J.B. Hunt Transport Services, Inc. Reports Earnings for the Second Quarter 2018

  • Second Quarter 2018 Revenue: $2.14 billion; up 24%
  • Second Quarter 2018 Operating Income: $214.8 million; up 31%
  • Second Quarter 2018 EPS: $1.37 vs. 88 cents

LOWELL, Ark.--()--J.B. Hunt Transport Services, Inc., (NASDAQ:JBHT) announced second quarter 2018 net earnings of $151.7 million, or diluted earnings per share of $1.37 vs. second quarter 2017 net earnings of $97.9 million, or 88 cents per diluted share.

Total operating revenue for the current quarter was $2.14 billion, compared with $1.73 billion for the second quarter 2017, an increase of 24%. Current quarter total operating revenue, excluding fuel surcharges, increased 21% vs. the comparable quarter 2017. An increase in revenue per load of 12% and load growth of 4% in Intermodal (JBI), a 17% increase in revenue producing trucks and a 10% increase in truck productivity in Dedicated Contract Services (DCS), a 38% increase in volume and a 13% increase in revenue per load in Integrated Capacity Solutions (ICS), and a 14% increase in rates per loaded mile in Truck (JBT) contributed to the increase in consolidated revenue compared to prior year.

Operating income for the current quarter totaled $214.8 million vs. $163.6 million for the second quarter 2017. The benefits of customer rate increases, volume growth, and increases in revenue producing truck counts were partially offset by increases in rail, over the road and outsourced dray purchased transportation costs, start-up costs associated with new DCS contracts, higher driver wages and recruiting costs, increased office and support personnel costs, increased technology costs for structural upgrades, and further development of J.B. Hunt 360, increased losses on the sale of equipment and increased equipment maintenance and facility 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 26.0% vs. 37.4% for the second quarter 2017.

Segment Information:

Intermodal (JBI)

  • Second Quarter 2018 Segment Revenue: $1.16 billion; up 16%
  • Second Quarter 2018 Operating Income: $134 million; up 22%

JBI load volumes grew 4% over the same period in 2017. Transcontinental loads decreased approximately 2% from second quarter 2017 mainly from network congestion and freight mix changes away from higher cost dray movements. Eastern network volumes grew approximately 13% compared to a year ago. Revenue increased 16% reflecting the 4% volume growth and an approximate 12% 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, increased 8% from second quarter 2017.

Operating income increased 22% from prior year. Benefits from customer rate increases and volume growth were partially offset by increases in rail purchased transportation costs, driver pay and retention costs, driver recruiting costs, outsourced dray costs, costs to install and integrate container tracking solutions, and equipment ownership costs. The current period ended with approximately 90,600 units of trailing capacity and 5,540 power units assigned to the dray fleet.

Dedicated Contract Services (DCS)

  • Second Quarter 2018 Segment Revenue: $530 million; up 29%
  • Second Quarter 2018 Operating Income: $58.5 million; up 20%

DCS revenue increased 29% during the current quarter over the same period in 2017. Productivity, defined as revenue per truck per week, increased approximately 10% vs. 2017. Productivity excluding fuel surcharges increased approximately 7% over a year ago primarily from customer rate increases, improved integration of assets between customer accounts, and increased customer supply chain fluidity. Included in the DCS revenue growth, Final Mile Services (FMS) recorded an increase in revenue of $39 million (including approximately $25.8 million from the July 2017 acquisition) compared to second quarter 2017. A net additional 1,284 revenue producing trucks, 148 net additions compared to first quarter 2018, were in the fleet by the end of the quarter compared to the prior year. Approximately 55% of these additions represent private fleet conversions and 39% represent FMS vs. traditional dedicated capacity fleets. Customer retention rates remain above 98%.

Operating income increased 20% over the prior year quarter primarily from increased productivity and additional trucks under contract; partially offset by increased costs in the expanding FMS network, increased driver wages and recruiting costs, increased maintenance costs on equipment scheduled to be traded in 2018, increased insurance and claims costs, and approximately $1.9 million in non-cash amortization expense compared to the second quarter 2017.

Integrated Capacity Solutions (ICS)

  • Second Quarter 2018 Segment Revenue: $347 million; up 56%
  • Second Quarter 2018 Operating Income: $14.9 million vs. an Operating Loss of $(0.2) million in 2017

ICS revenue was up 56% compared to the second quarter 2017. Volumes increased 38% while revenue per load increased approximately 13%, primarily due to increased contractual and spot rates compared to second quarter 2017. Spot volumes increased 63% and contractual volumes increased 28% from a year ago. Contractual volumes represented approximately 68% of total load volume and 45% of total revenue compared to 73% and 58%, respectively, in second quarter 2017. Of the total reported ICS revenue, approximately $137 million was executed through the marketplace for J.B. Hunt 360 compared to $96 million in first quarter 2018.

