J.B. Hunt Transport Services, Inc. Reports Earnings for the Second Quarter 2016 and Updates Full Year 2016 Expectations

  • Second Quarter 2016 Revenue: $1.62 billion; up 5%
  • Second Quarter 2016 Operating Income: $176 million; up 1%
  • Second Quarter 2016 EPS: 92 cents vs. 88 cents

LOWELL, Ark.--()--J.B. Hunt Transport Services, Inc., (NASDAQ:JBHT) announced second quarter 2016 net earnings of $105 million, or diluted earnings per share of 92 cents vs. second quarter 2015 net earnings of $103 million, or 88 cents per diluted share.

Total operating revenue for the current quarter was $1.62 billion, compared with $1.54 billion for the second quarter 2015, an increase of 5%. Current quarter total operating revenue, excluding fuel surcharges, increased 9% vs. the comparable quarter 2015. Load growth of 9% in Intermodal (JBI) and 62% in Integrated Capacity Solutions (ICS), a 5% increase in revenue producing trucks in Dedicated Contract Services (DCS) and an 11% increase in average fleet count in our Truck (JBT) business segment, contributed to the increase in consolidated revenue compared to prior year.

Operating income for the current quarter totaled $176 million versus $174 million for the second quarter 2015. The benefits of volume growth, increases in revenue producing truck counts and higher equipment utilization, were substantially offset by increases in rail purchased transportation costs, higher driver wages and recruiting costs and increased equipment ownership costs. In the second quarter of 2015, we recorded a charge of approximately $14.1 million for corporate wide streamlining and technology redevelopment costs.

Interest expense in the current quarter decreased due to lower overall debt levels from the same period last year. The effective income tax rate for the quarter was 38.0% versus 38.1% for the second quarter 2015. The 2016 annual tax rate is expected to be approximately 38.0%.

The Company posted revised full year 2016 Financial Expectations on its website under the Investors tab at www.jbhunt.com.

Segment Information:

Intermodal (JBI)

  • Second Quarter 2016 Segment Revenue: $933 million; up 3%
  • Second Quarter 2016 Operating Income: $105.6 million; down 11%

JBI load volumes grew 9% over the same period in 2015. Eastern network realized load growth of 10% and Transcontinental loads grew 8% as west coast port volumes continued a more normal velocity and rail service continued a year over year improvement trend. Revenue increased 3% reflecting the 9% volume growth, offset by a 5% decrease 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 2015.

Operating income decreased 11% from prior year. Benefits from volume growth, improved box utilization, lower outsourced carrier costs and reduced maintenance costs were not enough to overcome the cost increases in rail purchased transportation, equipment ownership, insurance and claims, and driver recruiting and retention. Second quarter of 2015 included approximately $6.4 million in corporate wide streamlining and technology redevelopment costs. The current period ended with 81,243 units of trailing capacity and 5,244 power units assigned to the dray fleet.

Dedicated Contract Services (DCS)

  • Second Quarter 2016 Segment Revenue: $383 million; up 4%
  • Second Quarter 2016 Operating Income: $50.5 million; up 24%

DCS revenue increased 4% during the current quarter over the same period in 2015. Productivity, defined as revenue per truck per week, decreased approximately 1% vs. 2015 primarily from lower fuel surcharges. Productivity excluding fuel surcharges increased 1% over a year ago primarily from better integration of assets between customer accounts, fewer unseated trucks, increased customer supply chain fluidity and customer rate increases. A net additional 350 revenue producing trucks, 132 net additions compared to first quarter 2016, were in the fleet by the end of the quarter compared to prior year. Approximately 87% of these additions represent private fleet conversions versus traditional dedicated capacity fleets. Customer retention rates remain above 98%.

The operating income increase of 24% over the prior year quarter is primarily due to increased revenue, improved asset utilization, and a reduction in overall safety costs, partially offset by higher driver wage and recruiting costs, increased salaries and benefits costs as well as higher equipment ownership costs. Approximately $2.6 million of corporate wide streamlining and technology redevelopment costs was incurred in the second quarter 2015.

