J.B. Hunt Transport Services, Inc., (NASDAQ:JBHT) announced fourth quarter 2015 net earnings of $116.7 million, or diluted earnings per share of $1.01 vs. fourth quarter 2014 net earnings of $110.3 million, or 93 cents per diluted share.

Total operating revenue for the current quarter was $1.62 billion, compared with $1.61 billion for the fourth quarter 2014. Load growth of 6% in Intermodal (JBI) was the primary reason for a 1% increase in segment revenue. Dedicated Contract Services (DCS) segment revenue increased by 2%, primarily from the addition of new customer accounts and rate increases implemented in the current and earlier periods. Truck (JBT) segment revenue increased 3% primarily from customer rate increases and an increase in fleet size compared to a year ago. Integrated Capacity Solutions (ICS) segment revenue decreased by 4%, mostly from less spot market activity and lower revenue per load. Current quarter total operating revenue, excluding fuel surcharges, increased 9% vs. the comparable quarter 2014.

Operating income for the current quarter increased to $192.9 million vs. $182.9 million for the fourth quarter 2014. The increase primarily reflects higher revenue in JBI, DCS and JBT business segments, improved fuel economy and lower maintenance costs on newer equipment, less reliance on third party carriers in JBI and DCS, expanding gross margins in ICS and lower safety and insurance costs in JBT. These benefits were partially offset by increased rail purchase transportation costs, increased wages paid to drivers, increased costs of recruiting drivers and independent contractors and higher costs of equipment ownership.

Net earnings rose 6% to $116.7 million in the current quarter from $110.3 million in 2014, due to increased operating income and lower net interest expense. Compared with the same period 2014, net interest expense in the current quarter decreased approximately 23% primarily from lower interest accruals on accrued income tax liabilities. The fourth quarter effective tax rates for 2015 and 2014 were 38.10% and 37.79%, respectively. The annual effective tax rates for 2015 and 2014 were 38.10% and 38.01%, respectively.

Segment Information:

Intermodal (JBI)

  • Fourth quarter 2015 Segment Revenue: $967 million; up 1%
  • Fourth quarter 2015 Operating Income: $127.7 million; down 1%

JBI total volumes grew 6% over the same period in 2014. Eastern network loads increased 8% and transcontinental loads increased 5% compared to the fourth quarter 2014. Revenue increased 1%, reflecting volume growth of 6% and a 5% decrease in revenue per load which is the combination of freight mix, customer rate increases and fuel surcharges. Revenue per load excluding fuel surcharges increased approximately 5% compared to a year ago.

Operating income decreased 1% from the prior year. Benefits from customer rate increases, a smaller percentage of outsourced dray usage and lower fleet maintenance costs could not offset increases in rail purchased transportation costs, equipment ownership costs and driver recruiting and retention costs. The current period ended with approximately 78,900 units of trailing capacity and approximately 5,080 power units in the dray fleet.

Dedicated Contract Services (DCS)

  • Fourth quarter 2015 Segment Revenue: $369 million; up 2%
  • Fourth quarter 2015 Operating Income: $42.0 million; up 13%

DCS revenue increased 2% during the current quarter over the same period 2014. Productivity (revenue per truck per week) decreased approximately 3% vs. 2014 primarily from lower fuel surcharge revenue. Productivity excluding fuel surcharge revenue increased approximately 2.5% from a year ago primarily from customer rate increases. A year over year net additional 328 revenue producing trucks, 41 net additions compared to third quarter 2015, were in the fleet by the end of the quarter. Approximately 61% of these additions represent private fleet conversions versus traditional dedicated capacity fleets and primarily reflect new contract implementations in this and prior periods. Customer retention rates remain above 96% as value driven services continue to support necessary rate increases.

Operating income increased by 13% from a year ago. Revenue from new customer accounts, higher truck productivity excluding fuel surcharge revenue, less reliance on third party carrier capacity and lower equipment maintenance costs were partially offset with higher driver wages, higher driver recruiting costs and higher equipment ownership costs compared to the same period in 2014.

Integrated Capacity Solutions (ICS)

  • Fourth Quarter 2015 Segment Revenue: $190 million; down 4%
  • Fourth Quarter 2015 Operating Income: $12.8 million; up 40%

ICS revenue decreased 4% in the current quarter vs. the fourth quarter 2014 mostly due to a 31% decrease in revenue per load due to lower fuel prices and freight mix changes driven by customer demand. Load volume increased 38% compared to fourth quarter 2014. Contractual volumes increased 54% to approximately 73% of the total load volume and 62% of the total revenue in the current quarter compared to 66% and 57%, respectively, in fourth quarter 2014.