Operating income increased $15.1 million over the same period 2017 primarily from a higher gross profit margin, improved operating leverage in branches open more than two years and lower insurance and claims costs partially offset by higher personnel costs and higher technology development costs as the marketplace for J.B. Hunt 360 continues expansion. Gross profit margins increased to 14.8% in the current quarter vs. 11.6% in the same period last year due to both improved contractual margins and a continuing active spot market. Total branch count increased to 44 from 42 at second quarter 2017. The carrier base increased 19% and the employee count increased 19% vs. second quarter 2017.

Truck (JBT)

  • Second Quarter 2018 Segment Revenue: $101 million; up 7%
  • Second Quarter 2018 Operating Income: $7.5 million; up 35%

JBT revenue increased 7% compared to the same period in 2017 primarily from customer rate increases and freight mix changes. Revenue excluding fuel surcharges increased approximately 4%, primarily from an increase in revenue per load partially offset by a decrease in load count. Revenue per load excluding fuel surcharges was up approximately 14% from an equivalent increase in rates per loaded mile compared to the same period in 2017. Customer contract rates increased approximately 7.2% compared to the same period in 2017. At the end of the period, JBT operated 1,976 tractors compared to 2,072 a year ago.

Operating income increased 35% compared to the same quarter 2017. The benefits from higher revenue per load and lower equipment ownership costs were partially offset by increased driver wage costs, higher independent contractor cost per mile, increased driver and independent contractor recruiting costs, and an average of 180 unseated trucks during the current period compared to the second quarter 2017.

Cash Flow and Capitalization:

At June 30, 2018, we had approximately $1.0 billion outstanding on various debt instruments compared to $943 million at June 30, 2017, and $1.09 billion at December 31, 2017.

Our net capital expenditures for the six months ended June 30, 2018, approximated $354 million compared to $165 million for the same period 2017. At June 30, 2018, we had cash and cash equivalents of $15.2 million.

We purchased approximately 420,000 shares of our common stock during the second quarter 2018 for approximately $50 million. At June 30, 2018, we had approximately $471 million remaining under our share repurchase authorization. Actual shares outstanding at June 30, 2018 approximated 109.3 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, 2017. 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
2018 2017
% Of % Of
Amount   Revenue Amount   Revenue
 
Operating revenues, excluding fuel surcharge revenues $ 1,874,388 $ 1,551,051
Fuel surcharge revenues 264,639 175,864
Total operating revenues 2,139,027 100.0 % 1,726,915 100.0 %
 
Operating expenses
Rents and purchased transportation 1,073,164 50.2 % 871,122 50.4 %
Salaries, wages and employee benefits 465,326 21.8 % 389,873 22.6 %
Fuel and fuel taxes 115,541 5.4 % 79,072 4.6 %
Depreciation and amortization 107,423 5.0 % 93,050 5.4 %
Operating supplies and expenses 76,446 3.6 % 64,486 3.7 %
General and administrative expenses, net of asset dispositions 37,306 1.7 % 21,728 1.3 %
Insurance and claims 28,371 1.3 % 27,461 1.6 %
Operating taxes and licenses 12,234 0.6 % 10,905 0.6 %
Communication and utilities 8,404 0.4 % 5,603 0.3 %
Total operating expenses 1,924,215 90.0 % 1,563,300 90.5 %
Operating income 214,812 10.0 % 163,615 9.5 %
Net interest expense 9,855 0.4 % 7,393 0.4 %
Earnings before income taxes 204,957 9.6 % 156,222 9.1 %
Income taxes 53,305 2.5 % 58,353 3.4 %
Net earnings $ 151,652 7.1 % $ 97,869 5.7 %
Average diluted shares outstanding 110,682 110,822
Diluted earnings per share $ 1.37 $ 0.88
 
                   
J.B. HUNT TRANSPORT SERVICES, INC.
Condensed Consolidated Statements of Earnings
(in thousands, except per share data)
(unaudited)
 