Integrated Capacity Solutions (ICS)

  • Second Quarter 2016 Segment Revenue: $204 million; up 17%
  • Second Quarter 2016 Operating Income: $10.9 million; up 122%

ICS revenue was up 17% compared to the second quarter 2015. Volumes increased 62% while revenue per load decreased 28%, primarily due to freight mix changes driven by customer demand and lower fuel prices compared to second quarter 2015. Contractual volumes represented approximately 73% of total load volume and 65% of total revenue compared to 70% and 62%, respectively, in second quarter 2015.

Operating income increased 122% over the same period 2015 primarily from increased volume and related revenue. Gross profit margins decreased to 15.0% in the current quarter versus 15.2% in the same period last year. The decrease in gross margin percentage is primarily the result of new customer rates implemented on contractual business and lower customer spot rates compared to the second quarter 2015. The increase in operating income was partly offset by higher personnel costs as the total branch count increased to 35 from 31 at second quarter 2015. Second quarter 2015 included $4.4 million of corporate wide streamlining and technology redevelopment costs. The carrier base increased 16% and the employee count increased 13% vs. second quarter 2015.

Truck (JBT)

  • Second Quarter 2016 Segment Revenue: $98 million; up 1%
  • Second Quarter 2016 Operating Income: $8.9 million; down 9%

JBT revenue for the current quarter was up 1% compared to the same period in 2015. Revenue excluding fuel surcharges increased 6%, primarily from an 11% increase in average fleet count. Rate per loaded mile excluding fuel surcharges was down approximately 5% primarily from customer driven freight mix changes, including a 5.8% increase in length of haul. Core customer rate increases were up 0.9% compared to the same period in 2015. At the end of the period, JBT operated 2,186 tractors compared to 2,073 a year ago.

Operating income decreased 9% compared to the same quarter 2015. Benefits of the larger fleet were more than offset by lower rates per loaded mile, increased driver hiring costs, higher independent contractor cost and increased tractor maintenance costs compared to the second quarter 2015. Approximately $700,000 of streamlining and technology redevelopment costs were recorded in second quarter 2015.

Cash Flow and Capitalization:

At June 30, 2016, we had a total of $958 million outstanding on various debt instruments compared to $890 million at June 30, 2015 and $998 million at December 31, 2015.

Our net capital expenditures for the six months ended June 30, 2016 approximated $258 million compared to $299 million for the same period 2015. At June 30, 2016, we had cash and cash equivalents of $11.3 million.

We had no purchases of our common stock during the second quarter 2016. At June 30, 2016 we had approximately $351 million remaining under our share repurchase authorization. Actual shares outstanding at June 30, 2016 approximated 112.7 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, 2015. 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 June 30
2016     2015
    % Of     % Of
Amount     Revenue Amount     Revenue
 
Operating revenues, excluding fuel surcharge revenues $ 1,483,354 $ 1,360,631
Fuel surcharge revenues   131,672   179,326
Total operating revenues 1,615,026 100.0 % 1,539,957 100.0 %
 
Operating expenses
Rents and purchased transportation 794,907 49.2 % 730,851 47.5 %
Salaries, wages and employee benefits 371,969 23.0 % 348,277 22.6 %
Depreciation and amortization 90,364 5.6 % 83,661 5.4 %
Fuel and fuel taxes 71,489 4.4 % 84,891 5.5 %
Operating supplies and expenses 56,495 3.5 % 56,718 3.7 %
General and administrative expenses, net of asset dispositions 18,711 1.2 % 27,670 1.8 %
Insurance and claims 19,094 1.2 % 18,207 1.2 %
Operating taxes and licenses 11,365 0.7 % 10,734 0.7 %
Communication and utilities   4,840 0.3 %   5,213 0.3 %
Total operating expenses   1,439,234 89.1 %   1,366,222 88.7 %
Operating income 175,792 10.9 % 173,735 11.3 %
Net interest expense   6,420 0.4 %   6,661 0.5 %
Earnings before income taxes 169,372 10.5 % 167,074 10.8 %
Income taxes   64,361 4.0 %   63,655 4.1 %
Net earnings $ 105,011 6.5 % $ 103,419 6.7 %
Average diluted shares outstanding   113,761   117,811
Diluted earnings per share $ 0.92 $ 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
2016     2015
    % Of     % Of
Amount Revenue Amount Revenue
 
Operating revenues, excluding fuel surcharge revenues $ 2,910,008 $ 2,624,541
Fuel surcharge revenues   233,730   355,596
Total operating revenues 3,143,738 100.0 % 2,980,137 100.0 %
 
