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8-K - FORM 8-K - HUNT J B TRANSPORT SERVICES INCjbht20140123_8k.htm

 

Exhibit 99.1

 

 

 

 

 

J.B. Hunt Transport Services, Inc.

Contact:      

David G. Mee

615 J.B. Hunt Corporate Drive

 

Executive Vice President,

Lowell, Arkansas 72745

 

Finance/Administration

(NASDAQ: JBHT)

 

and Chief Financial Officer

 

 

(479) 820-8363

 

 

FOR IMMEDIATE RELEASE

 

 

J. B. HUNT TRANSPORT SERVICES, INC. REPORTS RECORD REVENUES, RECORD NET EARNINGS

AND RECORD EARNINGS PER SHARE FOR BOTH THE FOURTH QUARTER AND YEAR ENDED DECEMBER 31, 2013

 

 

Fourth quarter 2013 Revenue:

$1.47 billion; up 10%

Fourth quarter 2013 Operating Income:

$153.5 million; up 7%

Fourth quarter 2013 EPS:

77 cents vs. 70 cents; up 10%

      

Full Year 2013 Revenue:

$5.6 billion; up 10%

Full Year 2013 Operating Income:

$576.7 million; up 9%

Full Year 2013 EPS:

$2.87 vs. $2.59; up 11%

  

LOWELL, ARKANSAS, January 23, 2014 - J.B. Hunt Transport Services, Inc., (NASDAQ:JBHT) announced record fourth quarter 2013 net earnings of $92 million, or diluted earnings per share of 77 cents vs. fourth quarter 2012 net earnings of $84 million, or 70 cents per diluted share.

 

Total operating revenue for the current quarter was $1.47 billion, compared with $1.34 billion for the fourth quarter 2012. Load growth of 13% in Intermodal (JBI) helped drive an 11% increase in segment revenue. Dedicated Contract Services (DCS) segment revenue increased by 17%, primarily from the addition of new customer accounts. Integrated Capacity Solutions (ICS) segment revenue increased by 13%, mostly from a higher load count and an increase in revenue per load. Truck (JBT) segment revenue decreased 19%, primarily from an 11% reduction in fleet size compared to a year ago. Current quarter total operating revenue, excluding fuel surcharges, increased 13% vs. the comparable quarter 2012.

 

Operating income for the current quarter increased to $153.5 million vs. $143.3 million for the fourth quarter 2012. The increase primarily reflects higher revenue on greater load volumes and improved network balance in JBI. These improvements were partially offset by increased costs paid to hire and retain drivers; higher workers’ compensation and accident costs; increased costs to third party carriers, fewer gains on equipment sales and lower truck utilization.

 

Net earnings rose 9% to $92 million in the current quarter from $84 million in 2012, primarily due to the growth in revenue and a lower cost of borrowing. Compared with the same period 2012, net interest expense in the current quarter was down approximately $500,000 on a higher average debt balance due to a reduction in our average interest rate. The annual and fourth quarter effective tax rates in 2013 were 38.15% and 38.23%. The annual and fourth quarter effective tax rates in 2012 were 38.5% and 39.16%, respectively.

 

 

 

 

Segment Information:

 

Intermodal (JBI)

■     Fourth quarter 2013 Segment Revenue:

$915 million; up 11%

■     Fourth quarter 2013 Operating Income:

$121.5 million; up 17%     

 

JBI revenue for the period grew 11% on a 13% increase in volume over the fourth quarter 2013. Eastern network loads increased 17% and transcontinental loads increased 11% compared to the same quarter 2012. Revenue per load decreased 1.3% from the same period a year ago due to the combination of traffic mix, customer rate increases and changes in fuel surcharge revenue; however, excluding fuel surcharge revenue, revenue per load increased 1.0% from fourth quarter 2012.

 

Operating income for the quarter grew 17%. Improved network balance yielded positive results in container utilization and a lower percentage of empty reposition moves. Cost increases in rail and dray purchased transportation, driver recruiting and retention costs and insurance and claims costs partially offset the improvements in productivity. The current period ended with approximately 66,000 units of trailing capacity and approximately 4,100 power units in the dray fleet.