Six Months Ended June 30
2018 2017
% Of % Of
Amount   Revenue Amount   Revenue
 
Operating revenues, excluding fuel surcharge revenues $ 3,587,321 $ 3,012,820
Fuel surcharge revenues 499,951 343,253
Total operating revenues 4,087,272 100.0 % 3,356,073 100.0 %
 
Operating expenses
Rents and purchased transportation 2,038,057 49.9 % 1,677,562 50.0 %
Salaries, wages and employee benefits 915,592 22.4 % 770,184 22.9 %
Fuel and fuel taxes 223,422 5.5 % 159,719 4.8 %
Depreciation and amortization 213,006 5.2 % 185,238 5.5 %
Operating supplies and expenses 147,126 3.6 % 122,507 3.7 %
General and administrative expenses, net of asset dispositions 69,630 1.6 % 45,209 1.4 %
Insurance and claims 56,870 1.4 % 50,466 1.5 %
Operating taxes and licenses 23,822 0.6 % 21,585 0.6 %
Communication and utilities 16,153 0.4 % 10,599 0.3 %
Total operating expenses 3,703,678 90.6 % 3,043,069 90.7 %
Operating income 383,594 9.4 % 313,004 9.3 %
Net interest expense 19,008 0.5 % 14,211 0.4 %
Earnings before income taxes 364,586 8.9 % 298,793 8.9 %
Income taxes 94,792 2.3 % 98,222 2.9 %
Net earnings $ 269,794 6.6 % $ 200,571 6.0 %
Average diluted shares outstanding 110,771 111,420
Diluted earnings per share $ 2.44 $ 1.80
 
                   
Financial Information By Segment
(in thousands)
(unaudited)
     
 
Three Months Ended June 30
2018 2017
% Of % Of
Amount   Total Amount   Total
 

Revenue

 
Intermodal $ 1,164,508 54 % $ 1,001,441 58 %
Dedicated 529,982 25 % 411,917 24 %
Integrated Capacity Solutions 347,295 16 % 222,465 13 %
Truck 101,241   5 % 94,575   5 %
Subtotal 2,143,026 100 % 1,730,398 100 %
Intersegment eliminations (3,999 ) (0 %) (3,483 ) (0 %)
Consolidated revenue $ 2,139,027   100 % $ 1,726,915   100 %
 

 

Operating income

 
Intermodal $ 133,993 62 % $ 109,714 67 %
Dedicated 58,452 27 % 48,574 30 %
Integrated Capacity Solutions 14,934 7 % (239 ) (0 %)
Truck 7,484 4 % 5,563 3 %
Other (1) (51 ) (0 %) 3   0 %
Operating income $ 214,812   100 % $ 163,615   100 %
 
 
 
 
 
Six Months Ended June 30
2018 2017
% Of % Of
Amount   Total Amount   Total

Revenue

 
Intermodal $ 2,234,772 54 % $ 1,938,559 58 %
Dedicated 1,024,462 25 % 804,378 24 %
Integrated Capacity Solutions 643,400 16 % 431,884 13 %
Truck 193,959   5 % 188,263   5 %
Subtotal 4,096,593 100 % 3,363,084 100 %
Intersegment eliminations (9,321 ) (0 %) (7,011 ) (0 %)
Consolidated revenue $ 4,087,272   100 % $ 3,356,073   100 %
 

 

Operating income

 
Intermodal $ 248,235 65 % $ 204,975 66 %
Dedicated 99,013 26 % 93,328 30 %
Integrated Capacity Solutions 23,810 6 % 4,230 1 %
Truck 12,614 3 % 10,504 3 %
Other (1) (78 ) (0 %) (33 ) (0 %)
Operating income $ 383,594   100 % $ 313,004   100 %
 
 
 

(1) Includes corporate support activity

 
               
Operating Statistics by Segment
(unaudited)
     
Three Months Ended June 30
2018 2017
 

Intermodal

 
Loads 520,341 501,038
Average length of haul 1,634 1,677
Revenue per load $ 2,238 $ 1,999
Average tractors during the period * 5,496 5,220
 
Tractors (end of period)
Company-owned 4,873 4,621
Independent contractor 666   680  
Total tractors 5,539 5,301
 
Net change in trailing equipment during the period 1,082 363
Trailing equipment (end of period) 90,575 85,581
Average effective trailing equipment usage 86,451 81,073
 
 

Dedicated

 
Loads 731,137 636,149
Average length of haul 179 178
Revenue per truck per week** $ 4,565 $ 4,156
Average trucks during the period*** 8,973 7,669
 
