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8-K - FORM 8-K - HUNT J B TRANSPORT SERVICES INCjbht20151014_8k.htm

Exhibit 99.1

 

 

J.B. Hunt Transport Services, Inc.  

Contact: David G. Mee

615 J.B. Hunt Corporate Drive  

Executive Vice President, Finance/Administration

Lowell, Arkansas 72745

and Chief Financial Officer

(NASDAQ: JBHT) 

(479) 820-8363

   

 

FOR IMMEDIATE RELEASE

 

 

J.B. HUNT TRANSPORT SERVICES, INC. REPORTS EARNINGS FOR THE THIRD QUARTER 2015

 

Third Quarter 2015 Revenue:  

$1.59 billion; down 1%

Third Quarter 2015 Operating Income:     

$194 million; up 13%

Third Quarter 2015 EPS:       

99 cents vs. 87 cents

        

 

LOWELL, ARKANSAS, October 14, 2015 - J.B. Hunt Transport Services, Inc., (NASDAQ:JBHT) announced third quarter 2015 net earnings of $115.1 million, or diluted earnings per share of 99 cents vs. third quarter 2014 net earnings of $102.4 million, or 87 cents per diluted share.

 

Total operating revenue for the current quarter was $1.59 billion, compared with $1.60 billion for the third quarter 2014. Customer rate increases, load growth of 3% in Intermodal (JBI), a 6% increase in revenue producing trucks and improved asset productivity, excluding fuel surcharges, in Dedicated Contract Services (DCS)™ , a 9% increase in load volume in Integrated Capacity Solutions (ICS) and 14% increase in truck count in our Truck (JBT) business segment could not offset the decrease in fuel surcharge revenue and tepid customer demand resulting in a decrease in consolidated revenue compared to prior year. Current quarter total operating revenue, excluding fuel surcharges, increased 8% vs. the comparable quarter 2014.

 

Operating income for the current quarter totaled $194 million vs. $172 million for the third quarter 2014. The increase in operating income from load growth, higher productivity and customer rate increases was partially offset by lower box turns from slower train speeds in some regions, increases in rail purchase transportation rates, increases in driver wages and recruiting costs and higher equipment ownership costs compared to third quarter 2014.

 

Interest expense in the current quarter increased from a year ago due to higher debt levels primarily from the timing of the issuance of new senior notes to refinance maturing senior notes. The effective income tax rate for both the current quarter and third quarter 2014 was 38.10%. We expect our 2015 annual tax rate to be approximately 38.10%.

  

 

Segment Information:

  

 

Intermodal (JBI)

    Third Quarter 2015 Segment Revenue: $949 million; down 2%

    Third Quarter 2015 Operating Income: $126.1 million; up 1%

 

Overall volumes increased 3% over the same period in 2014. The Eastern network load growth slowed to 1% and Transcontinental loads grew 4% over the third quarter 2014 as eastern network loads were challenged with recovering rail service while west coast import volumes began to improve. Revenue decreased 2% reflecting the 3% volume growth and an approximate 4.4% 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 increased approximately 5% compared to third quarter 2014.

 

 
 

 

  

Operating income increased 1% over prior year. Benefits from customer rate increases, reduced reliance on third party dray carriers and lower dray fleet maintenance costs were partially offset by increases in rail purchased transportation rates, equipment ownership costs including lower box utilization and increased costs to attract and retain drivers. The current period ended with approximately 77,900 units of trailing capacity and 5,040 power units assigned to the dray fleet.

 

 

Dedicated Contract Services (DCS)

Third Quarter 2015 Segment Revenue: $370 million; up 3%

Third Quarter 2015 Operating Income: $45.1 million; up 32%

  

DCS revenue increased 3% during the current quarter over the same period in 2014. Productivity (revenue per truck per week) decreased by approximately 4% vs. 2014 primarily from lower fuel surcharge revenue. Productivity excluding fuel surcharge revenue increased approximately 1.8% from a year ago primarily from customer rate increases and increased customer demand for capacity. A year-over-year net addition of 413 revenue producing trucks, 195 net additions compared to second quarter 2015, were in the fleet by the end of the quarter. Approximately 56% 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 96% as value driven services continue to support necessary rate increases.

 

Operating income increased by 32% from a year ago. Revenue from new accounts, higher productivity excluding fuel surcharge revenue, less reliance on third party carrier capacity and lower equipment maintenance costs were partially offset with higher driver wages, higher driver recruiting costs and higher equipment ownership costs compared to the same period in 2014.

 

 

Integrated Capacity Solutions (ICS)

Third Quarter 2015 Segment Revenue:     $173 million; down 7%

Third Quarter 2015 Operating Income:      $ 11.5 million; up 36%

 

ICS revenue decreased 7% in the current quarter vs. the third quarter 2014. Load volume increased 9% while revenue per load decreased 14% due to lower fuel prices and freight mix changes driven by customer demand including less transactional or “spot” business. Contractual volumes increased 13% to approximately 66% of total load volume and 61% of total revenue in the current quarter compared to 65% and 58%, respectively, in third quarter 2014.