 

 

Dedicated Contract Services (DCS)

■     Fourth quarter 2013 Segment Revenue:

$331 million; up 17%

■     Fourth quarter 2013 Operating Income:

$29.5 million; up 0.5%

 

DCS revenue increased 17% during the current quarter vs. 2012. The increase in revenue primarily resulted from 1,154 net additional revenue producing trucks, mostly due to converting customers’ private fleets. Productivity (revenue per truck per week) was virtually flat compared with the fourth quarter 2012 due to the higher percentage of customer provided equipment and customer paid fuel in the DCS book of business.

 

Operating income was up 0.5% compared to the same quarter 2012. Increases in operating income from a higher truck count due to new customer accounts was partially offset by increases in driver wages, employee recruiting costs, workers’ compensation costs, accident costs and lower gains on sales of revenue equipment compared to fourth quarter 2012.

 

 

Integrated Capacity Solutions (ICS) 

■     Fourth quarter 2013 Segment Revenue:

$145 million; up 13%

■     Fourth quarter 2013 Operating Income:

$3.5 million; down 24%

  

ICS revenue increased 13% in the current quarter vs. the fourth quarter 2012 mostly due to a 5% increase in load volume and a 7% increase in revenue per load. Revenue grew faster than volume primarily due to a change in freight mix driven by customer demand. Truckload brokerage volume increased for the quarter, but was partially offset by a decrease in less-than-truckload brokered loads compared to the same quarter in 2012. Both contractual and transactional business realized volume increases, however transactional business grew at a faster pace. Contractual business comprised approximately 65% of the total load volume in the current quarter vs. 67% a year ago.

 

Operating income decreased 24% over the same period in 2012. Gross profit margin decreased to 12.0% in the current period from 14.1% last year. Positive results from increased load growth at higher revenue per load were offset with gross margin pressure. Third party carrier rates rose faster than contractual customer rates. Additionally, in keeping with our growth strategy, we continue to expand the branch network resulting in increased personnel costs. Total branches at the end of the period grew to 24 from 15 at the end of the same period in 2012. ICS’s carrier base increased 7% and the employee count increased 11% from a year ago.

 

 
2

 

 

Truck (JBT) 

■     Fourth quarter 2013 Segment Revenue:

$91 million; down 19%

■     Fourth quarter 2013 Operating Loss:

$ (1.0) million; compared to Operating Income of $5.2 million in 2012

  

JBT revenue for the current quarter decreased 19% from the same period in 2012 due to an 11% reduction in fleet size, lower utilization per truck and lower rates per mile. Rates per mile, excluding fuel surcharges, decreased 2.7% on a 4.6% shorter average length of haul. Rates per mile in the prior year included spot rates largely affected by Hurricane Sandy relief efforts. Rates from consistent shippers decreased 1.0% from a year ago. At the end of the period, JBT’s tractor count was 1,857 compared to 2,093 in the fourth quarter 2012, primarily from a reduction in independent contractor capacity.

 

JBT incurred an operating loss of $1.0 million in the current quarter compared to operating income of $5.2 million in the same quarter of 2012. Favorable effects from reducing idle trailing equipment, fewer empty miles per load and reductions in office headcount were more than offset by a lower truck count, lower tractor utilization, increased driver and independent contractor pay, and higher maintenance cost per tractor compared to the same period 2012.

 

The previously announced personnel and leadership changes are expected to address and improve tractor utilization, maintenance and customer service issues that have impacted the profitability of JBT. We expect to demonstrate operational improvements throughout 2014, but significant financial improvements will become more apparent in 2015.

 

 

Cash Flow and Capitalization:

 

At December 31, 2013, we had total debt outstanding of $708 million on various debt instruments compared to $685 million at December 31, 2012 and $687 million at September 30, 2013.

 

Our net capital expenditures for 2013 approximated $443 million vs. $370 million in 2012. The increase in capital expenditures was primarily due to purchasing additional containers and chassis for JBI and additional and replacement tractors across all business units. At December 31, 2013, we had cash and cash equivalents of $5.8 million.

 

In the fourth quarter 2013, we used $50 million to purchase approximately 675,000 shares of our common stock. At December 31, 2013, we had approximately $338 million remaining under our share repurchase authorizations.

 

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, 2012. 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.

 

 
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J.B. HUNT TRANSPORT SERVICES, INC.

