935 105,209
Average nonpaid empty miles per load 85.1 86.3
Revenue per tractor per week** $ 3,464 $ 3,415
Average tractors during the period* 2,126 2,222
 
Tractors (end of period)
Company-owned 1,337 1,401
Independent contractor 735   785  
Total tractors 2,072 2,186
 
Trailers (end of period) 7,604 7,249
Average effective trailing equipment usage 7,198 6,727
 
 
* 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)
 
          June 30, 2017           December 31, 2016
ASSETS              
Current assets:
Cash and cash equivalents $ 7,274 $ 6,377
Accounts Receivable 749,042 745,288
Prepaid expenses and other         152,035           194,016
Total current assets         908,351           945,681
Property and equipment 4,384,981 4,258,915
Less accumulated depreciation         1,564,951           1,440,124
Net property and equipment         2,820,030           2,818,791
Other assets         50,001           64,516
        $ 3,778,382         $ 3,828,988
 
 
LIABILITIES & STOCKHOLDERS' EQUITY
Current liabilities:
Trade accounts payable $ 419,306 $ 384,308
Claims accruals 114,073 109,745
Accrued payroll 46,288 51,929
Other accrued expenses         28,425           27,152
Total current liabilities         608,092           573,134
 
Long-term debt 943,174 986,278
Other long-term liabilities 66,118 64,881
Deferred income taxes 753,277 790,634
Stockholders' equity         1,407,721           1,414,061
        $ 3,778,382         $ 3,828,988
 
 
 
 
Supplemental Data
(unaudited)
 
          June 30, 2017           December 31, 2016
 
Actual shares outstanding at end of period (000)         109,435           111,305
 
Book value per actual share outstanding at end of period       $ 12.86         $ 12.70
 
 
 
Six Months Ended June 30
2017 2016
 
Net cash provided by operating activities (000)       $ 443,447         $ 474,138
 
Net capital expenditures (000)       $ 165,092         $ 257,958
 
 
 

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