Operating income increased 40% over the same period in 2014 primarily due to improved gross profit margin. Gross profit margin increased to 16% in the current period from 13.7% last year. The operating income increase was partially offset by increased personnel costs to expand our branch network. Total branches at the end of the period grew to 34 from 29 at the end of the same period in 2014. ICS’s carrier base increased 17% and the employee count increased 15% from a year ago.

Truck (JBT)

  • Fourth quarter 2015 Segment Revenue: $ 99 million; up 3%
  • Fourth quarter 2015 Operating Income: $ 10.4 million; up 29%

JBT revenue for the current quarter increased 3% from the same period in 2014. Revenue excluding fuel surcharges increased 12% primarily from increased truck count and core customer rate increases of approximately 3.7% compared to fourth quarter 2014. At the end of the period, JBT operated 2,149 tractors compared to 1,886 a year ago.

Operating income increased 29% from fourth quarter 2014 levels. Favorable changes from an increased truck count, customer rate increases, lower equipment maintenance costs, lower safety and insurance costs and improved fuel economy were partially offset by increased driver wages, increased independent contractor costs per mile, higher driver recruiting and hiring costs, lower asset utilization and an increase in empty miles compared to fourth quarter 2014.

Cash Flow and Capitalization:

At December 31, 2015, we had total debt outstanding of $1.0 billion on various debt instruments compared to $934 million at December 31, 2014 and $993 million at September 30, 2015.

Our net capital expenditures for 2015 approximated $556 million vs. $660 million in 2014. At December 31, 2015, we had cash and cash equivalents of $5.6 million.

In the fourth quarter 2015, we purchased 672,500 shares of our common stock for approximately $50 million. At December 31, 2015, we had approximately $451 million remaining under our share repurchase authorization. Actual shares outstanding at December 31, 2015 approximated 114 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 December 31
2015 2014
% Of % Of
Amount     Revenue Amount     Revenue
 
Operating revenues, excluding fuel surcharge revenues $ 1,472,291 $ 1,344,891
Fuel surcharge revenues 148,724 264,620
Total operating revenues 1,621,015 100.0% 1,609,511 100.0%
 
Operating expenses
Rents and purchased transportation 799,903 49.3% 802,284 49.8%
Salaries, wages and employee benefits 363,801 22.4% 338,888 21.1%
Fuel and fuel taxes 69,575 4.3% 101,467 6.3%
Depreciation and amortization 88,374 5.5% 78,386 4.9%
Operating supplies and expenses 56,100 3.5% 52,600 3.3%
Insurance and claims 17,975 1.1% 23,440 1.5%
General and administrative expenses, net of asset dispositions 16,051 1.0% 14,071 0.8%
Operating taxes and licenses 11,579 0.7% 10,279 0.6%
Communication and utilities 4,764 0.3% 5,191 0.3%
Total operating expenses 1,428,122 88.1% 1,426,606 88.6%
Operating income 192,893 11.9% 182,905 11.4%
Net interest expense 4,290 0.3% 5,583 0.4%
Earnings before income taxes 188,603 11.6% 177,322 11.0%
Income taxes 71,857 4.4% 67,016 4.1%
Net earnings $ 116,746 7.2% $ 110,306 6.9%
Average diluted shares outstanding 115,048 118,078
Diluted earnings per share $ 1.01 $ 0.93
 
 
J.B. HUNT TRANSPORT SERVICES, INC.
Condensed Consolidated Statements of Earnings
(in thousands, except per share data)
(unaudited)
               
Twelve Months Ended December 31
2015 2014
% Of % Of
Amount     Revenue Amount     Revenue
 
Operating revenues, excluding fuel surcharge revenues $ 5,516,282 $ 5,082,827
Fuel surcharge revenues 671,364   1,082,614  
Total operating revenues 6,187,646 100.0 % 6,165,441 100.0 %
 