Condensed Consolidated Statements of Earnings

(in thousands, except per share data)

 

 

(unaudited)

 

 

   

Three Months Ended December 31

   

2013

 

2012

           

% Of

         

% Of

   

Amount

   

Revenue

 

Amount

   

Revenue

                                 

Operating revenues, excluding fuel surcharge revenues

  $ 1,202,168             $ 1,067,194          

Fuel surcharge revenues

    272,108               270,942          

Total operating revenues

    1,474,276       100.0 %     1,338,136       100.0 %
                                 

Operating expenses

                               

Rents and purchased transportation

    742,824       50.4 %     666,745       49.8 %

Salaries, wages and employee benefits

    302,448       20.5 %     270,706       20.2 %

Fuel and fuel taxes

    114,939       7.8 %     117,542       8.8 %

Depreciation and amortization

    66,077       4.5 %     59,046       4.4 %

Operating supplies and expenses

    52,782       3.6 %     44,978       3.4 %

Insurance and claims

    16,400       1.1 %     16,447       1.2 %

General and administrative expenses, net of asset dispositions

    11,884       0.8 %     7,513       0.6 %

Operating taxes and licenses

    8,585       0.6 %     7,545       0.6 %

Communication and utilities

    4,804       0.3 %     4,279       0.3 %

Total operating expenses

    1,320,743       89.6 %     1,194,801       89.3 %

Operating income

    153,533       10.4 %     143,335       10.7 %

Net interest expense

    4,820       0.3 %     5,296       0.4 %

Earnings before income taxes

    148,713       10.1 %     138,039       10.3 %

Income taxes

    56,849       3.9 %     54,062       4.0 %

Net earnings

  $ 91,864       6.2 %   $ 83,977       6.3 %

Average diluted shares outstanding

    118,960               120,019          

Diluted earnings per share

  $ 0.77             $ 0.70          

 

 
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J.B. HUNT TRANSPORT SERVICES, INC.

Condensed Consolidated Statements of Earnings

(in thousands, except per share data)

(unaudited)

 

   

Twelve Months Ended December 31

   

2013

 

2012

           

% Of

         

% Of

   

Amount

   

Revenue

 

Amount

   

Revenue

                                 

Operating revenues, excluding fuel surcharge revenues

  $ 4,527,238             $ 4,058,165          

Fuel surcharge revenues

    1,057,333               996,815          

Total operating revenues

    5,584,571       100.0 %     5,054,980       100.0 %
                                 

Operating expenses

                               

Rents and purchased transportation

    2,805,568       50.2 %     2,485,635       49.2 %

Salaries, wages and employee benefits

    1,138,213       20.4 %     1,037,526       20.5 %

Fuel and fuel taxes

    455,926       8.2 %     465,874       9.2 %

Depreciation and amortization

    253,380       4.5 %     229,166       4.5 %

Operating supplies and expenses

    202,700       3.6 %     178,610       3.5 %

Insurance and claims

    55,158       1.0 %     53,832       1.1 %

General and administrative expenses, net of asset dispositions

    45,469       0.8 %     27,231       0.6 %

Operating taxes and licenses

    32,307       0.7 %     29,461       0.6 %

Communication and utilities

    19,142       0.3 %     17,445       0.3 %

Total operating expenses

    5,007,863       89.7 %     4,524,780       89.5 %

Operating income

    576,708       10.3 %     530,200       10.5 %

Net interest expense

    23,140       0.4 %     25,559       0.5 %

Earnings before income taxes

    553,568       9.9 %     504,641       10.0 %

Income taxes

    211,186       3.8 %     194,287       3.9 %

Net earnings

  $ 342,382       6.1 %   $ 310,354       6.1 %

Average diluted shares outstanding

    119,404               120,022          

Diluted earnings per share

  $ 2.87             $ 2.59          

 

 
5

 

 

Financial Information By Segment

(in thousands)

(unaudited)

 

   

Three Months Ended December 31

   

2013

 

2012

           

% Of

         

% Of

   

Amount

   

Total

 

Amount

   

Total

                                 

Revenue

                               
                                 

Intermodal

  $ 915,071       62 %   $ 821,208       61 %

Dedicated

    330,684       23 %     283,722       21 %

Integrated Capacity Solutions

    145,293       10 %     128,517       10 %

Truck

    91,213       6 %     112,722       9 %

Subtotal

    1,482,261       101 %     1,346,169       101 %

Intersegment eliminations

    (7,985 )     (1 %)     (8,033 )     (1 %)

