JB HUNT TRANSPORT SERVICES 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 SECOND QUARTER 2015 AND UPDATES FULL YEAR 2015 EXPECTATIONS Second Quarter 2015 Revenue: $1.54 billion; down 0.5%
Second Quarter 2015 Operating Income: $174 million; up 9%
Second Quarter 2015 EPS: 88 cents vs. 79 cents
LOW ELL, ARKANSAS, July 17, 2015 - J.B. Hunt Transport Services, Inc., (NASDAQ:JBHT) announced second quarter 2015 net earnings of $103.4 million, or diluted earnings per share of 88 cents vs. second quarter 2014 net earnings of $93.4 million, or 79 cents per diluted share.
Total operating revenue for the current quarter was $1.54 billion, compared with $1.55 billion for the second quarter 2014. Customer rate increases across all business units, load growth of 2% in Intermodal (JBI), a 6% increase in revenue producing trucks in Dedicated Contract Services (DCS) and load growth of 12% in Integrated Capacity Solutions (ICS) could not offset the decrease in fuel surcharge revenue, sluggish consumer freight demand and lower equipment utilization in our Truck (JBT) business segment resulting in flat consolidated revenue compared to prior year. Current quarter total operating revenue, excluding fuel surcharges, increased 7% vs. the comparable quarter 2014.
Operating income for the current quarter totaled $174 million vs. $159 million for the second quarter
2014. The increase in operating income was primarily from customer rate increases, less reliance on outsourced JBI drayage and DCS capacity coverage, load growth, freight mix changes and improved equipment fuel economy. The operating income increase was partially offset by an approximate $14.1 million charge for corporate wide streamlining and technology redevelopment costs, the benefits of which are expected to be realized over the next two fiscal years, lower box turns from slower train velocities, higher driver recruiting and retention costs, higher workers' compensation costs and increased toll costs compared to second quarter 2014.
Interest expense in the current quarter decreased due to lower overall debt levels from the same period last year. The second quarter 2014 reflected 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% for both second quarter 2015 and 2014. The 2015 annual tax rate is expected to be approximately 38.10%.
The Company also posted revised full year 2015 Financial Expectations on its website under the
Investors tab at www.jbhunt.com.
Segment Information: Intermodal (JBI) Second Quarter 2015 Segment Revenue: $905 million; down 3%
Second Quarter 2015 Operating Income: $118.6 million; up 5%
Overall volumes increased 2% over the same period in 2014. Eastern network realized load growth of 3% and Transcontinental loads grew 1% over the second quarter 2014. The lingering effects of disruptive shipping patterns due to the west coast port issues, slow rail service recovery and a softer consumer driven freight demand all contributed to slower load volume growth. Revenue decreased 3% reflecting the 2% volume growth and an approximate 4.5% decrease in revenue per load, which is the combination of changes in customer rate, freight mix and fuel surcharges. Revenue per load excluding fuel surcharge increased approximately 4% over second quarter
2014.
Operating income increased 5% over prior year. Benefits from rate increases, reduced reliance on outsourced dray carriers, lower insurance and cargo claim costs and lower fleet maintenance costs were partially offset by approximately $6.4 million in corporate wide streamlining and technology redevelopment costs, increases in rail purchased transportation rates and slower rail service recovery that negatively impacted the network fluidity and decreased box turns. The current period ended with approximately 76,300 units of trailing capacity and 4,900 power units in the dray fleet.
Dedicated Contract Services (DCS)Second Quarter 2015 Segment Revenue: $367 million; up 5%
Second Quarter 2015 Operating Income: $40.6 million; up 34%
DCS revenue increased 5% during the current quarter over the same period in 2014. Productivity (revenue per truck per week) d e c r e a s e d by approximately 1% vs. 2014 primarily from lower fuel surcharge revenue. Productivity excluding fuel surcharge increased 5% from a year ago primarily from customer rate increases and increased customer demand. A net additional 413 revenue producing trucks, approximately 58% representing private fleet conversions versus traditional dedicated capacity services, were in the fleet by the end of the quarter compared to prior year primarily from new contract implementations in the current and prior periods. Customer retention rates remain above 96% as value driven services continue to support necessary rate increases.
