J.B. Hunt Transport Services, Inc., (NASDAQ:JBHT) announced third quarter 2014 net earnings of $102.4 million, or diluted earnings per share of 87 cents vs. third quarter 2013 net earnings of $89.5 million, or 75 cents per diluted share.

Total operating revenue for the current quarter was $1.60 billion, compared with $1.44 billion for the third quarter 2013. Load growth in Intermodal (JBI), improved asset productivity and implemented rate increases in Dedicated Contract Services (DCS)™ and an increase in both load volume and revenue per load in Integrated Capacity Solutions (ICS), helped drive 8%, 13% and 35% increases in segment revenue, respectively. Truck (JBT) segment revenue decreased by 1%; primarily from a 6% smaller fleet. Current quarter total operating revenue, excluding fuel surcharges, increased 13% vs. the comparable quarter 2013.

Operating income for the current quarter totaled $172 million vs. $151 million for the third quarter 2013. The increase in operating income from load growth, higher productivity and rate increases was partially offset by lower box turns from slower train speeds, increases in driver recruiting costs, higher rates paid to third party carriers, higher driver mileage pay, higher equipment costs and higher insurance and workers’ compensation costs.

Interest expense in the current quarter increased from a year ago due to higher debt levels primarily from increased net capital expenditures. The effective income tax rate for the current quarter was 38.10% compared to 38.25% for the third quarter 2013. We expect our 2014 annual tax rate to be approximately 38.10%.

Segment Information:

Intermodal (JBI)

  • Third Quarter 2014 Segment Revenue: $964 million; up 8%
  • Third Quarter 2014 Operating Income: $125 million; up 6%

Overall volumes increased 8% over the same period in 2013 in an environment of challenging rail service and limited dray fleet capacity. Eastern network growth was 19% and transcontinental growth was 2% over the third quarter 2013. Revenue grew 8% reflecting volume growth and flat revenue per load, which is the combination of freight mix, customer rate increases and fuel surcharges. Revenue per load excluding fuel surcharges increased 1% compare to third quarter 2013.

Operating income increased 6% over prior year. Slow train speeds and the shortage in dray fleet capacity continues to impact network fluidity resulting in decreased box turns and decreased dray fleet utilization compared to third quarter 2013. Increased costs to attract and retain drivers, increased outsourced dray costs, higher insurance and claims costs, higher equipment costs and an increase in operating supplies compared to prior year partially offset the increased revenue. The current period ended with approximately 71,600 units of trailing capacity and 4,650 power units assigned to the dray fleet.

Dedicated Contract Services (DCS)

  • Third Quarter 2014 Segment Revenue: $361 million; up 13%
  • Third Quarter 2014 Operating Income: $34.3 million; up 17%

DCS revenue increased 13% during the current quarter over the same period in 2013. Productivity (revenue per truck per week) increased by approximately 4% vs. 2013 due to increased customer demand at accounts open longer than a year and rate increases implemented during the quarter. A net additional 538 revenue producing trucks were in the fleet by the end of the quarter compared to prior year primarily reflecting new contract implementations in this and prior periods.

Operating income increased by 17% from a year ago. The increase is primarily due to the revenue from increased customer activity and higher rates, but was partially offset by continued higher costs for driver hiring and retention, increased insurance and claims costs, higher workers’ compensation costs and fewer gains on the sale of equipment compared to the same period in 2013.

Integrated Capacity Solutions (ICS)

  • Third Quarter 2014 Segment Revenue: $185 million; up 35%
  • Third Quarter 2014 Operating Income: $ 8.4 million; up 197%

ICS revenue increased 35% in the current quarter vs. the third quarter 2013, primarily due to a 24% increase in load volume and an 9% increase in revenue per load. Revenue grew faster than volumes primarily due to freight mix changes driven from customer demand. Both transactional and contractual volumes continued to grow during the quarter. Contractual business was approximately 64% of total load volume but only 58% of total revenue in the current quarter compared to 64% of total volume and 61% of total revenue in third quarter 2013.

Operating income increased 197% over the same period 2013 primarily due to increased revenue and a higher gross profit margin. Gross profit margin increased to 13.3% in the current quarter vs. 10.4% last year primarily due to customer rate increases in the contractual business and maintaining margin discipline in the transactional business. Personnel costs increased from the comparable period a year ago as we continue to on-board and train staff in order to expand our branch network. Total branches at the end of the quarter grew to 28. ICS’s carrier base increased 11% and the employee count increased 18% vs. third quarter 2013.