Operating expenses
Rents and purchased transportation 1,535,310 48.8 % 1,424,535 47.8 %
Salaries, wages and employee benefits 734,480 23.4 % 678,786 22.8 %
Depreciation and amortization 178,716 5.7 % 165,038 5.5 %
Fuel and fuel taxes 130,903 4.2 % 166,704 5.6 %
Operating supplies and expenses 111,031 3.5 % 107,199 3.6 %
General and administrative expenses, net of asset dispositions 40,545 1.3 % 41,606 1.4 %
Insurance and claims 36,522 1.2 % 35,635 1.2 %
Operating taxes and licenses 22,491 0.7 % 20,822 0.7 %
Communication and utilities   10,058 0.3 %   10,857 0.4 %
Total operating expenses   2,800,056 89.1 %   2,651,182 89.0 %
Operating income 343,682 10.9 % 328,955 11.0 %
Net interest expense   12,862 0.4 %   13,364 0.4 %
Earnings before income taxes 330,820 10.5 % 315,591 10.6 %
Income taxes   125,711 4.0 %   120,240 4.0 %
Net earnings $ 205,109 6.5 % $ 195,351 6.6 %
Average diluted shares outstanding   113,882   117,805
Diluted earnings per share $ 1.80 $ 1.66
 
 
Financial Information By Segment
(in thousands)
(unaudited)
 
 
      Three Months Ended June 30
2016     2015
    % Of     % Of
Amount     Total Amount     Total
 

Revenue

 
Intermodal $ 933,430 58 % $ 904,868 59 %
Dedicated 382,721 24 % 366,716 24 %
Integrated Capacity Solutions 203,767 12 % 173,879 11 %
Truck   98,264   6 %   97,509   6 %
Subtotal 1,618,182 100 % 1,542,972 100 %
Intersegment eliminations   (3,156 ) (0 %)   (3,015 ) (0 %)
Consolidated revenue $ 1,615,026   100 % $ 1,539,957   100 %
 
 

Operating income

 
Intermodal $ 105,614 60 % $ 118,617 68 %
Dedicated 50,467 29 % 40,573 23 %
Integrated Capacity Solutions 10,875 6 % 4,893 3 %
Truck 8,853 5 % 9,675 6 %
Other (1)   (17 ) (0 %)   (23 ) (0 %)
Operating income $ 175,792   100 % $ 173,735   100 %
 
 
 
Six Months Ended June 30
2016 2015
% Of % Of
Amount     Total Amount     Total

Revenue

 
Intermodal $ 1,828,630 58 % $ 1,748,757 59 %
Dedicated 741,091 24 % 711,905 24 %
Integrated Capacity Solutions 386,934 12 % 337,090 11 %
Truck   194,315   6 %   188,697   6 %
Subtotal 3,150,970 100 % 2,986,449 100 %
Intersegment eliminations   (7,232 ) (0 %)   (6,312 ) (0 %)
Consolidated revenue $ 3,143,738   100 % $ 2,980,137   100 %
 
 

Operating income

 
Intermodal $ 208,740 61 % $ 222,879 68 %
Dedicated 95,237 28 % 76,388 23 %
Integrated Capacity Solutions 21,670 6 % 11,522 4 %
Truck 18,032 5 % 18,204 5 %
Other (1)   3   0 %   (38 ) (0 %)
Operating income $ 343,682   100 % $ 328,955   100 %
 
 

(1) Includes corporate support activity

 
 
Operating Statistics by Segment
(unaudited)
         
Three Months Ended June 30
2016 2015
 

Intermodal

 
Loads 476,098 436,466
Average length of haul 1,640 1,642
Revenue per load $ 1,961 $ 2,073
Average tractors during the period * 5,232 4,915
 
Tractors (end of period)
Company-owned 4,519 4,186
Independent contractor   725     701  
Total tractors 5,244 4,887
 

Net change in trailing equipment during the period

1,377

2,086
Trailing equipment (end of period) 81,243 76,279
Average effective trailing equipment usage 74,751 70,823
 
 

Dedicated

 
Loads 607,078 562,017
Average length of haul 174 176
Revenue per truck per week** $ 4,062 $ 4,096
Average trucks during the period*** 7,286 6,921
 
Trucks (end of period)
Company-owned 6,833 6,543
Independent contractor 17 7
Customer-owned (Dedicated operated)   472     422  
Total trucks 7,322 6,972
 