Operating income increased by 34% from a year ago. Revenues from new accounts, higher productivity excluding fuel surcharge, less reliance on third party carrier capacity and lower equipment maintenance costs were partially offset with approximately $2.6 million in corporate wide streamlining and technology redevelopment costs and higher driver wages and recruiting costs.
Integrated Capacity Solutions (ICS) Second Quarter 2015 Segment Revenue: $174 million; up 0.6%
Second Quarter 2015 Operating Income: $4.9 million; down 21%
ICS revenue was flat compared to the second quarter 2014. Volumes increased 12% while revenue per load decreased 10%, primarily from lower fuel prices and less transactional customer demand versus second quarter
2014. Contractual volumes increased 32% to approximately 70% of total load volume and 62% of total revenue compared to 60% and 52%, respectively, in second quarter 2014.
Operating income decreased 21% over the same period 2014. Gross profit margin increased to 15.2% in the current quarter vs. 12.7% last year. Improvements in gross profit margin were offset by approximately $4.4 million in corporate wide streamlining and technology redevelopment costs and higher personnel costs as the total branch count increased to 31 from 26 compared to second quarter 2014. The carrier base increased 17% and the employee count increased 18% vs. second quarter 2014.
Truck (JBT) Second Quarter 2015 Segment Revenue: $98 million; down 3.5%
Second Quarter 2015 Operating Income: $9.7 million; up 3%
JBT revenue for the current quarter was down 3.5% compared to the same period in 2014. Revenue excluding fuel surcharges increased 2%, primarily from increased truck count and core rate increases of approximately 6.5% partially offset by less spot activity and lower utilization per tractor. At the end of the period, JBT operated 2,073 tractors compared to 1,860 a year ago.
Operating income increased 3% compared to the same quarter 2014. Favorable changes in core rates, increased truck count, lower equipment maintenance costs and improved fuel economy were partially offset by increased driver and independent contractor costs per mile, increased driver hiring costs, approximately $2.6 million of lower equipment gains and approximately $700,000 in corporate wide streamlining and technology redevelopment costs compared to second quarter 2014.
Cash Flow and Capitalization:At June 30, 2015, we had a total of $893 million outstanding on various debt instruments compared to $874 million at June 30, 2014 and $934 million at December 31, 2014.
Our net capital expenditures for the six months ended June 30, 2015 approximated $319 million compared to $353 million for the same period 2014. At June 30, 2015, we had cash and cash equivalents of $5.6 million.
We purchased approximately 331,000 shares of our common stock during the quarter for $28 million. At June 30,
2015 we had approximately $179 million remaining under our share repurchase authorization. Actual shares outstanding at June 30, 2015 approximated 116.3 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, 2014. W e 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
2015 2014
Operating revenues, excluding fuel surcharge revenues $ 1,360,631 $ 1,268,636
Fuel surcharge revenues 179,326 279,231
Total operating revenues 1,539,957 100.0% 1,547,867 100.0%
Operating expenses