Operating expenses
Rents and purchased transportation 2,994,586 48.4 % 3,085,276 50.0 %
Salaries, wages and employee benefits 1,394,239 22.5 % 1,290,404 20.9 %
Fuel and fuel taxes 313,034 5.1 % 453,919 7.4 %
Depreciation and amortization 339,613 5.5 % 294,496 4.8 %
Operating supplies and expenses 220,597 3.6 % 218,539 3.5 %
Insurance and claims 73,689 1.2 % 81,062 1.3 %
General and administrative expenses, net of asset dispositions 72,522 1.1 % 50,596 0.8 %
Operating taxes and licenses 43,084 0.7 % 38,796 0.7 %
Communication and utilities 20,588   0.3 % 20,811   0.4 %
Total operating expenses 5,471,952   88.4 % 5,533,899   89.8 %
Operating income 715,694 11.6 % 631,542 10.2 %
Net interest expense 25,491   0.4 % 26,941   0.4 %
Earnings before income taxes 690,203 11.2 % 604,601 9.8 %
Income taxes 262,968   4.3 % 229,809   3.7 %
Net earnings $ 427,235   6.9 % $ 374,792   6.1 %
Average diluted shares outstanding 116,728   118,445  
Diluted earnings per share $ 3.66   $ 3.16  
 
 
 
Financial Information By Segment
(in thousands)
(unaudited)
 
 
Three Months Ended December 31
2015 2014
% Of % Of
Amount     Total Amount     Total
 

Revenue

 
Intermodal $ 967,133 59 % $ 957,714 59 %
Dedicated 368,992 23 % 362,966 23 %
Integrated Capacity Solutions 189,540 12 % 197,417 12 %
Truck 99,292   6 % 96,306   6 %
Subtotal 1,624,957 100 % 1,614,403 100 %
Intersegment eliminations (3,942 ) (0 %) (4,892 ) (0 %)
Consolidated revenue $ 1,621,015   100 % $ 1,609,511   100 %
 
 

Operating income

 
Intermodal $ 127,730 66 % $ 128,767 70 %
Dedicated 42,000 22 % 37,031 20 %
Integrated Capacity Solutions 12,754 7 % 9,092 5 %
Truck 10,416 5 % 8,079 5 %
Other (1) (7 ) (0 %) (64 ) (0 %)
Operating income $ 192,893   100 % $ 182,905   100 %
 
 
Twelve Months Ended December 31
2015 2014
% Of % Of
Amount     Total Amount     Total

Revenue

 
Intermodal $ 3,664,670 59 % $ 3,687,444 60 %
Dedicated 1,451,256 24 % 1,393,768 22 %
Integrated Capacity Solutions 699,525 11 % 718,076 12 %
Truck 385,510   6 % 385,603   6 %
Subtotal 6,200,961 100 % 6,184,891 100 %
Intersegment eliminations (13,315 ) (0 %) (19,450 ) (0 %)
Consolidated revenue $ 6,187,646   100 % $ 6,165,441   100 %
 
 

Operating income

 
Intermodal $ 476,685 67 % $ 460,377 73 %
Dedicated 163,511 23 % 117,243 18 %
Integrated Capacity Solutions 35,729 5 % 29,880 5 %
Truck 39,864 5 % 24,223 4 %
Other (1) (95 ) (0 %) (181 ) (0 %)
Operating income $ 715,694   100 % $ 631,542   100 %
 
(1) Includes corporate support activity
 
 
Operating Statistics by Segment
(unaudited)
 
Three Months Ended December 31
2015 2014
 

Intermodal

 
Loads 467,461 439,565
Average length of haul 1,664 1,666
Revenue per load $ 2,069 $ 2,179
Average tractors during the period * 5,088 4,697
 
Tractors (end of period)
Company-owned 4,276 3,916
Independent contractor 805   761  
Total tractors 5,081 4,677
 
Net change in trailing equipment during the period 1,020 1,620
Trailing equipment (end of period) 78,957 73,298
Average effective trailing equipment usage 76,305 71,481
 
 

Dedicated

 
Loads 578,692 548,615
Average length of haul 175 174
Revenue per truck per week** $ 4,048 $ 4,184
Average trucks during the period*** 7,177 6,885
 
Trucks (end of period)
Company-owned 6,762 6,425
Independent contractor 10 7
Customer-owned (Dedicated operated) 436   448  
Total trucks 7,208 6,880
 
Trailing equipment (end of period) 21,672 20,516
Average effective trailing equipment usage 22,594 21,589
 
 