 

Operating income increased 36% over the same period 2014 primarily due to improved gross profit margin. Gross profit margin increased to 15.9% in the current quarter vs. 13.3% in the prior year. The increase in operating income was partially offset by increased personnel costs as the total branch count grew to 33 compared to 28 at the end of third quarter last year. ICS’s carrier base increased 17% and the employee count increased 13% vs. third quarter 2014.

 

Truck (JBT)

Third Quarter 2015 Segment Revenue: $ 98 million; up 2%

Third Quarter 2015 Operating Income: $ 11.2 million; up 159%

 

JBT revenue for the current quarter increased 2% from the same period in 2014. Revenue excluding fuel surcharge increased 10%, primarily from increased truck count and core rate increases of approximately 4.5%, but was partially offset by lower asset utilization. At the end of the period, JBT operated 2,100 tractors compared to 1,843 a year ago.

 

 
 

 

  

Operating income increased by 159% compared to third quarter 2014. Favorable changes in core rates, increased fleet count, lower equipment maintenance costs, lower safety and insurance costs and improved fuel economy were partially offset by increased driver and independent contractor costs per mile, increased driver hiring costs, and lower asset utilization compared to third quarter 2014.

  

Cash Flow and Capitalization:

At September 30, 2015, we had a total of $993 million outstanding on various debt instruments compared to $837 million at September 30, 2014 and $934 million at December 31, 2014.

 

Our net capital expenditures for the nine months ended September 30, 2015 approximated $431 million compared to $479 million for the same period 2014. At September 30, 2015, we had cash and cash equivalents of approximately $5.5 million.

 

We purchased approximately 2.2 million shares of our common stock during the quarter for $177.9 million. At September 30, 2015 we had approximately $1 million remaining under our share repurchase authorization. Shares outstanding at September 30, 2015 approximated 114.6 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, 2014. 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

 
   

2015

   

2014

 
           

% Of

           

% Of

 
   

Amount

   

Revenue

   

Amount

   

Revenue

 
                                 

Operating revenues, excluding fuel surcharge revenues

  $ 1,419,451             $ 1,316,951          

Fuel surcharge revenues

    167,043               284,205          

Total operating revenues

    1,586,494       100.0 %     1,601,156       100.0 %
                                 

Operating expenses

                               

Rents and purchased transportation

    770,148       48.5 %     802,092       50.1 %

Salaries, wages and employee benefits

    351,651       22.2 %     327,106       20.4 %

Fuel and fuel taxes

    76,755       4.8 %     115,503       7.2 %

Depreciation and amortization

    86,201       5.4 %     75,416       4.7 %

Operating supplies and expenses

    57,299       3.6 %     56,978       3.6 %

Insurance and claims

    20,078       1.3 %     21,904       1.4 %

General and administrative expenses, net of asset dispositions

    14,866       1.0 %     15,057       0.9 %

Operating taxes and licenses

    10,683       0.7 %     9,893       0.7 %

Communication and utilities

    4,967       0.3 %     5,107       0.3 %

Total operating expenses

    1,392,648       87.8 %     1,429,056       89.3 %

Operating income

    193,846       12.2 %     172,100       10.7 %

Net interest expense

    7,838       0.5 %     6,649       0.4 %

Earnings before income taxes

    186,008       11.7 %     165,451       10.3 %

Income taxes

    70,869       4.4 %     63,037       3.9 %

Net earnings

  $ 115,139       7.3 %   $ 102,414       6.4 %

Average diluted shares outstanding

    116,282               118,221          

Diluted earnings per share

  $ 0.99             $ 0.87          

  

 
 

 

 

J.B. HUNT TRANSPORT SERVICES, INC.

Condensed Consolidated Statements of Earnings

(in thousands, except per share data)

(unaudited)

 

   

Nine Months Ended September 30

 
   

2015

   

2014

 
           

% Of

           

% Of

 
   

Amount

   

Revenue

   

Amount

   

Revenue

 
                                 

Operating revenues, excluding fuel surcharge revenues

  $ 4,043,991             $ 3,737,936          

Fuel surcharge revenues

    522,640               817,994          

Total operating revenues

    4,566,631       100.0 %     4,555,930       100.0 %
                                 

Operating expenses

                               

