J.B. Hunt Transport Services, Inc., JBHT announced record fourth quarter 2013 net earnings of $92 million, or diluted earnings per share of 77 cents vs. fourth quarter 2012 net earnings of $84 million, or 70 cents per diluted share.
Total operating revenue for the current quarter was $1.47 billion, compared with $1.34 billion for the fourth quarter 2012. Load growth of 13% in Intermodal (JBI) helped drive an 11% increase in segment revenue. Dedicated Contract Services (DCS) segment revenue increased by 17%, primarily from the addition of new customer accounts. Integrated Capacity Solutions (ICS) segment revenue increased by 13%, mostly from a higher load count and an increase in revenue per load. Truck (JBT) segment revenue decreased 19%, primarily from an 11% reduction in fleet size compared to a year ago. Current quarter total operating revenue, excluding fuel surcharges, increased 13% vs. the comparable quarter 2012.
Operating income for the current quarter increased to $153.5 million vs. $143.3 million for the fourth quarter 2012. The increase primarily reflects higher revenue on greater load volumes and improved network balance in JBI. These improvements were partially offset by increased costs paid to hire and retain drivers; higher workers' compensation and accident costs; increased costs to third party carriers, fewer gains on equipment sales and lower truck utilization.
Net earnings rose 9% to $92 million in the current quarter from $84 million in 2012, primarily due to the growth in revenue and a lower cost of borrowing. Compared with the same period 2012, net interest expense in the current quarter was down approximately $500,000 on a higher average debt balance due to a reduction in our average interest rate. The annual and fourth quarter effective tax rates in 2013 were 38.15% and 38.23%. The annual and fourth quarter effective tax rates in 2012 were 38.5% and 39.16%, respectively.
Segment Information:
Intermodal (JBI)
- Fourth quarter 2013 Segment Revenue: $915 million; up 11%
- Fourth quarter 2013 Operating Income: $121.5 million; up 17%
JBI revenue for the period grew 11% on a 13% increase in volume over the fourth quarter 2013. Eastern network loads increased 17% and transcontinental loads increased 11% compared to the same quarter 2012. Revenue per load decreased 1.3% from the same period a year ago due to the combination of traffic mix, customer rate increases and changes in fuel surcharge revenue; however, excluding fuel surcharge revenue, revenue per load increased 1.0% from fourth quarter 2012.
Operating income for the quarter grew 17%. Improved network balance yielded positive results in container utilization and a lower percentage of empty reposition moves. Cost increases in rail and dray purchased transportation, driver recruiting and retention costs and insurance and claims costs partially offset the improvements in productivity. The current period ended with approximately 66,000 units of trailing capacity and approximately 4,100 power units in the dray fleet.
Dedicated Contract Services (DCS)
- Fourth quarter 2013 Segment Revenue: $331 million; up 17%
- Fourth quarter 2013 Operating Income: $29.5 million; up 0.5%
DCS revenue increased 17% during the current quarter vs. 2012. The increase in revenue primarily resulted from 1,154 net additional revenue producing trucks, mostly due to converting customers' private fleets. Productivity (revenue per truck per week) was virtually flat compared with the fourth quarter 2012 due to the higher percentage of customer provided equipment and customer paid fuel in the DCS book of business.
Operating income was up 0.5% compared to the same quarter 2012. Increases in operating income from a higher truck count due to new customer accounts was partially offset by increases in driver wages, employee recruiting costs, workers' compensation costs, accident costs and lower gains on sales of revenue equipment compared to fourth quarter 2012.
Integrated Capacity Solutions (ICS)
- Fourth Quarter 2013 Segment Revenue: $145 million; up 13%
- Fourth Quarter 2013 Operating Income: $3.5 million; down 24%
ICS revenue increased 13% in the current quarter vs. the fourth quarter 2012 mostly due to a 5% increase in load volume and a 7% increase in revenue per load. Revenue grew faster than volume primarily due to a change in freight mix driven by customer demand. Truckload brokerage volume increased for the quarter, but was partially offset by a decrease in less-than-truckload brokered loads compared to the same quarter in 2012. Both contractual and transactional business realized volume increases, however transactional business grew at a faster pace. Contractual business comprised approximately 65% of the total load volume in the current quarter vs. 67% a year ago.
