J. B. Hunt Transport Services, Inc. Reports Earnings for the Second Quarter 2014 and Updates Full Year 2014 Expectations

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LOWELL, Ark.--(BUSINESS WIRE)--

J. B. Hunt Transport Services, Inc., JBHT announced second quarter 2014 net earnings of $93.4 million, or diluted earnings per share of 79 cents vs. second quarter 2013 net earnings of $87.7 million, or 73 cents per diluted share.

Total operating revenue for the current quarter was $1.55 billion, compared with $1.38 billion for the second quarter 2013. Load growth of 8% in Intermodal (JBI) and 15% in Integrated Capacity Solutions (ICS), helped drive 9% and 31% increases in segment revenue, respectively. Dedicated Contract Services (DCS) segment revenue increased by 15% as productivity improved on large private fleet conversions implemented a year ago. Truck (JBT) segment revenue was flat with prior year with an 8% smaller fleet. Current quarter total operating revenue, excluding fuel surcharges, increased 13% vs. the comparable quarter 2013.

Operating income for the current quarter totaled $159 million vs. $147 million for the second quarter 2013. The increase in operating income derived from load growth, customer rate increases and freight mix changes was partially offset by lower box turns from slower train velocities, higher driver recruiting and retention costs, higher purchased transportation costs, higher safety and insurance costs and increases in equipment and tire costs compared to second quarter 2013.

Interest expense in the current quarter increased due to higher overall debt levels and the accelerated payment of $100 million of 6.08 % fixed rate senior notes that would have matured in July 2014. The effective income tax rate for the quarter was 38.10% compared to 37.88% in 2013. In 2013 we realized a deferred tax benefit on the sale of real property. The 2014 annual tax rate is expected to be approximately 38.10%.

“The slowdown in train velocity and the difficult driver recruiting environment has challenged our growth in JBI. We are pleased we were able to maintain profitability levels despite these obstacles. The worsening driver supply conditions will continue to be a headwind for DCS and JBT as well. The planned improvement in JBT is ahead of schedule and though there is more to do, we are extremely pleased with the progress thus far,” stated John N. Roberts III, President and CEO of J.B. Hunt Transport Services, Inc.

“While we continue to work to improve customer service and equipment utilization levels to achieve our expected market growth, the second quarter results demonstrate the combined earnings value of our four diversified, yet integrated, business units,” said Roberts.

The Company also posted revised full year 2014 Financial Expectations on its website under the Investor Relations tab at www.jbhunt.com.

Segment Information:

Intermodal (JBI)

  • Second Quarter 2014 Segment Revenue: $931 million; up 9%
  • Second Quarter 2014 Operating Income: $113.4 million; up 2%

Overall volumes increased 8% over the same period in 2013. Continued customer demand for truck to rail conversion resulted in Eastern network growth of 17% and transcontinental growth of 2% over the second quarter 2013. Revenue grew 9% reflecting the 8% volume growth and a 1% increase in revenue per load, which is the combination of customer rate increases, freight mix and fuel surcharges. Revenue per load excluding fuel surcharge increased approximately 1.5% over second quarter 2013.

Operating income increased 2% over prior year. Slower rail velocity and continuing service disruptions negatively impacted the network fluidity resulting in a decrease in box turns and dray power utilization compared to second quarter 2013. Increased costs to attract and retain drivers, particularly in high freight density markets, higher insurance and claims costs, increased tire and equipment costs and increases in outsourced drayage costs compared to prior year partially offset the benefit of increased revenue. The current period ended with 69,700 units of trailing capacity and 4,500 power units available to the dray fleet.

Dedicated Contract Services (DCS)

  • Second Quarter 2014 Segment Revenue: $348 million; up 15%
  • Second Quarter 2014 Operating Income: $30.3 million; up 2%

DCS revenue increased 15% during the current quarter over the same period in 2013. Productivity (revenue per truck per week) increased by approximately 1% vs. 2013 primarily from increased customer demand at mature contracts. A net additional 625 revenue producing trucks were added by the end of the quarter compared to prior year.

Operating income increased by 2% from a year ago. Revenues from new accounts and higher productivity were mostly offset with higher driver recruiting costs, higher purchased transportation costs and increased safety, insurance and workers' compensation costs. Driver wage and recruiting cost increases continue to rise faster than customer rate adjustments can be implemented and will continue to be a challenge to margin improvement.