Trailing equipment (end of period) 21,914 20,989
Average effective trailing equipment usage 22,597 22,275
 
 

Integrated Capacity Solutions

 
Loads 199,312 123,082
Revenue per load $ 1,022 $ 1,413
Gross profit margin 15.0 % 15.2 %
Employee count (end of period) 721 636

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

48,900

42,300
 
 

Truck

 
Loads 96,929 93,225
Average length of haul 460 435
Loaded miles (000) 44,614 40,355
Total miles (000) 53,063 47,752
Average nonpaid empty miles per load 87.2 79.3
Revenue per tractor per week** $ 3,419 $ 3,802
Average tractors during the period * 2,234 2,021
 
Tractors (end of period)
Company-owned 1,401 1,510
Independent contractor   785     563  
Total tractors 2,186 2,073
 
Trailers (end of period) 7,249 7,479
Average effective trailing equipment usage 6,784 6,392
 
 
* 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
2016 2015
 

Intermodal

 
Loads 935,624 846,763
Average length of haul 1,641 1,643
Revenue per load $ 1,954 $ 2,065
Average tractors during the period * 5,169 4,866
 
Tractors (end of period)
Company-owned 4,519 4,186
Independent contractor   725     701  
Total tractors 5,244 4,887
 

Net change in trailing equipment during the period

2,286

2,981
Trailing equipment (end of period) 81,243 76,279
Average effective trailing equipment usage 73,998 69,758
 
 

Dedicated

 
Loads 1,186,556 1,092,779
Average length of haul 174 176
Revenue per truck per week** $ 3,969 $ 4,032
Average trucks during the period*** 7,241 6,887
 
Trucks (end of period)
Company-owned 6,833 6,543
Independent contractor 17 7
Customer-owned (Dedicated operated)   472     422  
Total trucks 7,322 6,972
 
Trailing equipment (end of period) 21,914 20,989
Average effective trailing equipment usage 22,517 22,276
 
 

Integrated Capacity Solutions

 
Loads 374,935 244,044
Revenue per load $ 1,032 $ 1,381
Gross profit margin 16.1 % 14.5 %
Employee count (end of period) 721 636

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

48,900

42,300
 
 

Truck

 
Loads 191,339 179,468
Average length of haul 464 443
Loaded miles (000) 88,697 78,991
Total miles (000) 105,209 93,206
Average nonpaid empty miles per load 86.3 79.1
Revenue per tractor per week** $ 3,415 $ 3,754
Average tractors during the period* 2,222 1,982
 
Tractors (end of period)
Company-owned 1,401 1,510
Independent contractor   785     563  
Total tractors 2,186 2,073
 
Trailers (end of period) 7,249 7,479
Average effective trailing equipment usage 6,727 6,208
 
 
* 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, 2016     December 31, 2015
ASSETS          
Current assets:
Cash and cash equivalents $ 11,277 $ 5,566
Accounts Receivable 744,026 654,542
Prepaid expenses and other         71,705       197,817
Total current assets         827,008       857,925
Property and equipment 4,128,542 4,019,451
Less accumulated depreciation         1,361,627       1,318,122
Net property and equipment         2,766,915       2,701,329
Other assets         103,441       70,290
        $ 3,697,364     $ 3,629,544
 
 
LIABILITIES & STOCKHOLDERS' EQUITY
Current liabilities:
Trade accounts payable $ 343,652 $ 340,332
Claims accruals 115,628 104,220
Accrued payroll 66,237 59,420
Other accrued expenses         27,199       28,445
Total current liabilities         552,716       532,417
 
Long-term debt 957,574 998,003
Other long-term liabilities 65,075 58,552
Deferred income taxes 742,574 740,220
Stockholders' equity         1,379,425       1,300,352
        $ 3,697,364     $ 3,629,544
 
 
 
Supplemental Data
(unaudited)
               
        June 30, 2016     December 31, 2015
 

Actual shares outstanding at end of period (000)

       

112,680

      113,948
 
Book value per actual share outstanding at end of period       $ 12.24     $ 11.41
 
 
               
Six Months Ended June 30
2016 2015
 
Net cash provided by operating activities (000)       $ 474,138     $ 453,537
 
Net capital expenditures (000)       $ 257,958     $ 299,246
 

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