Rents and purchased transportation 730,851 47.5% 775,485 50.1% Salaries, wages and employee benefits 348,277 22.6% 320,016 20.7% Fuel and fuel taxes 84,891 5.5% 116,999 7.6% Depreciation and amortization 83,661 5.4% 71,726 4.6% Operating supplies and expenses 56,718 3.7% 58,173 3.8% Insurance and claims 18,207 1.2% 19,886 1.3% General and administrative expenses, net of asset dispositions 27,670 1.8% 11,547 0.7% Operating taxes and licenses 10,734 0.7% 9,650 0.6% Communication and utilities 5,213 0.3% 5,155 0.3% Total operating expenses 1,366,222 88.7% 1,388,637 89.7% Operating income 173,735 11.3% 159,230 10.3%
Net interest expense 6,661 0.5% 8,329 0.6% Earnings before income taxes 167,074 10.8% 150,901 9.7% Income taxes 63,655 4.1% 57,493 3.7% Net earnings $ 103,419 6.7% $ 93,408 6.0%
Average diluted shares outstanding 117,811 118,541
Diluted earnings per share $ 0.88 $ 0.79
(in thousands, except per share data)
(unaudited)
Six Months Ended June 30
2015 2014
Operating revenues, excluding fuel surcharge revenues $ 2,624,541 $ 2,420,985
Fuel surcharge revenues 355,596 533,789
Total operating revenues 2,980,137 100.0% 2,954,774 100.0%
Operating expenses
Rents and purchased transportation 1,424,535 47.8% 1,480,900 50.1% Salaries, wages and employee benefits 678,786 22.8% 624,410 21.1% Fuel and fuel taxes 166,704 5.6% 236,949 8.0% Depreciation and amortization 165,038 5.5% 140,693 4.8% Operating supplies and expenses 107,199 3.6% 108,961 3.7% Insurance and claims 35,635 1.2% 35,718 1.2% General and administrative expenses, net of asset dispositions 41,606 1.4% 21,470 0.7% Operating taxes and licenses 20,822 0.7% 18,623 0.6% Communication and utilities 10,857 0.4% 10,513 0.4% Total operating expenses 2,651,182 89.0% 2,678,237 90.6% Operating income 328,955 11.0% 276,537 9.4%
Net interest expense 13,364 0.4% 14,710 0.5% Earnings before income taxes 315,591 10.6% 261,827 8.9% Income taxes 120,240 4.0% 99,756 3.4% Net earnings $ 195,351 6.6% $ 162,071 5.5%
Average diluted shares outstanding 117,805 118,740
Diluted earnings per share $ 1.66 $ 1.36
Financial Information By Segment (in thousands) (unaudited)
Three Months Ended June 30
Revenue
Intermodal $ 904,868 59% $ 930,668 60% Dedicated 366,716 24% 347,730 22% Integrated Capacity Solutions 173,879 11% 172,894 11% Truck 97,509 6% 101,074 7% Subtotal 1,542,972 100% 1,552,366 100% Intersegment eliminations (3,015) (0%) (4,499) (0%) Consolidated revenue $ 1,539,957 100% $ 1,547,867 100%
Operating income
Intermodal | $ 118,617 | 68% | $ 113,394 | 71% |
Dedicated | 40,573 | 23% | 30,318 | 19% |
Integrated Capacity Solutions | 4,893 | 3% | 6,222 | 4% |
Truck | 9,675 | 6% | 9,363 | 6% |
Other (1) | (23) | (0%) | (67) | (0%) |
Operating income | $ 173,735 | 100.0% | $ 159,230 | 100% |
Revenue
Six Months Ended June 30
2015 2014
Intermodal $ 1,748,757 59% $ 1,766,163 60% Dedicated 711,905 24% 669,771 23% Integrated Capacity Solutions 337,090 11% 335,524 11% Truck 188,697 6% 193,544 6% Subtotal 2,986,449 100% 2,965,002 100%
Intersegment eliminations | (6,312) | (0%) | (10,228) | (0%) |
Consolidated revenue | $ 2,980,137 | 100% | $ 2,954,774 | 100% |
Operating income
Intermodal | $ 222,879 | 68% | $ 206,566 | 75% |
Dedicated | 76,388 | 23% | 45,918 | 17% |
Integrated Capacity Solutions | 11,522 | 4% | 12,346 | 4% |
Truck | 18,204 | 5% | 11,811 | 4% |
Other (1) | (38) | (0%) | (104) | (0%) |
Operating income | $ 328,955 | 100% | $ 276,537 | 100% |
(1) Includes corporate support activity
Dedicated
Operating Statistics by Segment
(unaudited)
Three Months Ended June 30
Loads | 562,017 | 522,117 |
Average length of haul | 176 | 178 |
Revenue per truck per week** | $ 4,096 | $ 4,117 |
Average trucks during the period*** | 6,921 | 6,538 |
Trucks (end of period) Company-owned | 6,543 | 6,050 |
Independent contractor | 7 | 6 |
Customer-owned (Dedicated operated) | 422 | 503 |
Total trucks | 6,972 | 6,559 |
Trailing equipment (end of period) | 20,989 | 19,696 |