Integrated Capacity Solutions (ICS)

  • Second Quarter 2014 Segment Revenue: $173 million; up 31%
  • Second Quarter 2014 Operating Income: $ 6.2 million; up 50%

ICS revenue increased 31% in the current quarter compared to the second quarter 2013, mostly due to a 15% increase in load volume and a 14% increase in revenue per load. Both transactional and contractual volumes continued to grow during the quarter. Contractual business was approximately 61% of total load volume, but only 52% of total revenue in the current period compared to 60% for both load volume and total revenue, in second quarter 2013.

Operating income increased 50% over the same period 2013 primarily due to the increased revenue and improvement in gross profit margin. Gross profit margin increased to 12.7% in the current quarter vs. 11.8% last year primarily due to increased transactional business. We continue to execute our branch network growth strategy and opened two new branches during the quarter, bringing the total branch count to 26. ICS's carrier base increased 9% and the employee count increased 23% vs. second quarter 2013.

Truck (JBT)

  • Second Quarter 2014 Segment Revenue: $101 million; flat
  • Second Quarter 2014 Operating Income: $ 9.4 million; up 217%

JBT revenue for the current quarter was flat compared to the same period in 2013 despite an 8% reduction in fleet size. Revenue excluding fuel surcharges increased 1%. Rates per loaded mile, excluding fuel surcharge increased 10% on a 6% shorter length of haul compared to second quarter 2013. Both freight mix change, to create a more balanced network, and core rate increases from customers of approximately 4% contributed to the overall rate increase. At the end of the period, JBT operated 1,860 tractors compared to 2,018 a year ago.

Operating income increased 217% compared to the same quarter 2013. Favorable changes in core rate, freight mix, lower personnel costs, a smaller trailer fleet and approximately $2.8 million in equipment sale gains compared to none in second quarter 2013, were partially offset by increased driver and independent contractor costs, increased driver hiring costs and higher equipment costs per unit compared to second quarter 2013.

Cash Flow and Capitalization:

At June 30, 2014, we had a total of $874 million outstanding on various debt instruments compared to $674 million at June 30, 2013 and $708 million at December 31, 2013.

Our net capital expenditures for the six months ended June 30, 2014 approximated $353 million compared to $212 million for the same period 2013. At June 30, 2014, we had cash and cash equivalents of $5.9 million.

We purchased approximately 990,000 shares of our common stock during the quarter for $75 million. At June 30, 2014 we had approximately $263 million remaining under our share repurchase authorization. Actual shares outstanding at June 30, 2014 approximated 117 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, 2013. 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
2014     2013
    % Of     % Of
Amount     Revenue Amount     Revenue
 
Operating revenues, excluding fuel surcharge revenues $ 1,268,636 $ 1,120,164
Fuel surcharge revenues 279,231 262,694
Total operating revenues 1,547,867 100.0 % 1,382,858 100.0 %
 
Operating expenses
Rents and purchased transportation 775,485 50.1 % 693,795 50.2 %
Salaries, wages and employee benefits 320,016 20.7 % 282,252 20.4 %
Fuel and fuel taxes 116,999 7.6 % 110,280 8.0 %
Depreciation and amortization 71,726 4.6 % 62,283 4.5 %
Operating supplies and expenses 58,173 3.8 % 49,626 3.6 %
Insurance and claims 19,886 1.3 % 12,111 0.9 %
General and administrative expenses, net of asset dispositions 11,547 0.7 % 12,425 0.8 %
Operating taxes and licenses 9,650 0.6 % 8,042 0.6 %
Communication and utilities 5,155 0.3 % 4,637 0.3 %
Total operating expenses 1,388,637 89.7 % 1,235,451 89.3 %
Operating income 159,230 10.3 % 147,407 10.7 %
Net interest expense 8,329 0.6 % 6,230 0.5 %
Earnings before income taxes 150,901 9.7 % 141,177 10.2 %
Income taxes 57,493 3.7 % 53,480 3.9 %
Net earnings $ 93,408 6.0 % $ 87,697 6.3 %
Average diluted shares outstanding 118,541 119,472
Diluted earnings per share $ 0.79 $ 0.73
 
 
J.B. HUNT TRANSPORT SERVICES, INC.
Condensed Consolidated Statements of Earnings
(in thousands, except per share data)
(unaudited)
                 
Six Months Ended June 30
2014 2013
% Of % Of
Amount     Revenue Amount     Revenue
 
Operating revenues, excluding fuel surcharge revenues $ 2,420,985 $ 2,159,104
Fuel surcharge revenues 533,789 515,340
Total operating revenues 2,954,774 100.0 % 2,674,444 100.0 %
 