Operating income decreased 24% over the same period in 2012. Gross profit margin decreased to 12.0% in the current period from 14.1% last year. Positive results from increased load growth at higher revenue per load were offset with gross margin pressure. Third party carrier rates rose faster than contractual customer rates. Additionally, in keeping with our growth strategy, we continue to expand the branch network resulting in increased personnel costs. Total branches at the end of the period grew to 24 from 15 at the end of the same period in 2012. ICS's carrier base increased 7% and the employee count increased 11% from a year ago.
Truck (JBT)
- Fourth quarter 2013 Segment Revenue: $91 million; down 19%
- Fourth quarter 2013 Operating Loss: $ (1.0) million; compared to Operating Income of $5.2 million in 2012
JBT revenue for the current quarter decreased 19% from the same period in 2012 due to an 11% reduction in fleet size, lower utilization per truck and lower rates per mile. Rates per mile, excluding fuel surcharges, decreased 2.7% on a 4.6% shorter average length of haul. Rates per mile in the prior year included spot rates largely affected by Hurricane Sandy relief efforts. Rates from consistent shippers decreased 1.0% from a year ago. At the end of the period, JBT's tractor count was 1,857 compared to 2,093 in the fourth quarter 2012, primarily from a reduction in independent contractor capacity.
JBT incurred an operating loss of $1.0 million in the current quarter compared to operating income of $5.2 million in the same quarter of 2012. Favorable effects from reducing idle trailing equipment, fewer empty miles per load and reductions in office headcount were more than offset by a lower truck count, lower tractor utilization, increased driver and independent contractor pay, and higher maintenance cost per tractor compared to the same period 2012.
The previously announced personnel and leadership changes are expected to address and improve tractor utilization, maintenance and customer service issues that have impacted the profitability of JBT. We expect to demonstrate operational improvements throughout 2014, but significant financial improvements will become more apparent in 2015.
Cash Flow and Capitalization:
At December 31, 2013, we had total debt outstanding of $708 million on various debt instruments compared to $685 million at December 31, 2012 and $687 million at September 30, 2013.
Our net capital expenditures for 2013 approximated $443 million vs. $370 million in 2012. The increase in capital expenditures was primarily due to purchasing additional containers and chassis for JBI and additional and replacement tractors across all business units. At December 31, 2013, we had cash and cash equivalents of $5.8 million.
In the fourth quarter 2013, we used $50 million to purchase approximately 675,000 shares of our common stock. At December 31, 2013, we had approximately $338 million remaining under our share repurchase authorizations.
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, 2012. 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.
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J.B. HUNT TRANSPORT SERVICES, INC. |
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Condensed Consolidated Statements of Earnings |
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(in thousands, except per share data) |
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(unaudited) |
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| Three Months Ended December 31 | |||||||||||||||
| 2013 | 2012 | ||||||||||||||
| % Of | % Of | ||||||||||||||
| Amount | Revenue | Amount | Revenue | ||||||||||||