Consolidated revenue

  $ 1,474,276       100 %   $ 1,338,136       100 %
                                 

Operating income

                               
                                 

Intermodal

  $ 121,523       79 %   $ 104,223       73 %

Dedicated

    29,532       19 %     29,396       20 %

Integrated Capacity Solutions

    3,518       3 %     4,614       3 %

Truck

    (1,041 )     (1 %)     5,150       4 %

Other (1)

    1       0 %     (48 )     (0 %)

Operating income

  $ 153,533       100 %   $ 143,335       100 %

 

   

Twelve Months Ended December 31

   

2013

 

2012

           

% Of

         

% Of

   

Amount

   

Total

 

Amount

   

Total

Revenue

                               
                                 

Intermodal

  $ 3,456,164       62 %   $ 3,071,127       61 %

Dedicated

    1,231,342       22 %     1,079,508       21 %

Integrated Capacity Solutions

    536,844       10 %     456,331       9 %

Truck

    391,086       7 %     483,757       10 %

Subtotal

    5,615,436       101 %     5,090,723       101 %

Intersegment eliminations

    (30,865 )     (1 %)     (35,743 )     (1 %)

Consolidated revenue

  $ 5,584,571       100 %   $ 5,054,980       100 %
                                 

Operating income

                               
                                 

Intermodal

  $ 447,030       77 %   $ 374,965       71 %

Dedicated

    110,438       19 %     116,335       22 %

Integrated Capacity Solutions

    15,693       3 %     16,130       3 %

Truck

    3,658       1 %     22,880       4 %

Other (1)

    (111 )     (0 %)     (110 )     (0 %)

Operating income

  $ 576,708       100 %   $ 530,200       100 %

 

      (1) Includes corporate support activity

 

 
6

 

 

Operating Statistics by Segment

(unaudited)

 

   

Three Months Ended December 31

 
   

2013

   

2012

 
                 

Intermodal

               
                 

Loads

    415,601       368,022  

Average length of haul

    1,703       1,720  

Revenue per load

  $ 2,202     $ 2,231  

Average tractors during the period *

    4,084       3,582  
                 

Tractors (end of period)

               

Company-owned

    3,448       3,124  

Independent contractor

    646       472  

Total tractors

    4,094       3,596  
                 

Net change in trailing equipment during the period

    2,059       1,049  

Trailing equipment (end of period)

    65,979       58,962  

Average effective trailing equipment usage

    63,914       56,473  
                 

Dedicated

               
                 

Loads

    504,738       407,801  

Average length of haul

    179       196  

Revenue per truck per week**

  $ 4,198     $ 4,220  

Average trucks during the period***

    6,271       5,294  
                 

Trucks (end of period)

               

Company-owned

    5,805       4,844  

Independent contractor

    10       15  

Customer-owned (Dedicated operated)

    592       394  

Total trucks

    6,407       5,253  
                 

Trailing equipment (end of period)

    19,062       13,448  

Average effective trailing equipment usage

    20,099       14,884  
                 

Integrated Capacity Solutions

               
                 

Loads

    99,444       94,315  

Revenue per load

  $ 1,461     $ 1,363  

Gross profit margin

    12.0 %     14.1 %

Employee count (end of period)

    503       453  

Approximate number of third-party carriers (end of period)

    34,600       32,300  
                 

Truck

               
                 

Loads

    89,663       104,694  

Average length of haul

    432       452  

Loaded miles (000)

    38,629       46,690  

Total miles (000)

    45,422       55,288  

Average nonpaid empty miles per load

    80.4       81.6  

Revenue per tractor per week**

  $ 3,804     $ 3,968  

Average tractors during the period *

    1,921       2,258  
                 

Tractors (end of period)

               

Company-owned

    1,200       1,192  

Independent contractor

    657       901  

Total tractors

    1,857       2,093  
                 

Trailers (end of period)

    6,828       8,954  

Average effective trailing equipment usage

    6,114       7,724  

 

* Includes company-owned and independent contractor tractors

** Using weighted workdays

*** Includes company-owned, independent contractor, and customer-owned trucks

 

 
7

 

 