Operating expenses
Rents and purchased transportation 1,480,900 50.1 % 1,338,328 50.0 %
Salaries, wages and employee benefits 624,410 21.1 % 545,976 20.4 %
Fuel and fuel taxes 236,949 8.0 % 226,840 8.5 %
Depreciation and amortization 140,693 4.8 % 123,013 4.6 %
Operating supplies and expenses 108,961 3.7 % 94,540 3.5 %
Insurance and claims 35,718 1.2 % 24,881 0.9 %
General and administrative expenses, net of asset dispositions 21,470 0.7 % 23,409 0.9 %
Operating taxes and licenses 18,623 0.6 % 15,555 0.6 %
Communication and utilities 10,513 0.4 % 9,456 0.4 %
Total operating expenses 2,678,237 90.6 % 2,401,998 89.8 %
Operating income 276,537 9.4 % 272,446 10.2 %
Net interest expense 14,710 0.5 % 12,485 0.5 %
Earnings before income taxes 261,827 8.9 % 259,961 9.7 %
Income taxes 99,756 3.4 % 98,916 3.7 %
Net earnings $ 162,071 5.5 % $ 161,045 6.0 %
Average diluted shares outstanding 118,740 119,647
Diluted earnings per share $ 1.36 $ 1.35
                               
 
Financial Information By Segment
(in thousands)
(unaudited)
 
 
      Three Months Ended June 30
2014     2013
    % Of     % Of
Amount     Total Amount     Total
 

Revenue

 
Intermodal $ 930,668 60 % $ 854,732 62 %
Dedicated 347,730 22 % 302,624 22 %
Integrated Capacity Solutions 172,894 11 % 131,825 10 %
Truck 101,074   7 % 101,167   7 %
Subtotal 1,552,366 100 % 1,390,348 101 %
Intersegment eliminations (4,499 ) (0 %) (7,490 ) (1 %)
Consolidated revenue $ 1,547,867   100 % $ 1,382,858   100 %
 
 

Operating income

 
Intermodal $ 113,394 71 % $ 110,679 75 %
Dedicated 30,318 19 % 29,705 20 %
Integrated Capacity Solutions 6,222 4 % 4,161 3 %
Truck 9,363 6 % 2,956 2 %
Other (1) (67 ) (0 %) (94 ) (0 %)
Operating income $ 159,230   100 % $ 147,407   100 %
 
 
 
Six Months Ended June 30
2014 2013
% Of % Of
Amount   Total Amount   Total

Revenue

 
Intermodal $ 1,766,163 60 % $ 1,650,994 62 %
Dedicated 669,771 23 % 581,707 22 %
Integrated Capacity Solutions 335,524 11 % 254,146 9 %
Truck 193,544   6 % 203,012   8 %
Subtotal 2,965,002 100 % 2,689,859 101 %
Intersegment eliminations (10,228 ) (0 %) (15,415 ) (1 %)
Consolidated revenue $ 2,954,774   100 % $ 2,674,444   100 %
 
 

Operating income

 
Intermodal $ 206,566 75 % $ 207,473 76 %
Dedicated 45,918 17 % 51,651 19 %
Integrated Capacity Solutions 12,346 4 % 9,335 3 %
Truck 11,811 4 % 4,051 2 %
Other (1) (104 ) (0 %) (64 ) (0 %)
Operating income $ 276,537   100 % $ 272,446   100 %
 
 
(1) Includes corporate support activity
 
 

Operating Statistics by Segment

(unaudited)

 
      Three Months Ended June 30
2014     2013
 

Intermodal

 
Loads 429,438 398,596
Average length of haul 1,643 1,688
Revenue per load $ 2,167 $ 2,144
Average tractors during the period * 4,447 3,881
 
Tractors (end of period)
Company-owned 3,868 3,387
Independent contractor 678   565  
Total tractors 4,546 3,952
 
Net change in trailing equipment during the period 2,160 1,606
Trailing equipment (end of period) 69,724 61,911
Average effective trailing equipment usage 67,534 60,148
 
 

Dedicated

 
Loads 522,117 446,841
Average length of haul 178 197
Revenue per truck per week** $ 4,117 $ 4,068
Average trucks during the period*** 6,538 5,767
 
Trucks (end of period)
Company-owned 6,050 5,336
Independent contractor 6 12
Customer-owned (Dedicated operated) 503   586  
Total trucks 6,559 5,934
 