Truck (JBT)

  • Third Quarter 2014 Segment Revenue: $ 96 million; down 1%
  • Third Quarter 2014 Operating Income: $ 4.3 million; up 569%

JBT revenue for the current quarter decreased 1% from the same period in 2013 primarily from a 6% reduction in fleet size. Revenue excluding fuel surcharge increased 1%. Rates per loaded mile, excluding fuel surcharge increased 10% on a 3% shorter length of haul compared to third quarter 2013. Intentional freight mix change, to create a more balanced operating network, and core customer rate increases of approximately 6% contributed to the overall rate increase. At the end of the period, JBT operated 1,843 tractors compared to 1,951 a year ago.

Operating income increased by 569% compared to third quarter 2013. Favorable changes from increased rates per loaded mile and a smaller trailer fleet were offset by increased driver and independent contractor costs per mile, increased driver hiring costs, higher equipment costs per unit and increased insurance and safety costs compare to third quarter 2013.

Cash Flow and Capitalization:

At September 30, 2014, we had a total of $837 million outstanding on various debt instruments compared to $687 million at September 30, 2013 and $708 million at December 31, 2013.

Our net capital expenditures for the nine months ended September 30, 2014 approximated $479 million compared to $334 million for the same period 2013. At September 30, 2014, we had cash and cash equivalents of approximately $5.9 million.

We did not purchase any shares of our common stock during the quarter. At September 30, 2014 we had approximately $263 million remaining under our share repurchase authorization. Actual shares outstanding at September 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 September 30
2014 2013
% Of % Of
Amount     Revenue Amount     Revenue
 
Operating revenues, excluding fuel surcharge revenues $ 1,316,951 $ 1,165,965
Fuel surcharge revenues 284,205 269,885
Total operating revenues 1,601,156 100.0 % 1,435,850 100.0 %
 
Operating expenses
Rents and purchased transportation 802,092 50.1 % 724,417 50.5 %
Salaries, wages and employee benefits 327,106 20.4 % 289,789 20.2 %
Fuel and fuel taxes 115,503 7.2 % 114,147 7.9 %
Depreciation and amortization 75,416 4.7 % 64,291 4.5 %
Operating supplies and expenses 56,978 3.6 % 55,378 3.9 %
Insurance and claims 21,904 1.4 % 13,878 1.0 %
General and administrative expenses, net of asset dispositions 15,057 0.9 % 10,172 0.6 %
Operating taxes and licenses 9,893 0.7 % 8,168 0.6 %
Communication and utilities 5,107 0.3 % 4,881 0.3 %
Total operating expenses 1,429,056 89.3 % 1,285,121 89.5 %
Operating income 172,100 10.7 % 150,729 10.5 %
Net interest expense 6,649 0.4 % 5,835 0.4 %
Earnings before income taxes 165,451 10.3 % 144,894 10.1 %
Income taxes 63,037 3.9 % 55,422 3.9 %
Net earnings $ 102,414 6.4 % $ 89,472 6.2 %
Average diluted shares outstanding 118,221 119,357
Diluted earnings per share $ 0.87 $ 0.75
 
 
 
 
J.B. HUNT TRANSPORT SERVICES, INC.
Condensed Consolidated Statements of Earnings
(in thousands, except per share data)
(unaudited)
 
Nine Months Ended September 30
2014 2013
% Of % Of
Amount     Revenue Amount     Revenue
 
Operating revenues, excluding fuel surcharge revenues $ 3,737,936 $ 3,325,070
Fuel surcharge revenues 817,994 785,225
Total operating revenues 4,555,930 100.0 % 4,110,295 100.0 %
 