| Operating revenues, excluding fuel surcharge revenues | $ | 1,202,168 | $ | 1,067,194 | |||||||||||
| Fuel surcharge revenues | 272,108 | 270,942 | |||||||||||||
| Total operating revenues | 1,474,276 | 100.0 | % | 1,338,136 | 100.0 | % | |||||||||
| Operating expenses | |||||||||||||||
| Rents and purchased transportation | 742,824 | 50.4 | % | 666,745 | 49.8 | % | |||||||||
| Salaries, wages and employee benefits | 302,448 | 20.5 | % | 270,706 | 20.2 | % | |||||||||
| Fuel and fuel taxes | 114,939 | 7.8 | % | 117,542 | 8.8 | % | |||||||||
| Depreciation and amortization | 66,077 | 4.5 | % | 59,046 | 4.4 | % | |||||||||
| Operating supplies and expenses | 52,782 | 3.6 | % | 44,978 | 3.4 | % | |||||||||
| Insurance and claims | 16,400 | 1.1 | % | 16,447 | 1.2 | % | |||||||||
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General and administrative expenses, net of asset dispositions |
11,884 | 0.8 | % | 7,513 | 0.6 | % | |||||||||
| Operating taxes and licenses | 8,585 | 0.6 | % | 7,545 | 0.6 | % | |||||||||
| Communication and utilities | 4,804 | 0.3 | % | 4,279 | 0.3 | % | |||||||||
| Total operating expenses | 1,320,743 | 89.6 | % | 1,194,801 | 89.3 | % | |||||||||
| Operating income | 153,533 | 10.4 | % | 143,335 | 10.7 | % | |||||||||
| Net interest expense | 4,820 | 0.3 | % | 5,296 | 0.4 | % | |||||||||
| Earnings before income taxes | 148,713 | 10.1 | % | 138,039 | 10.3 | % | |||||||||
| Income taxes | 56,849 | 3.9 | % | 54,062 | 4.0 | % | |||||||||
| Net earnings | $ | 91,864 | 6.2 | % | $ | 83,977 | 6.3 | % | |||||||
| Average diluted shares outstanding | 118,960 | 120,019 | |||||||||||||
| Diluted earnings per share | $ | 0.77 | $ | 0.70 | |||||||||||
| J.B. HUNT TRANSPORT SERVICES, INC. | |||||||||||||||
| Condensed Consolidated Statements of Earnings | |||||||||||||||
| (in thousands, except per share data) | |||||||||||||||
| (unaudited) | |||||||||||||||
| Twelve Months Ended December 31 | |||||||||||||||
| 2013 | 2012 | ||||||||||||||
| % Of | % Of | ||||||||||||||
| Amount | Revenue | Amount | Revenue | ||||||||||||
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Operating revenues, excluding fuel surcharge revenues |
$ | 4,527,238 | $ | 4,058,165 | |||||||||||
| Fuel surcharge revenues | 1,057,333 | 996,815 | |||||||||||||
| Total operating revenues | 5,584,571 | 100.0 | % | 5,054,980 | 100.0 | % | |||||||||
| Operating expenses | |||||||||||||||
| Rents and purchased transportation | 2,805,568 | 50.2 | % | 2,485,635 | 49.2 | % | |||||||||
| Salaries, wages and employee benefits | 1,138,213 | 20.4 | % | 1,037,526 | 20.5 | % | |||||||||
| Fuel and fuel taxes | 455,926 | 8.2 | % | 465,874 | 9.2 | % | |||||||||
| Depreciation and amortization | 253,380 | 4.5 | % | 229,166 | 4.5 | % | |||||||||
| Operating supplies and expenses | 202,700 | 3.6 | % | 178,610 | 3.5 | % | |||||||||
| Insurance and claims | 55,158 | 1.0 | % | 53,832 | 1.1 | % | |||||||||
| General and administrative expenses, net of asset dispositions | 45,469 | 0.8 | % | 27,231 | 0.6 | % | |||||||||
| Operating taxes and licenses | 32,307 | 0.7 | % | 29,461 | 0.6 | % | |||||||||
| Communication and utilities | 19,142 | 0.3 | % | 17,445 | 0.3 | % | |||||||||
| Total operating expenses | 5,007,863 | 89.7 | % | 4,524,780 | 89.5 | % | |||||||||
| Operating income | 576,708 | 10.3 | % | 530,200 | 10.5 | % | |||||||||
| Net interest expense | 23,140 | 0.4 | % | 25,559 | 0.5 | % | |||||||||
| Earnings before income taxes | 553,568 | 9.9 | % | 504,641 | 10.0 | % | |||||||||
| Income taxes | 211,186 | 3.8 | % | 194,287 | 3.9 | % | |||||||||
| Net earnings | $ | 342,382 | 6.1 | % | $ | 310,354 | 6.1 | % | |||||||
