J.B. Hunt Transport Services, Inc. Reports Earnings for the Third Quarter 2017

  • Third Quarter 2017 Revenue: $1.84 billion; up 9%
  • Third Quarter 2017 Operating Income: $165 million; down 10%
  • Third Quarter 2017 EPS: 91 cents vs. 97 cents

LOWELL, Ark.--()--J.B. Hunt Transport Services, Inc., (NASDAQ: JBHT) announced third quarter 2017 net earnings of $100.4 million, or diluted earnings per share of 91 cents vs. third quarter 2016 net earnings of $109.4 million, or 97 cents per diluted share.

Total operating revenue for the current quarter was $1.84 billion, compared with $1.69 billion for the third quarter 2016. Load growth of 6% in Intermodal (JBI), a 14% increase in revenue producing trucks and improved asset productivity in Dedicated Contract Services (DCS)™ and a 17% increase in revenue per load in Integrated Capacity Solutions (ICS) contributed to the increase in consolidated revenue compared to prior year. Operating revenue growth was partially offset by a 7% decrease in load count in the Truck (JBT) business segment and the disruption caused by hurricanes Harvey, Irma and Maria. Current quarter total operating revenue, excluding fuel surcharges, increased 8% vs. the comparable quarter 2016.

Operating income for the current quarter totaled $165 million vs. $183 million for the third quarter 2016. Operating income decreased from third quarter 2016 primarily from increases in driver wages and recruiting costs, increased rail purchase transportation rates, higher insurance and claims costs, increased legal and consulting costs, higher equipment maintenance costs and acquisition and integration costs incurred by DCS with the purchase of Special Logistics Dedicated (SLD) that closed during the quarter.

Interest expense in the current quarter increased primarily from higher debt balances and higher interest rates compared to third quarter 2016. The effective income tax rate for the current quarter is 35.9%, compared to 38% in the third quarter 2016. We expect our 2017 annual tax rate to be approximately 35%.

Segment Information:

Intermodal (JBI)

  • Third Quarter 2017 Segment Revenue: $1.05 billion; up 8%
  • Third Quarter 2017 Operating Income: $109.1 million; down 7%

Overall volumes increased 6% over the same period in 2016. The Eastern network realized load growth of 2% and Transcontinental loads grew 8% over the third quarter 2016. The network disruption caused from hurricanes Harvey, Irma and Maria limited our ability to handle approximately 5,500 loads in the current period. Revenue increased 8% reflecting the 6% volume growth and an approximate 2% increase in revenue per load, which is the combination of changes in customer rate, freight mix and fuel surcharges. Revenue per load excluding fuel surcharges was flat compared to third quarter 2016.

Operating income decreased 7% over prior year. Benefits from improved volumes were offset by increased costs to attract, place and retain drivers; higher insurance and claims costs; increases in rail purchased transportation rates; increases in costs from inefficiencies due to rail congestion, rationalization and maintenance; and approximately $1.8 million in additional costs and inefficiencies in the dray and rail networks in areas directly affected by natural disasters. The current period ended with approximately 87,000 units of trailing capacity and 5,500 power units assigned to the dray fleet.

Dedicated Contract Services (DCS)

  • Third Quarter 2017 Segment Revenue: $438 million; up 11%
  • Third Quarter 2017 Operating Income: $42.9 million; down 18%

DCS revenue increased 11% during the current quarter over the same period in 2016. Productivity (revenue per truck per week) increased by approximately 2% vs. 2016. Productivity excluding fuel surcharge revenue was flat from 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 1,024 revenue producing trucks, 621 net additions sequentially from second quarter 2017 including 328 acquired in the SLD purchase, were in the fleet by the end of the quarter. Approximately 63% of these additions represent private fleet conversions versus traditional dedicated capacity services. Customer retention rates remain above 98%.

Operating income decreased by 18% from a year ago primarily from the timing between increasing driver wages and recovery through customer contracts, increased driver recruiting costs including the length of time to fill open trucks, increased insurance and claims costs, increased salaries and benefits costs, higher equipment ownership costs and approximately $1 million of excess costs associated with operations in the hurricane affected regions compared to the same period in 2016. During the current period, DCS incurred approximately $3 million in acquisition costs and $1.5 million in intangible asset amortization due to the purchase of SLD.