Operating expenses
Rents and purchased transportation 2,282,992 50.1 % 2,062,745 50.2 %
Salaries, wages and employee benefits 951,517 20.9 % 835,765 20.3 %
Fuel and fuel taxes 352,452 7.7 % 340,987 8.3 %
Depreciation and amortization 216,109 4.7 % 187,304 4.6 %
Operating supplies and expenses 165,939 3.6 % 149,918 3.6 %
Insurance and claims 57,622 1.3 % 38,759 0.9 %
General and administrative expenses, net of asset dispositions 36,525 0.9 % 33,581 0.9 %
Operating taxes and licenses 28,517 0.7 % 23,723 0.6 %
Communication and utilities 15,620 0.3 % 14,338 0.3 %
Total operating expenses 4,107,293 90.2 % 3,687,120 89.7 %
Operating income 448,637 9.8 % 423,175 10.3 %
Net interest expense 21,358 0.4 % 18,320 0.4 %
Earnings before income taxes 427,279 9.4 % 404,855 9.9 %
Income taxes 162,793 3.6 % 154,337 3.8 %
Net earnings $ 264,486 5.8 % $ 250,518 6.1 %
Average diluted shares outstanding 118,567 119,552
Diluted earnings per share $ 2.23 $ 2.10
 
 
 
 
 
 
 
Financial Information By Segment
(in thousands)
(unaudited)
                 
 
Three Months Ended September 30
2014 2013
% Of % Of
Amount     Total Amount     Total
 

Revenue

 
Intermodal $ 963,568 60 % $ 890,099 62 %
Dedicated 361,030 22 % 318,951 22 %
Integrated Capacity Solutions 185,135 12 % 137,405 10 %
Truck 95,754   6 % 96,861   7 %
Subtotal 1,605,487 100 % 1,443,316 101 %
Intersegment eliminations (4,331 ) (0 %) (7,466 ) (1 %)
Consolidated revenue $ 1,601,156   100 % $ 1,435,850   100 %
 
 

Operating income

 
Intermodal $ 125,044 73 % $ 118,034 78 %
Dedicated 34,294 20 % 29,254 19 %
Integrated Capacity Solutions 8,442 5 % 2,839 2 %
Truck 4,333 2 % 648 1 %

Other(1)

(13 ) (0 %) (46 ) (0 %)
Operating income $ 172,100   100 % $ 150,729   100 %
 
 
 
 
 
Nine Months Ended September 30
2014 2013
% Of % Of
Amount     Total Amount     Total

Revenue

 
Intermodal $ 2,729,731 60 % $ 2,541,093 62 %
Dedicated 1,030,802 23 % 900,658 22 %
Integrated Capacity Solutions 520,659 11 % 391,551 10 %
Truck 289,297   6 % 299,873   7 %
Subtotal 4,570,489 100 % 4,133,175 101 %
Intersegment eliminations (14,559 ) (0 %) (22,880 ) (1 %)
Consolidated revenue $ 4,555,930   100 % $ 4,110,295   100 %
 
 

Operating income

 
Intermodal $ 331,610 74 % $ 325,507 77 %
Dedicated 80,212 18 % 80,905 19 %
Integrated Capacity Solutions 20,788 5 % 12,174 3 %
Truck 16,144 3 % 4,699 1 %

Other(1)

(117 ) (0 %) (110 ) (0 %)
Operating income $ 448,637   100 % $ 423,175   100 %
 
 
(1) Includes corporate support activity
 
 
 
 
 
 
Operating Statistics by Segment
(unaudited)
       
Three Months Ended September 30
2014 2013
 

Intermodal

 
Loads 445,385 411,548
Average length of haul 1,645 1,693
Revenue per load $ 2,163 $ 2,163

Average tractors during the period*

4,615 4,033
 
Tractors (end of period)
Company-owned 3,895 3,452
Independent contractor 754   598  
Total tractors 4,649 4,050
 
Net change in trailing equipment during the period 1,954 2,009
Trailing equipment (end of period) 71,678 63,920
Average effective trailing equipment usage 70,516 62,448
 
 

Dedicated

 
Loads 544,304 485,994
Average length of haul 176 190
Revenue per truck per week** $ 4,170 $ 4,023
Average trucks during the period*** 6,650 6,099
 
Trucks (end of period)
Company-owned 6,252 5,606
Independent contractor 6 10
Customer-owned (Dedicated operated) 496   600  
Total trucks 6,754 6,216
 
Trailing equipment (end of period) 20,027 18,355
Average effective trailing equipment usage 21,052 19,828
 
 

Integrated Capacity Solutions

 
Loads 116,401 93,880
Revenue per load $ 1,590 $ 1,464
Gross profit margin 13.3 % 10.4 %
Employee count (end of period) 577 490
Approximate number of third-party carriers (end of period) 37,700 34,000
 