Rents and purchased transportation

    2,194,683       48.1 %     2,282,992       50.1 %

Salaries, wages and employee benefits

    1,030,438       22.6 %     951,517       20.9 %

Fuel and fuel taxes

    243,459       5.3 %     352,452       7.7 %

Depreciation and amortization

    251,239       5.5 %     216,109       4.7 %

Operating supplies and expenses

    164,497       3.6 %     165,939       3.6 %

Insurance and claims

    55,714       1.2 %     57,622       1.3 %

General and administrative expenses, net of asset dispositions

    56,471       1.3 %     36,525       0.9 %

Operating taxes and licenses

    31,505       0.7 %     28,517       0.7 %

Communication and utilities

    15,824       0.3 %     15,620       0.3 %

Total operating expenses

    4,043,830       88.6 %     4,107,293       90.2 %

Operating income

    522,801       11.4 %     448,637       9.8 %

Net interest expense

    21,202       0.4 %     21,358       0.4 %

Earnings before income taxes

    501,599       11.0 %     427,279       9.4 %

Income taxes

    191,109       4.2 %     162,793       3.6 %

Net earnings

  $ 310,490       6.8 %   $ 264,486       5.8 %

Average diluted shares outstanding

    117,293               118,567          

Diluted earnings per share

  $ 2.65             $ 2.23          

  

 
 

 

 

Financial Information By Segment

 

(in thousands)

 

(unaudited)

 
                                 
                                 
   

Three Months Ended September 30

 
   

2015

   

2014

 
           

% Of

           

% Of

 
   

Amount

   

Total

   

Amount

   

Total

 
                                 

Revenue

                               
                                 

Intermodal

  $ 948,779       60 %   $ 963,568       60 %

Dedicated

    370,360       23 %     361,030       22 %

Integrated Capacity Solutions

    172,894       11 %     185,135       12 %

Truck

    97,521       6 %     95,754       6 %

Subtotal

    1,589,554       100 %     1,605,487       100 %

Intersegment eliminations

    (3,060 )     (0 %)     (4,331 )     (0 %)

Consolidated revenue

  $ 1,586,494       100 %   $ 1,601,156       100 %
                                 
                                 

Operating income

                               
                                 

Intermodal

  $ 126,077       65 %   $ 125,044       73 %

Dedicated

    45,123       23 %     34,294       20 %

Integrated Capacity Solutions

    11,453       6 %     8,442       5 %

Truck

    11,244       6 %     4,333       2 %

Other (1)

    (51 )     (0 %)     (13 )     (0 %)

Operating income

  $ 193,846       100 %   $ 172,100       100 %

 

   

Nine Months Ended September 30

 
   

2015

   

2014

 
           

% Of

           

% Of

 
   

Amount

   

Total

   

Amount

   

Total

 

Revenue

                               
                                 

Intermodal

  $ 2,697,537       59 %   $ 2,729,731       60 %

Dedicated

    1,082,264       24 %     1,030,802       23 %

Integrated Capacity Solutions

    509,985       11 %     520,659       11 %

Truck

    286,218       6 %     289,297       6 %

Subtotal

    4,576,004       100 %     4,570,489       100 %

Intersegment eliminations

    (9,373 )     (0 %)     (14,559 )     (0 %)

Consolidated revenue

  $ 4,566,631       100 %   $ 4,555,930       100 %
                                 
                                 

Operating income

                               
                                 

Intermodal

  $ 348,955       67 %   $ 331,610       74 %

Dedicated

    121,511       23 %     80,212       18 %

Integrated Capacity Solutions

    22,974       4 %     20,788       5 %

Truck

    29,448       6 %     16,144       3 %

Other (1)

    (87 )     (0 %)     (117 )     (0 %)

Operating income

  $ 522,801       100 %   $ 448,637       100 %
                                 

 

(1) Includes corporate support activity

  

 
 

 

 

Operating Statistics by Segment

 

(unaudited)

 
                 
   

Three Months Ended September 30

 
   

2015

   

2014

 
                 

Intermodal

               
                 

Loads

    458,584       445,385  

Average length of haul

    1,660       1,645  

Revenue per load

  $ 2,069     $ 2,163  

Average tractors during the period *

    4,977       4,615  
                 

Tractors (end of period)

               

Company-owned

    4,292       3,895  

Independent contractor

    750       754  

Total tractors

    5,042       4,649  
                 

Net change in trailing equipment during the period

    1,658       1,954  

Trailing equipment (end of period)

    77,937       71,678  

Average effective trailing equipment usage

    74,669       70,516  
                 
                 

Dedicated

               
                 

Loads

    578,628       544,304  

Average length of haul

    174       176  

Revenue per truck per week**

  $ 3,998     $ 4,170  

Average trucks during the period***

    7,098       6,650  
                 

Trucks (end of period)

               

Company-owned

    6,758       6,252  

Independent contractor

    9       6  

Customer-owned (Dedicated operated)

    400       496  

Total trucks

    7,167       6,754  
                 

Trailing equipment (end of period)

    21,141       20,027  

Average effective trailing equipment usage

    22,420       21,052  
                 
                 

Integrated Capacity Solutions

               
                 