Average effective trailing equipment usage | 22,275 | 20,721 |
Integrated Capacity Solutions
Loads | 123,082 | 109,803 |
Revenue per load | $ 1,413 | $ 1,575 |
Gross profit margin | 15.2% | 12.7% |
Employee count (end of period) | 636 | 540 |
Approximate number of third-party carriers (end of period) | 42,300 | 36,300 |
Truck
Loads | 93,225 | 101,044 |
Average length of haul | 435 | 384 |
Loaded miles (000) | 40,355 | 38,720 |
Total miles (000) | 47,752 | 45,718 |
Average nonpaid empty miles per load | 77.1 | 67.8 |
Revenue per tractor per week** | $ 3,802 | $ 4,226 |
Average tractors during the period * | 2,021 | 1,877 |
Tractors (end of period) Company-owned | 1,510 | 1,215 |
Independent contractor | 563 | 645 |
Total tractors | 2,073 | 1,860 |
Trailers (end of period) | 7,479 | 6,576 |
Average effective trailing equipment usage | 6,392 | 5,718 |
* Includes company-owned and independent contractor tractors
** Using weighted workdays
*** Includes company-owned, independent contractor, and customer-owned trucks
Dedicated
Operating Statistics by Segment
(unaudited)
Six Months Ended June 30
Loads | 1,092,779 | 1,008,788 |
Average length of haul | 176 | 179 |
Revenue per truck per week** | $ 4,032 | $ 4,016 |
Average trucks during the period*** | 6,887 | 6,514 |
Trucks (end of period) Company-owned | 6,543 | 6,050 |
Independent contractor | 7 | 6 |
Customer-owned (Dedicated operated) | 422 | 503 |
Total trucks | 6,972 | 6,559 |
Trailing equipment (end of period) | 20,989 | 19,696 |
Average effective trailing equipment usage | 22,276 | 20,533 |
Integrated Capacity Solutions
Loads | 244,044 | 212,886 |
Revenue per load | $ 1,381 | $ 1,576 |
Gross profit margin | 14.5% | 12.4% |
Employee count (end of period) | 636 | 540 |
Approximate number of third-party carriers (end of period) | 42,300 | 36,300 |
Truck
Loads | 179,468 | 191,042 |
Average length of haul | 443 | 396 |
Loaded miles (000) | 78,991 | 75,715 |
Total miles (000) | 93,206 | 89,189 |
Average nonpaid empty miles per load | 76.0 | 67.9 |
Revenue per tractor per week** | $ 3,754 | $ 4,040 |
Average tractors during the period* | 1,982 | 1,884 |
Tractors (end of period) Company-owned | 1,510 | 1,215 |
Independent contractor | 563 | 645 |
Total tractors | 2,073 | 1,860 |
Trailers (end of period) | 7,479 | 6,576 |
Average effective trailing equipment usage | 6,208 | 5,774 |
* 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)
ASSETS
Current assets:
June 30, 2015 December 31, 2014
Cash and cash equivalents $ 5,586 $ 5,961
Accounts Receivable 665,241 653,795
Prepaid expenses and other 97,172 201,743
Deferred income taxes 18,631 18,631
Total current assets 786,630 880,130
Property and equipment 3,881,077 3,719,757
Less accumulated depreciation 1,254,973 1,237,225
Net property and equipment 2,626,104 2,482,532
Other assets 72,616 34,455
$ 3,485,350 $ 3,397,117
LIABILITIES & STOCKHOLDERS' EQUITY
Current liabilities:
Current debt $ 250,000 $ 250,000
Trade accounts payable 341,520 325,838
Claims accruals 98,423 96,719
Accrued payroll 65,671 80,547
Other accrued expenses 20,991 17,966
Total current liabilities 776,605 771,070
Long-term debt 643,202 683,539
Other long-term liabilities 59,197 59,561
Deferred income taxes 667,141 678,424
Stockholders' equity 1,339,205 1,204,523
$ 3,485,350 $ 3,397,117
Supplemental Data
(unaudited)
June 30, 2015 December 31, 2014
Actual shares outstanding at end of period (000) 116,251 116,575
Book value per actual share outstanding at end of period $ 11.52 $ 10.33
Six Months Ended June 30
2015 2014
Net cash provided by operating activities (000) $ 453,537 $ 301,001
Net capital expenditures (000) $ 319,343 $ 352,843
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