 

Truck

 
Loads 89,636 95,302
Average length of haul 419 434
Loaded miles (000) 37,674 41,151
Total miles (000) 44,436 47,969
Average nonpaid empty miles per load 73.6 71.0
Revenue per tractor per week** $ 4,109 $ 3,758

Average tractors during the period*

1,816 1,989
 
Tractors (end of period)
Company-owned 1,249 1,193
Independent contractor 594   758  
Total tractors 1,843 1,951
 
Trailers (end of period) 6,776 7,698
Average effective trailing equipment usage 5,816 6,744
 
 
* Includes company-owned and independent contractor tractors
** Using weighted workdays
*** Includes company-owned, independent contractor, and customer-owned trucks
 
 
 
 
 
 
Operating Statistics by Segment
(unaudited)
       
Nine Months Ended September 30
2014 2013
 

Intermodal

 
Loads 1,260,809 1,177,910
Average length of haul 1,652 1,691
Revenue per load $ 2,165 $ 2,157

Average tractors during the period*

4,437 3,860
 
Tractors (end of period)
Company-owned 3,895 3,452
Independent contractor 754   598  
Total tractors 4,649 4,050
 
Net change in trailing equipment during the period 5,699 4,958
Trailing equipment (end of period) 71,678 63,920
Average effective trailing equipment usage 67,750 59,511
 
 

Dedicated

 
Loads 1,553,092 1,331,134
Average length of haul 178 195
Revenue per truck per week** $ 4,069 $ 4,079
Average trucks during the period*** 6,559 5,729
 
Trucks (end of period)
Company-owned 6,252 5,606
Independent contractor 6 10
Customer-owned (Dedicated operated) 496   600  
Total trucks 6,754 6,216
 
Trailing equipment (end of period) 20,027 18,355
Average effective trailing equipment usage 20,706 18,939
 
 

Integrated Capacity Solutions

 
Loads 329,287 289,543
Revenue per load $ 1,581 $ 1,352
Gross profit margin 12.7 % 11.7 %
Employee count (end of period) 577 490
Approximate number of third-party carriers (end of period) 37,700 34,000
 
 

Truck

 
Loads 280,678 297,212
Average length of haul 404 430
Loaded miles (000) 113,389 126,914
Total miles (000) 133,625 148,624
Average nonpaid empty miles per load 69.7 72.9
Revenue per tractor per week** $ 4,063 $ 3,835
Average tractors during the period* 1,862 2,035
 
Tractors (end of period)
Company-owned 1,249 1,193
Independent contractor 594   758  
Total tractors 1,843 1,951
 
Trailers (end of period) 6,776 7,698
Average effective trailing equipment usage 5,788 7,132
 
 
* 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)
           
        September 30, 2014           December 31, 2013    
ASSETS
Current assets:
Cash and cash equivalents $ 5,859 $ 5,831
Accounts Receivable 671,298 568,519
Prepaid expenses and other       60,521           105,853    
Total current assets       737,678           680,203    
Property and equipment 3,584,953 3,259,814
Less accumulated depreciation       1,199,847           1,147,610    
Net property and equipment       2,385,106           2,112,204    
Other assets       36,134           26,997    
      $ 3,158,918         $ 2,819,404    
 
 
LIABILITIES & STOCKHOLDERS' EQUITY
Current liabilities:
Current debt $ 250,000 $ 250,000
Trade accounts payable 352,645 305,465
Claims accruals 87,413 68,221
Accrued payroll 74,862 72,063
Other accrued expenses 11,585 14,062
Deferred income taxes       13,787           2,485    
Total current liabilities       790,292           712,296    
 
Long-term debt 587,074 458,417
Other long-term liabilities 65,384 58,274
Deferred income taxes 556,349 577,965
Stockholders' equity       1,159,819           1,012,452    
      $ 3,158,918         $ 2,819,404    
 
 
 
Supplemental Data
(unaudited)
                         
        September 30, 2014     December 31, 2013    
 
Actual shares outstanding at end of period (000)       117,154           117,241    
 
Book value per actual share outstanding at end of period     $ 9.90         $ 8.64    
 
 
 
Nine Months Ended September 30
2014 2013
 
Net cash provided by operating activities (000)     $ 486,365         $ 411,228    
 
Net capital expenditures (000)     $ 479,225         $ 333,624