Integrated Capacity Solutions (ICS)

  • Third Quarter 2017 Segment Revenue: $269 million; up 16%
  • Third Quarter 2017 Operating Income: $ 7.3 million; down 14%

ICS revenue increased 16% in the current quarter vs. the third quarter 2016. Revenue per load increased 17% from increased spot market activity while load volumes decreased 1% vs third quarter 2016. While continuing to meet our customer commitments, increased spot market activity created a better balance between contractual and spot revenues. Contractual volumes represented approximately 65% of total load volume and 48% of total revenue in the current quarter compared to 75% and 64%, respectively, in third quarter 2016.

Operating income decreased 14% over the same period 2016. Gross profit margin was flat at 12.8% compared to the prior year as continued compression of gross margins in contractual business offset improvements in spot market gross margins. Higher year over year technology development costs and a higher number of branches open less than two years (23 vs. 15) more than offset the increased revenue compared to a year ago. Total location count grew to 44 compared to 40 at the end of third quarter last year. ICS’s carrier base increased 10% and the employee count increased 17% vs. third quarter 2016.

Truck (JBT)

  • Third Quarter 2017 Segment Revenue: $ 93 million; down 5%
  • Third Quarter 2017 Operating Income: $ 5.7 million; up 12%

JBT revenue was down 5% from the same period in 2016. Revenue excluding fuel surcharge decreased 6%, primarily from a 7% decrease in load count from third quarter 2016. Revenue per load increased approximately 1% due to a 4% increase in rates per loaded mile offset by a 3% decrease in length of haul compared to a year ago. Comparable contractual customer rates were flat compared to the same period in 2016. At the end of the period, JBT operated 2,040 tractors compared to 2,183 a year ago.

Operating income increased 12% compared to third quarter 2016. Favorable changes from higher rates per loaded mile and lower insurance and claims costs were partially offset by increased driver wages and independent contractor costs per mile, a decrease in fleet size, lower tractor utilization from an increase in unseated trucks and higher equipment maintenance costs compared to third quarter 2016.

Cash Flow and Capitalization:

At September 30, 2017, we had a total of $1.08 billion outstanding on various debt instruments compared to $944 million at September 30, 2016 and $986 million at December 31, 2016.

Our net capital expenditures for the nine months ended September 30, 2017 approximated $330 million compared to $359 million for the same period 2016. At September 30, 2017, we had cash and cash equivalents of approximately $7.7 million. Other assets include approximately $55-$65 million of amortizable intangible assets related to the purchase of SLD.

We had no purchases of our common stock during the third quarter 2017. At September 30,2017, we had approximately $521 million remaining under our combined share repurchase authorizations. Actual shares outstanding at September 30, 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 September 30
2017 2016
% Of % Of
Amount     Revenue Amount     Revenue
 
Operating revenues, excluding fuel surcharge revenues $ 1,657,380 $ 1,538,701
Fuel surcharge revenues   185,954     151,958  
Total operating revenues 1,843,334 100.0 % 1,690,659 100.0 %
 
Operating expenses
Rents and purchased transportation 947,145 51.4 % 846,238 50.1 %
Salaries, wages and employee benefits 408,340 22.2 % 374,517 22.2 %
Depreciation and amortization 95,959 5.2 % 91,001 5.4 %
Fuel and fuel taxes 87,006 4.7 % 74,179 4.4 %
Operating supplies and expenses 67,578 3.7 % 62,191 3.7 %
Insurance and claims 26,463 1.4 % 21,862 1.3 %
General and administrative expenses, net of asset dispositions 29,389 1.6 % 21,025 1.1 %
Operating taxes and licenses 10,744 0.6 % 11,665 0.7 %
Communication and utilities   5,738   0.3 %   5,004   0.3 %
Total operating expenses   1,678,362   91.1 %   1,507,682   89.2 %
Operating income 164,972 8.9 % 182,977 10.8 %
Net interest expense   8,310   0.4 %   6,485   0.4 %
Earnings before income taxes 156,662 8.5 % 176,492 10.4 %
Income taxes   56,277   3.1 %   67,067   3.9 %
Net earnings $ 100,385   5.4 % $ 109,425   6.5 %
Average diluted shares outstanding   110,628     113,363  
Diluted earnings per share $ 0.91   $ 0.97  
 
 
 
 
J.B. HUNT TRANSPORT SERVICES, INC.
Condensed Consolidated Statements of Earnings
(in thousands, except per share data)
(unaudited)
 
Nine Months Ended September 30
2017 2016
% Of % Of
Amount     Revenue Amount     Revenue
 
