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) decreased 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. 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
2015     2014
    % Of     % Of
Amount     Revenue Amount     Revenue
 
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
 
 
J.B. HUNT TRANSPORT SERVICES, INC.
Condensed Consolidated Statements of Earnings
(in thousands, except per share data)
(unaudited)
 
      Six Months Ended June 30
2015     2014
    % Of     % Of
Amount     Revenue Amount     Revenue
 
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
2015     2014
    % Of     % Of
Amount     Total Amount     Total
 

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 %
 
 
 
Six Months Ended June 30
2015 2014
% Of % Of
Amount     Total Amount     Total

Revenue

 
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
 
 
Operating Statistics by Segment
(unaudited)
 
      Three Months Ended June 30
2015       2014
 

Intermodal

 
Loads 436,466 429,438
Average length of haul 1,642 1,643
Revenue per load $ 2,073 $ 2,167
Average tractors during the period * 4,915 4,447
 
Tractors (end of period)
Company-owned 4,186 3,868
Independent contractor 701   678  
Total tractors 4,887 4,546
 
Net change in trailing equipment during the period 2,086 2,160
Trailing equipment (end of period) 76,279 69,724
Average effective trailing equipment usage 70,823 67,534
 
 

Dedicated

 
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
 
 
Operating Statistics by Segment
(unaudited)
 
      Six Months Ended June 30
2015       2014
 

Intermodal

 
Loads 846,763 815,424
Average length of haul 1,643 1,656
Revenue per load $ 2,065 $ 2,166
Average tractors during the period * 4,866 4,348
 
Tractors (end of period)
Company-owned 4,186 3,868
Independent contractor 701   678  
Total tractors 4,887 4,546
 
Net change in trailing equipment during the period 2,981 3,745
Trailing equipment (end of period) 76,279 69,724
Average effective trailing equipment usage 69,758 66,367
 
 

Dedicated

 
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)
             
          June 30, 2015           December 31, 2014
ASSETS
Current assets:
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