| Average diluted shares outstanding | 119,404 | 120,022 | |||||||||||||
| Diluted earnings per share | $ | 2.87 | $ | 2.59 | |||||||||||
| Financial Information By Segment | |||||||||||||||||
| (in thousands) | |||||||||||||||||
| (unaudited) | |||||||||||||||||
| Three Months Ended December 31 | |||||||||||||||||
| 2013 | 2012 | ||||||||||||||||
| % Of | % Of | ||||||||||||||||
| Amount | Total | Amount | Total | ||||||||||||||
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Revenue |
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| Intermodal | $ | 915,071 | 62 | % | $ | 821,208 | 61 | % | |||||||||
| Dedicated | 330,684 | 23 | % | 283,722 | 21 | % | |||||||||||
| Integrated Capacity Solutions | 145,293 | 10 | % | 128,517 | 10 | % | |||||||||||
| Truck | 91,213 | 6 | % | 112,722 | 9 | % | |||||||||||
| Subtotal | 1,482,261 | 101 | % | 1,346,169 | 101 | % | |||||||||||
| Intersegment eliminations | (7,985 | ) | (1 | %) | (8,033 | ) | (1 | %) | |||||||||
| Consolidated revenue | $ | 1,474,276 | 100 | % | $ | 1,338,136 | 100 | % | |||||||||
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Operating income |
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| Intermodal | $ | 121,523 | 79 | % | $ | 104,223 | 73 | % | |||||||||
| Dedicated | 29,532 | 19 | % | 29,396 | 20 | % | |||||||||||
| Integrated Capacity Solutions | 3,518 | 3 | % | 4,614 | 3 | % | |||||||||||
| Truck | (1,041 | ) | (1 | %) | 5,150 | 4 | % | ||||||||||
| Other (1) | 1 | 0 | % | (48 | ) | (0 | %) | ||||||||||
| Operating income | $ | 153,533 | 100 | % | $ | 143,335 | 100 | % | |||||||||
| Twelve Months Ended December 31 | |||||||||||||||||
| 2013 | 2012 | ||||||||||||||||
| % Of | % Of | ||||||||||||||||
| Amount | Total | Amount | Total | ||||||||||||||
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Revenue |
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| Intermodal | $ | 3,456,164 | 62 | % | $ | 3,071,127 | 61 | % | |||||||||
| Dedicated | 1,231,342 | 22 | % | 1,079,508 | 21 | % | |||||||||||
| Integrated Capacity Solutions | 536,844 | 10 | % | 456,331 | 9 | % | |||||||||||
| Truck | 391,086 | 7 | % | 483,757 | 10 | % | |||||||||||
| Subtotal | 5,615,436 | 101 | % | 5,090,723 | 101 | % | |||||||||||
| Intersegment eliminations | (30,865 | ) | (1 | %) | (35,743 | ) | (1 | %) | |||||||||
| Consolidated revenue | $ | 5,584,571 | 100 | % | $ | 5,054,980 | 100 | % | |||||||||
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Operating income |
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| Intermodal | $ | 447,030 | 77 | % | $ | 374,965 | 71 | % | |||||||||
| Dedicated | 110,438 | 19 | % | 116,335 | 22 | % | |||||||||||
| Integrated Capacity Solutions | 15,693 | 3 | % | 16,130 | 3 | % | |||||||||||
| Truck | 3,658 | 1 | % | 22,880 | 4 | % | |||||||||||
| Other (1) | (111 | ) | (0 | %) | (110 | ) | (0 | %) | |||||||||
| Operating income | $ | 576,708 | 100 | % | $ | 530,200 | 100 | % | |||||||||
| (1) Includes corporate support activity | |||||||||||||||||
| Operating Statistics by Segment | ||||||||||
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(unaudited) |
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| Three Months Ended December 31 | ||||||||||
| 2013 |
2012 |
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Intermodal |
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| Loads | 415,601 | 368,022 | ||||||||
| Average length of haul | 1,703 | 1,720 | ||||||||
| Revenue per load | $ | 2,202 | $ | 2,231 | ||||||
| Average tractors during the period * | 4,084 | 3,582 | ||||||||
| Tractors (end of period) | ||||||||||
| Company-owned | 3,448 | 3,124 | ||||||||
| Independent contractor | 646 | 472 | ||||||||