Trucks (end of period)
Company-owned 8,526 7,207
Independent contractor 57 9
Customer-owned (Dedicated operated) 476   559  
Total trucks 9,059 7,775
 
Trailing equipment (end of period) 25,501 23,387
Average effective trailing equipment usage 26,540 23,899
 
 

Integrated Capacity Solutions

 
Loads 331,278 240,069
Revenue per load $ 1,048 $ 927
Gross profit margin 14.8 % 11.6 %
Employee count (end of period) 1,043 876
Approximate number of third-party carriers (end of period) 63,500 53,400
 

 

Truck

 
Loads 88,301 96,897
Average length of haul 433 431
Loaded miles (000) 38,221 41,678
Total miles (000) 45,468 49,917
Average nonpaid empty miles per load 82.1 85.1
Revenue per tractor per week** $ 3,935 $ 3,518
Average tractors during the period * 2,003 2,102
 
Tractors (end of period)
Company-owned 1,262 1,337
Independent contractor 714   735  
Total tractors 1,976 2,072
 
Trailers (end of period) 6,928 7,604
Average effective trailing equipment usage 6,497 7,232
 
 
* 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
2018 2017
 

Intermodal

 
Loads 1,016,105 967,878
Average length of haul 1,648 1,678
Revenue per load $ 2,199 $ 2,003
Average tractors during the period * 5,495 5,221
 
Tractors (end of period)
Company-owned 4,873 4,621
Independent contractor 666   680  
Total tractors 5,539 5,301
 
Net change in trailing equipment during the period 1,965 987
Trailing equipment (end of period) 90,575 85,581
Average effective trailing equipment usage 86,858 79,221
 
 

Dedicated

 
Loads 1,419,487 1,232,889
Average length of haul 180 179
Revenue per truck per week** $ 4,453 $ 4,135
Average trucks during the period*** 8,906 7,553
 
Trucks (end of period)
Company-owned 8,526 7,207
Independent contractor 57 9
Customer-owned (Dedicated operated) 476   559  
Total trucks 9,059 7,775
 
Trailing equipment (end of period) 25,501 23,387
Average effective trailing equipment usage 26,804 23,732
 
 

Integrated Capacity Solutions

 
Loads 582,799 478,127
Revenue per load $ 1,104 $ 903
Gross profit margin 14.6 % 12.9 %
Employee count (end of period) 1,043 876
Approximate number of third-party carriers (end of period) 63,500 53,400
 

 

Truck

 
Loads 169,800 192,533
Average length of haul 443 434
Loaded miles (000) 75,146 83,564
Total miles (000) 89,313 99,935
Average nonpaid empty miles per load 83.5 85.1
Revenue per tractor per week** $ 3,857 $ 3,464
Average tractors during the period* 1,973 2,126
 
Tractors (end of period)
Company-owned 1,262 1,337
Independent contractor 714   735  
Total tractors 1,976 2,072
 
Trailers (end of period) 6,928 7,604
Average effective trailing equipment usage 6,529 7,198
 
 
* 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, 2018       December 31, 2017
ASSETS
Current assets:
Cash and cash equivalents $ 15,191 $ 14,612
Accounts Receivable 1,019,622 920,767
Prepaid expenses and other     272,608       403,349
Total current assets     1,307,421       1,338,728
Property and equipment 4,924,684 4,670,464
Less accumulated depreciation     1,782,297       1,687,133
Net property and equipment     3,142,387       2,983,331
Other assets     139,435       143,290
    $ 4,589,243     $ 4,465,349
 
 
LIABILITIES & STOCKHOLDERS' EQUITY
Current liabilities:
Current debt $ 249,436 $ -
Trade accounts payable 551,715 598,594
Claims accruals 259,078 251,980
Accrued payroll 63,792 42,382
Other accrued expenses     34,516       28,888
Total current liabilities     1,158,537       921,844
 
Long-term debt 755,575 1,085,649
Other long-term liabilities 88,903 76,661
Deferred income taxes 552,866 541,870
Stockholders' equity     2,033,362       1,839,325
    $ 4,589,243     $ 4,465,349
 
 
 
Supplemental Data
(unaudited)
               
      June 30, 2018       December 31, 2017
 
Actual shares outstanding at end of period (000)     109,344       109,753
 
Book value per actual share outstanding at end of period   $ 18.60     $ 16.76
 
 
               
Six Months Ended June 30
2018 2017
 
Net cash provided by operating activities (000)   $ 529,033     $ 443,447
 
Net capital expenditures (000)   $ 354,131     $ 165,092
 

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