Integrated Capacity Solutions

 
Loads 171,887 124,123
Revenue per load $ 1,103 $ 1,590
Gross profit margin 16.0 % 13.7 %
Employee count (end of period) 670 582
Approximate number of third-party carriers (end of period) 45,700 39,100
 
 

Truck

 
Loads 95,190 89,877
Average length of haul 454 433
Loaded miles (000) 42,749 38,337
Total miles (000) 51,437 45,411
Average nonpaid empty miles per load 82.0 78.3
Revenue per tractor per week** $ 3,663 $ 4,086
Average tractors during the period * 2,157 1,887
 
Tractors (end of period)
Company-owned 1,462 1,296
Independent contractor 687   590  
Total tractors 2,149 1,886
 
Trailers (end of period) 7,604 7,215
Average effective trailing equipment usage 6,814 6,201
 
 
* Includes company-owned and independent contractor tractors
** Using weighted workdays
*** Includes company-owned, independent contractor, and customer-owned trucks
 
 
Operating Statistics by Segment
(unaudited)
 
Twelve Months Ended December 31
2015 2014
 

Intermodal

 
Loads 1,772,808 1,700,374
Average length of haul 1,652 1,656
Revenue per load $ 2,067 $ 2,169
Average tractors during the period * 4,949 4,502
 
Tractors (end of period)
Company-owned 4,276 3,916
Independent contractor 805   761  
Total tractors 5,081 4,677
 
Net change in trailing equipment during the period 5,659 7,319
Trailing equipment (end of period) 78,957 73,298
Average effective trailing equipment usage 72,622 68,683
 
 

Dedicated

 
Loads 2,250,099 2,101,707
Average length of haul 175 177
Revenue per truck per week** $ 4,028 $ 4,098
Average trucks during the period*** 7,012 6,641
 
Trucks (end of period)
Company-owned 6,762 6,425
Independent contractor 10 7
Customer-owned (Dedicated operated) 436   448  
Total trucks 7,208 6,880
 
Trailing equipment (end of period) 21,672 20,516
Average effective trailing equipment usage 22,391 20,927
 
 

Integrated Capacity Solutions

 
Loads 542,947 453,410
Revenue per load $ 1,288 $ 1,584
Gross profit margin 15.3 % 13.0 %
Employee count (end of period) 670 582
Approximate number of third-party carriers (end of period) 45,700 39,100
 
 

Truck

 
Loads 366,297 370,555
Average length of haul 448 411
Loaded miles (000) 163,115 151,725
Total miles (000) 193,856 179,036
Average nonpaid empty miles per load 78.9 71.8
Revenue per tractor per week** $ 3,698 $ 4,068
Average tractors during the period* 2,051 1,868
 
Tractors (end of period)
Company-owned 1,462 1,296
Independent contractor 687   590  
Total tractors 2,149 1,886
 
Trailers (end of period) 7,604 7,215
Average effective trailing equipment usage 6,460 5,891
 
 
* 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, 2015       December 31, 2014
ASSETS
Current assets:
Cash and cash equivalents $ 5,566 $ 5,961
Accounts Receivable 654,542 653,795
Prepaid expenses and other       199,259       201,743
Total current assets       859,367       861,499
Property and equipment 4,019,451 3,719,757
Less accumulated depreciation       1,318,122       1,237,225
Net property and equipment       2,701,329       2,482,532
Other assets       75,871       34,455
      $ 3,636,567     $ 3,378,486
 
 
LIABILITIES & STOCKHOLDERS' EQUITY
Current liabilities:
Current debt $ - $ 250,000
Trade accounts payable 340,332 325,838
Claims accruals 104,220 96,719
Accrued payroll 59,420 80,547
Other accrued expenses 28,445 17,966
Total current liabilities       532,417       771,070
 
Long-term debt 1,005,026 683,539
Other long-term liabilities 58,552 59,561
Deferred income taxes 740,220 659,793
Stockholders' equity       1,300,352       1,204,523
      $ 3,636,567     $ 3,378,486
 
 
Supplemental Data
(unaudited)
                 
        December 31, 2015       December 31, 2014
 
Actual shares outstanding at end of period (000)       113,948       116,575
 
Book value per actual share outstanding at end of period     $ 11.41     $ 10.33
 
                 
Twelve Months Ended December 31
2015 2014
 
Net cash provided by operating activities (000)     $ 873,308     $ 646,779
 
Net capital expenditures (000)     $ 556,436     $ 659,710