| Total tractors | 4,094 | 3,596 | ||||||||
| Net change in trailing equipment during the period | 2,059 | 1,049 | ||||||||
| Trailing equipment (end of period) | 65,979 | 58,962 | ||||||||
| Average effective trailing equipment usage | 63,914 | 56,473 | ||||||||
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Dedicated |
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| Loads | 504,738 | 407,801 | ||||||||
| Average length of haul | 179 | 196 | ||||||||
| Revenue per truck per week** | $ | 4,198 | $ | 4,220 | ||||||
| Average trucks during the period*** | 6,271 | 5,294 | ||||||||
| Trucks (end of period) | ||||||||||
| Company-owned | 5,805 | 4,844 | ||||||||
| Independent contractor | 10 | 15 | ||||||||
| Customer-owned (Dedicated operated) | 592 | 394 | ||||||||
| Total trucks | 6,407 | 5,253 | ||||||||
| Trailing equipment (end of period) | 19,062 | 13,448 | ||||||||
| Average effective trailing equipment usage | 20,099 | 14,884 | ||||||||
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Integrated Capacity Solutions |
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| Loads | 99,444 | 94,315 | ||||||||
| Revenue per load | $ | 1,461 | $ | 1,363 | ||||||
| Gross profit margin | 12.0 | % | 14.1 | % | ||||||
| Employee count (end of period) | 503 | 453 | ||||||||
| Approximate number of third-party carriers (end of period) | 34,600 | 32,300 | ||||||||
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Truck |
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| Loads | 89,663 | 104,694 | ||||||||
| Average length of haul | 432 | 452 | ||||||||
| Loaded miles (000) | 38,629 | 46,690 | ||||||||
| Total miles (000) | 45,422 | 55,288 | ||||||||
| Average nonpaid empty miles per load | 80.4 | 81.6 | ||||||||
| Revenue per tractor per week** | $ | 3,804 | $ | 3,968 | ||||||
| Average tractors during the period * | 1,921 | 2,258 | ||||||||
| Tractors (end of period) | ||||||||||
| Company-owned | 1,200 | 1,192 | ||||||||
| Independent contractor | 657 | 901 | ||||||||
| Total tractors | 1,857 | 2,093 | ||||||||
| Trailers (end of period) | 6,828 | 8,954 | ||||||||
| Average effective trailing equipment usage | 6,114 | 7,724 | ||||||||
| * Includes company-owned and independent contractor tractors | ||||||||||
| ** Using weighted workdays | ||||||||||
| *** Includes company-owned, independent contractor, and customer-owned trucks | ||||||||||
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Operating Statistics by Segment |
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(unaudited) |
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| Twelve Months Ended December 31 | ||||||||||
| 2013 | 2012 | |||||||||
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Intermodal |
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| Loads | 1,593,511 | 1,415,663 | ||||||||
| Average length of haul | 1,694 | 1,702 | ||||||||
| Revenue per load | $ | 2,169 | $ | 2,169 | ||||||
| Average tractors during the period * | 3,916 | 3,417 | ||||||||
| Tractors (end of period) | ||||||||||
| Company-owned | 3,448 | 3,124 | ||||||||
| Independent contractor | 646 | 472 | ||||||||
| Total tractors | 4,094 | 3,596 | ||||||||
| Net change in trailing equipment during the period | 7,017 | 4,456 | ||||||||
| Trailing equipment (end of period) | 65,979 | 58,962 | ||||||||
| Average effective trailing equipment usage | 60,612 | 54,302 | ||||||||
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Dedicated |
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| Loads | 1,835,872 | 1,522,740 | ||||||||
| Average length of haul | 190 | 201 | ||||||||
| Revenue per truck per week** | $ | 4,109 | $ | 4,164 | ||||||