Operating Statistics by Segment

(unaudited)

 

   

Twelve Months Ended December 31

 
   

2013

   

2012

 
                 

Intermodal

               
                 

Loads

    1,593,511       1,415,663  

Average length of haul

    1,694       1,702  

Revenue per load

  $ 2,169     $ 2,169  

Average tractors during the period *

    3,916       3,417  
                 

Tractors (end of period)

               

Company-owned

    3,448       3,124  

Independent contractor

    646       472  

Total tractors

    4,094       3,596  
                 

Net change in trailing equipment during the period

    7,017       4,456  

Trailing equipment (end of period)

    65,979       58,962  

Average effective trailing equipment usage

    60,612       54,302  
                 

Dedicated

               
                 

Loads

    1,835,872       1,522,740  

Average length of haul

    190       201  

Revenue per truck per week**

  $ 4,109     $ 4,164  

Average trucks during the period***

    5,865       5,057  
                 

Trucks (end of period)

               

Company-owned

    5,805       4,844  

Independent contractor

    10       15  

Customer-owned (Dedicated operated)

    592       394  

Total trucks

    6,407       5,253  
                 

Trailing equipment (end of period)

    19,062       13,448  

Average effective trailing equipment usage

    19,229       13,932  
                 

Integrated Capacity Solutions

               
                 

Loads

    388,987       326,574  

Revenue per load

  $ 1,380     $ 1,397  

Gross profit margin

    11.8 %     13.0 %

Employee count (end of period)

    503       453  

Approximate number of third-party carriers (end of period)

    34,600       32,300  
                 

Truck

               
                 

Loads

    386,875       449,366  

Average length of haul

    431       467  

Loaded miles (000)

    165,543       207,677  

Total miles (000)

    194,046       242,311  

Average nonpaid empty miles per load

    75.4       77.1  

Revenue per tractor per week**

  $ 3,828     $ 3,891  

Average tractors during the period*

    2,007       2,435  
                 

Tractors (end of period)

               

Company-owned

    1,200       1,192  

Independent contractor

    657       901  

Total tractors

    1,857       2,093  
                 

Trailers (end of period)

    6,828       8,954  

Average effective trailing equipment usage

    6,877       7,985  

 

* Includes company-owned and independent contractor tractors

** Using weighted workdays

*** Includes company-owned, independent contractor, and customer-owned trucks

 

 
8

 

 

J.B. HUNT TRANSPORT SERVICES, INC.

Condensed Consolidated Balance Sheets

(in thousands)

(unaudited)

 

   

December 31, 2013

   

December 31, 2012

 

ASSETS

               

Current assets:

               

Cash and cash equivalents

  $ 5,831     $ 5,589  

Accounts Receivable

    568,519       466,011  

Prepaid expenses and other

    105,853       82,932  

Total current assets

    680,203       554,532  

Property and equipment

    3,259,814       2,904,706  

Less accumulated depreciation

    1,147,610       1,019,232  

Net property and equipment

    2,112,204       1,885,474  

Other assets

    26,997       24,635  
    $ 2,819,404     $ 2,464,641  
                 

LIABILITIES & STOCKHOLDERS' EQUITY

               

Current liabilities:

               

Current debt

  $ 250,000     $ 100,000  

Trade accounts payable

    305,465       266,722  

Claims accruals

    68,221       47,442  

Accrued payroll

    72,063       70,647  

Other accrued expenses

    14,062       17,199  

Deferred income taxes

    2,485       750  

Total current liabilities

    712,296       502,760  
                 

Long-term debt

    458,417       585,347  

Other long-term liabilities

    58,274       53,050  

Deferred income taxes

    577,965       531,624  

Stockholders' equity

    1,012,452       791,860  
    $ 2,819,404     $ 2,464,641  

 

Supplemental Data

(unaudited)

             
   

December 31, 2013

   

December 31, 2012

 
                 

Actual shares outstanding at end of period (000)

    117,241       117,529  
                 

Book value per actual share outstanding at end of period

  $ 8.64     $ 6.74  

 

       
   

Twelve Months Ended December 31

 
   

2013

   

2012

 
                 

Net cash provided by operating activities (000)

  $ 574,351     $ 548,044  
                 

Net capital expenditures (000)

  $ 442,504     $ 369,679  

 

 

9