Trailing equipment (end of period) 19,696 17,998
Average effective trailing equipment usage 20,721 19,253
 
 

Integrated Capacity Solutions

 
Loads 109,803 95,740
Revenue per load $ 1,575 $ 1,377
Gross profit margin 12.7 % 11.8 %
Employee count (end of period) 540 440
Approximate number of third-party carriers (end of period) 36,300 33,400
 
 

Truck

 
Loads 101,044 104,024
Average length of haul 384 408
Loaded miles (000) 38,720 42,158
Total miles (000) 45,718 49,593
Average nonpaid empty miles per load 73.8 72.0
Revenue per tractor per week** $ 4,226 $ 3,861
Average tractors during the period * 1,877 2,034
 
Tractors (end of period)
Company-owned 1,215 1,187
Independent contractor 645   831  
Total tractors 1,860 2,018
 
Trailers (end of period) 6,576 8,311
Average effective trailing equipment usage 5,718 7,235
 
 
* 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
2014     2013
 

Intermodal

 
Loads 815,424 766,362
Average length of haul 1,656 1,690
Revenue per load $ 2,166 $ 2,154
Average tractors during the period * 4,348 3,773
 
Tractors (end of period)
Company-owned 3,868 3,387
Independent contractor 678   565  
Total tractors 4,546 3,952
 
Net change in trailing equipment during the period 3,745 2,949
Trailing equipment (end of period) 69,724 61,911
Average effective trailing equipment usage 66,367 58,043
 
 

Dedicated

 
Loads 1,008,788 845,140
Average length of haul 179 198
Revenue per truck per week** $ 4,016 $ 4,108
Average trucks during the period*** 6,514 5,545
 
Trucks (end of period)
Company-owned 6,050 5,336
Independent contractor 6 12
Customer-owned (Dedicated operated) 503   586  
Total trucks 6,559 5,934
 
Trailing equipment (end of period) 19,696 17,998
Average effective trailing equipment usage 20,533 18,495
 
 

Integrated Capacity Solutions

 
Loads 212,886 195,663
Revenue per load $ 1,576 $ 1,299
Gross profit margin 12.4 % 12.4 %
Employee count (end of period) 540 440
Approximate number of third-party carriers (end of period) 36,300 33,400
 
 

Truck

 
Loads 191,042 201,910
Average length of haul 396 429
Loaded miles (000) 75,715 85,764
Total miles (000) 89,189 100,655
Average nonpaid empty miles per load 72.7 73.7
Revenue per tractor per week** $ 4,040 $ 3,873
Average tractors during the period* 1,884 2,059
 
Tractors (end of period)
Company-owned 1,215 1,187
Independent contractor 645   831  
Total tractors 1,860 2,018
 
Trailers (end of period) 6,576 8,311
Average effective trailing equipment usage 5,774 7,326
 
 
* 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, 2014       December 31, 2013
ASSETS          
Current assets:
Cash and cash equivalents $ 5,870 $ 5,831
Accounts Receivable 667,620 568,519
Prepaid expenses and other         65,735       105,853
Total current assets         739,225       680,203
Property and equipment 3,488,606 3,259,814
Less accumulated depreciation         1,172,061       1,147,610
Net property and equipment         2,316,545       2,112,204
Other assets         35,589       26,997
        $ 3,091,359     $ 2,819,404
 
 
LIABILITIES & STOCKHOLDERS' EQUITY
Current liabilities:
Current debt $ - $ 250,000
Trade accounts payable 338,063 305,465
Claims accruals 81,221 68,221
Accrued payroll 75,170 72,063
Other accrued expenses 17,695 14,062
Deferred income taxes         2,485       2,485
Total current liabilities         514,634       712,296
 
Long-term debt 874,028 458,417
Other long-term liabilities 61,287 58,274
Deferred income taxes 560,293 577,965
Stockholders' equity         1,081,117       1,012,452
        $ 3,091,359     $ 2,819,404
 
 

Supplemental Data

(unaudited)
 
          June 30, 2014       December 31, 2013
 
Actual shares outstanding at end of period (000)         116,547       117,241
 
Book value per actual share outstanding at end of period       $ 9.28     $ 8.64
 
 
                   
Six Months Ended June 30
2014 2013
 
Net cash provided by operating activities (000)       $ 301,001     $ 293,571
 
Net capital expenditures (000)       $ 352,852     $ 211,692
 

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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Posted In: Press Releases
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