| Average trucks during the period*** | 5,865 | 5,057 | ||||||||
| Trucks (end of period) | ||||||||||
| Company-owned | 5,805 | 4,844 | ||||||||
| Independent contractor | 10 | 15 | ||||||||
| Customer-owned (Dedicated operated) | 592 | 394 | ||||||||
| Total trucks | 6,407 | 5,253 | ||||||||
| Trailing equipment (end of period) | 19,062 | 13,448 | ||||||||
| Average effective trailing equipment usage | 19,229 | 13,932 | ||||||||
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Integrated Capacity Solutions |
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| Loads | 388,987 | 326,574 | ||||||||
| Revenue per load | $ | 1,380 | $ | 1,397 | ||||||
| Gross profit margin | 11.8 | % | 13.0 | % | ||||||
| Employee count (end of period) | 503 | 453 | ||||||||
| Approximate number of third-party carriers (end of period) | 34,600 | 32,300 | ||||||||
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Truck |
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| Loads | 386,875 | 449,366 | ||||||||
| Average length of haul | 431 | 467 | ||||||||
| Loaded miles (000) | 165,543 | 207,677 | ||||||||
| Total miles (000) | 194,046 | 242,311 | ||||||||
| Average nonpaid empty miles per load | 75.4 | 77.1 | ||||||||
| Revenue per tractor per week** | $ | 3,828 | $ | 3,891 | ||||||
| Average tractors during the period* | 2,007 | 2,435 | ||||||||
| Tractors (end of period) | ||||||||||
| Company-owned | 1,200 | 1,192 | ||||||||
| Independent contractor | 657 | 901 | ||||||||
| Total tractors | 1,857 | 2,093 | ||||||||
| Trailers (end of period) | 6,828 | 8,954 | ||||||||
| Average effective trailing equipment usage | 6,877 | 7,985 | ||||||||
| * 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) | ||||||||
| December 31, 2013 | December 31, 2012 | |||||||
| ASSETS | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | 5,831 | $ | 5,589 | ||||
| Accounts Receivable | 568,519 | 466,011 | ||||||
| Prepaid expenses and other | 105,853 | 82,932 | ||||||
| Total current assets | 680,203 | 554,532 | ||||||
| Property and equipment | 3,259,814 | 2,904,706 | ||||||
| Less accumulated depreciation | 1,147,610 | 1,019,232 | ||||||
| Net property and equipment | 2,112,204 | 1,885,474 | ||||||
| Other assets | 26,997 | 24,635 | ||||||
| $ | 2,819,404 | $ | 2,464,641 | |||||
| LIABILITIES & STOCKHOLDERS' EQUITY | ||||||||
| Current liabilities: | ||||||||
| Current debt | $ | 250,000 | $ | 100,000 | ||||
| Trade accounts payable | 305,465 | 266,722 | ||||||
| Claims accruals | 68,221 | 47,442 | ||||||
| Accrued payroll | 72,063 | 70,647 | ||||||
| Other accrued expenses | 14,062 | 17,199 | ||||||
| Deferred income taxes | 2,485 | 750 | ||||||
| Total current liabilities | 712,296 | 502,760 | ||||||
| Long-term debt | 458,417 | 585,347 | ||||||
| Other long-term liabilities | 58,274 | 53,050 | ||||||
| Deferred income taxes | 577,965 | 531,624 | ||||||
| Stockholders' equity | 1,012,452 | 791,860 | ||||||
| $ | 2,819,404 | $ | 2,464,641 | |||||
| Supplemental Data | ||||||||
| (unaudited) | ||||||||
| December 31, 2013 | December 31, 2012 | |||||||
| Actual shares outstanding at end of period (000) | 117,241 | 117,529 | ||||||
| Book value per actual share outstanding at end of period | $ | 8.64 | $ | 6.74 | ||||
| Twelve Months Ended December 31 | ||||||||
| 2013 | 2012 | |||||||
| Net cash provided by operating activities (000) | $ | 574,351 | $ | 548,044 | ||||
| Net capital expenditures (000) | $ | 442,504 | $ | 369,679 | ||||
J.B. Hunt Transport Services, Inc.
David G. Mee, 479-820-8363
Executive
Vice President Finance/Administration and Chief Financial Officer
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