Operating revenues, excluding fuel surcharge revenues $ 4,670,200 $ 4,448,709
Fuel surcharge revenues   529,208     385,688  
Total operating revenues 5,199,408 100.0 % 4,834,397 100.0 %
 
Operating expenses
Rents and purchased transportation 2,624,707 50.5 % 2,381,547 49.3 %
Salaries, wages and employee benefits 1,178,524 22.7 % 1,108,997 22.9 %
Depreciation and amortization 281,198 5.4 % 269,717 5.6 %
Fuel and fuel taxes 246,725 4.7 % 205,082 4.2 %
Operating supplies and expenses 190,085 3.7 % 173,222 3.6 %
Insurance and claims 76,930 1.5 % 58,384 1.2 %
General and administrative expenses, net of asset dispositions 74,597 1.4 % 61,570 1.3 %
Operating taxes and licenses 32,329 0.6 % 34,156 0.7 %
Communication and utilities   16,337   0.3 %   15,063   0.3 %
Total operating expenses   4,721,432   90.8 %   4,307,738   89.1 %
Operating income 477,976 9.2 % 526,659 10.9 %
Net interest expense   22,521   0.4 %   19,347   0.4 %
Earnings before income taxes 455,455 8.8 % 507,312 10.5 %
Income taxes   154,499   3.0 %   192,778   4.0 %
Net earnings $ 300,956   5.8 % $ 314,534   6.5 %
Average diluted shares outstanding   111,154     113,709  
Diluted earnings per share $ 2.71   $ 2.77  
 
 
 
 
 
 
 
 
Financial Information By Segment
(in thousands)
(unaudited)
 
Three Months Ended September 30
2017 2016
% Of % Of
Amount     Total Amount     Total

Revenue

 
Intermodal $ 1,048,187 57 % $ 969,654 57 %
Dedicated 437,521 24 % 393,770 23 %
Integrated Capacity Solutions 269,451 14 % 233,022 14 %
Truck   92,632   5 %   97,154   6 %
Subtotal 1,847,791 100 % 1,693,600 100 %
Intersegment eliminations   (4,457 ) (0 %)   (2,941 ) (0 %)
Consolidated revenue $ 1,843,334   100 % $ 1,690,659   100 %
 
 

Operating income

 
Intermodal $ 109,130 66 % $ 116,885 64 %
Dedicated 42,867 26 % 52,463 28 %
Integrated Capacity Solutions 7,291 4 % 8,516 5 %
Truck 5,713 4 % 5,080 3 %
Other (1)   (29 ) (0 %)   33   0 %
Operating income $ 164,972   100 % $ 182,977   100 %
 
 
 
Nine Months Ended September 30
2017 2016
% Of % Of
Amount     Total Amount     Total

Revenue

 
Intermodal $ 2,986,746 57 % $ 2,798,284 58 %
Dedicated 1,241,899 24 % 1,134,861 23 %
Integrated Capacity Solutions 701,335 14 % 619,956 13 %
Truck   280,895   5 %   291,468   6 %
Subtotal 5,210,875 100 % 4,844,569 100 %
Intersegment eliminations   (11,467 ) (0 %)   (10,172 ) (0 %)
Consolidated revenue $ 5,199,408   100 % $ 4,834,397   100 %
 
 

Operating income

 
Intermodal $ 314,105 66 % $ 325,625 62 %
Dedicated 136,195 29 % 147,700 28 %
Integrated Capacity Solutions 11,520 2 % 30,186 6 %
Truck 16,216 3 % 23,112 4 %
Other (1)   (60 ) (0 %)   36   0 %
Operating income $ 477,976   100 % $ 526,659   100 %
 
 
(1) Includes corporate support activity
 
 
 
 
 
 
 
Operating Statistics by Segment
(unaudited)
             
Three Months Ended September 30
2017 2016
 

Intermodal

 
Loads 516,260 489,109
Average length of haul 1,685 1,662
Revenue per load $ 2,030 $ 1,983
Average tractors during the period * 5,461 5,279
 
Tractors (end of period)
Company-owned 4,768 4,568
Independent contractor   773     714  
Total tractors 5,541 5,282
 
Net change in trailing equipment during the period 1,724 1,578
Trailing equipment (end of period) 87,305 82,821
Average effective trailing equipment usage 86,622 79,107
 
 

Dedicated

 
Loads 655,881 607,876
Average length of haul 177 177
Revenue per truck per week** $ 4,196 $ 4,120
Average trucks during the period*** 8,105 7,357
 
Trucks (end of period)
Company-owned 7,792 6,936
Independent contractor 55 22
Customer-owned (Dedicated operated)   549     414  
Total trucks 8,396 7,372
 