Loads

    127,016       116,401  

Revenue per load

  $ 1,361     $ 1,590  

Gross profit margin

    15.9 %     13.3 %

Employee count (end of period)

    650       577  

Approximate number of third-party carriers (end of period)

    44,000       37,700  
                 
                 

Truck

               
                 

Loads

    91,639       89,636  

Average length of haul

    454       419  

Loaded miles (000)

    41,376       37,674  

Total miles (000)

    49,213       44,436  

Average nonpaid empty miles per load

    80.9       73.6  

Revenue per tractor per week**

  $ 3,630     $ 4,109  

Average tractors during the period *

    2,080       1,816  
                 

Tractors (end of period)

               

Company-owned

    1,471       1,249  

Independent contractor

    629       594  

Total tractors

    2,100       1,843  
                 

Trailers (end of period)

    7,740       6,776  

Average effective trailing equipment usage

    6,610       5,816  

 

* 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

 
   

2015

   

2014

 
                 

Intermodal

               
                 

Loads

    1,305,347       1,260,809  

Average length of haul

    1,648       1,652  

Revenue per load

  $ 2,067     $ 2,165  

Average tractors during the period *

    4,903       4,437  
                 

Tractors (end of period)

               

Company-owned

    4,292       3,895  

Independent contractor

    750       754  

Total tractors

    5,042       4,649  
                 

Net change in trailing equipment during the period

    4,639       5,699  

Trailing equipment (end of period)

    77,937       71,678  

Average effective trailing equipment usage

    71,395       67,750  
                 
                 

Dedicated

               
                 

Loads

    1,671,407       1,553,092  

Average length of haul

    175       178  

Revenue per truck per week**

  $ 4,021     $ 4,069  

Average trucks during the period***

    6,957       6,559  
                 

Trucks (end of period)

               

Company-owned

    6,758       6,252  

Independent contractor

    9       6  

Customer-owned (Dedicated operated)

    400       496  

Total trucks

    7,167       6,754  
                 

Trailing equipment (end of period)

    21,141       20,027  

Average effective trailing equipment usage

    22,324       20,706  
                 
                 

Integrated Capacity Solutions

               
                 

Loads

    371,060       329,287  

Revenue per load

  $ 1,374     $ 1,581  

Gross profit margin

    15.0 %     12.7 %

Employee count (end of period)

    650       577  

Approximate number of third-party carriers (end of period)

    44,000       37,700  
                 
                 

Truck

               
                 

Loads

    271,107       280,678  

Average length of haul

    446       404  

Loaded miles (000)

    120,366       113,389  

Total miles (000)

    142,419       133,625  

Average nonpaid empty miles per load

    77.8       69.7  

Revenue per tractor per week**

  $ 3,711     $ 4,063  

Average tractors during the period*

    2,015       1,862  
                 

Tractors (end of period)

               

Company-owned

    1,471       1,249  

Independent contractor

    629       594  

Total tractors

    2,100       1,843  
                 

Trailers (end of period)

    7,740       6,776  

Average effective trailing equipment usage

    6,342       5,788  

 

* 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, 2015

   

December 31, 2014

 

ASSETS

               

Current assets:

               

Cash and cash equivalents

  $ 5,542     $ 5,961  

Accounts Receivable

    671,398       653,795  

Prepaid expenses and other

    72,600       201,743  

Deferred income taxes

    18,631       18,631  

Total current assets

    768,171       880,130  

Property and equipment

    3,957,722       3,719,757  

Less accumulated depreciation

    1,287,213       1,237,225  

Net property and equipment

    2,670,509       2,482,532  

Other assets

    80,584       34,455  
    $ 3,519,264     $ 3,397,117  
                 
                 

LIABILITIES & STOCKHOLDERS' EQUITY

               

Current liabilities:

               

Current debt

  $ -     $ 250,000  

Trade accounts payable

    355,671       325,838  

Claims accruals

    100,649       96,719  

Accrued payroll

    69,447       80,547  

Other accrued expenses

    18,281       17,966  

Total current liabilities

    544,048       771,070  
                 

Long-term debt

    993,353       683,539  

Other long-term liabilities

    59,646       59,561  

Deferred income taxes

    673,030       678,424  

Stockholders' equity

    1,249,187       1,204,523  
    $ 3,519,264     $ 3,397,117  

 

Supplemental Data

 

(unaudited)

 
                 
   

September 30, 2015

   

December 31, 2014

 
                 

Actual shares outstanding at end of period (000)

    114,602       116,575  
                 

Book value per actual share outstanding at end of period

  $ 10.90     $ 10.33  

 

   

Nine Months Ended September 30

 
   

2015

   

2014

 
                 

Net cash provided by operating activities (000)

  $ 696,960     $ 486,365  
                 

Net capital expenditures (000)

  $ 430,660     $ 479,225