Trailing equipment (end of period) 24,524 22,391
Average effective trailing equipment usage 24,914 22,939
 
 

Integrated Capacity Solutions

 
Loads 236,796 239,399
Revenue per load $ 1,138 $ 973
Gross profit margin 12.8 % 12.8 %
Employee count (end of period) 899 769
Approximate number of third-party carriers (end of period) 54,900 50,100
 
 

Truck

 
Loads 90,520 97,052
Average length of haul 437 453
Loaded miles (000) 39,516 43,865
Total miles (000) 47,292 52,317
Average nonpaid empty miles per load 86.0 87.2
Revenue per tractor per week** $ 3,524 $ 3,468
Average tractors during the period * 2,055 2,162
 
Tractors (end of period)
Company-owned 1,340 1,384
Independent contractor   700     799  
Total tractors 2,040 2,183
 
Trailers (end of period) 7,538 7,572
Average effective trailing equipment usage 7,099 7,083
 
 
* 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
2017 2016
 

Intermodal

 
Loads 1,484,138 1,424,733
Average length of haul 1,680 1,648
Revenue per load $ 2,012 $ 1,964
Average tractors during the period * 5,301 5,206
 
Tractors (end of period)
Company-owned 4,768 4,568
Independent contractor   773     714  
Total tractors 5,541 5,282
 
Net change in trailing equipment during the period 2,711 3,864
Trailing equipment (end of period) 87,305 82,821
Average effective trailing equipment usage 85,719 75,702
 
 

Dedicated

 
Loads 1,888,770 1,794,432
Average length of haul 178 175
Revenue per truck per week** $ 4,156 $ 4,021
Average trucks during the period*** 7,737 7,280
 
Trucks (end of period)
Company-owned 7,792 6,936
Independent contractor 55 22
Customer-owned (Dedicated operated)   549     414  
Total trucks 8,396 7,372
 
Trailing equipment (end of period) 24,524 22,391
Average effective trailing equipment usage 24,126 22,657
 
 

Integrated Capacity Solutions

 
Loads 714,923 614,334
Revenue per load $ 981 $ 1,009
Gross profit margin 12.9 % 14.9 %
Employee count (end of period) 899 769
Approximate number of third-party carriers (end of period) 54,900 50,100
 
 

Truck

 
Loads 283,053 288,392
Average length of haul 435 460
Loaded miles (000) 123,080 132,562
Total miles (000) 147,227 157,526
Average nonpaid empty miles per load 86.1 86.6
Revenue per tractor per week** $ 3,484 $ 3,432
Average tractors during the period* 2,103 2,202
 
Tractors (end of period)
Company-owned 1,340 1,384
Independent contractor   700     799  
Total tractors 2,040 2,183
 
Trailers (end of period) 7,538 7,572
Average effective trailing equipment usage 7,165 6,846
 
 
* 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, 2017       December 31, 2016
ASSETS
Current assets:
Cash and cash equivalents $ 7,707 $ 6,377
Accounts receivable 858,720 745,288
Prepaid expenses and other           140,164           194,016  
Total current assets           1,006,591           945,681  
Property and equipment 4,507,917 4,258,915
Less accumulated depreciation           1,632,108           1,440,124  
Net property and equipment           2,875,809           2,818,791  
Other assets           171,523           64,516  
          $ 4,053,923         $ 3,828,988  
 
 
LIABILITIES & STOCKHOLDERS' EQUITY
Current liabilities:
Trade accounts payable $ 493,585 $ 384,308
Claims accruals 117,645 109,745
Accrued payroll 47,514 51,929
Other accrued expenses           23,011           27,152  
Total current liabilities           681,755           573,134  
 
Long-term debt 1,084,801 986,278
Other long-term liabilities 68,564 64,881
Deferred income taxes 746,833 790,634
Stockholders' equity           1,471,970           1,414,061  
          $ 4,053,923         $ 3,828,988  
 
 
 
 
Supplemental Data
(unaudited)
                   
          September 30, 2017       December 31, 2016
 
Actual shares outstanding at end of period (000)           109,752           111,305  
 
Book value per actual share outstanding at end of period         $ 13.41         $ 12.70  
 
 
 
Nine Months Ended September 30
2017 2016
 
Net cash provided by operating activities (000)         $ 628,549         $ 683,963  
 
Net capital expenditures (000)         $ 329,775         $ 358,754  
 
 
 
 
 

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