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8-K - FORM 8-K - HUNT J B TRANSPORT SERVICES INCjbht20180118_8k.htm

Exhibit 99.1

 

J.B. Hunt Transport Services, Inc. Contact:      David G. Mee

615 J.B. Hunt Corporate Drive

Lowell, Arkansas 72745

(NASDAQ: JBHT)

 

Executive Vice President,

Finance/Administration

and Chief Financial Officer

(479) 820-8363

 

 

FOR IMMEDIATE RELEASE

 

 

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

PER SHARE FOR BOTH THE FOURTH QUARTER AND YEAR ENDED DECEMBER 31, 2017

 

  Fourth quarter 2017 Revenue:   $1.99 billion; up 16%
  Fourth quarter 2017 Operating Income:   $146 million; down 25%
  Fourth quarter 2017 EPS:   $3.48 vs. $1.05; up 232%
         
         
  Full Year 2017 Revenue:   $7.2 billion; up 10%
  Full Year 2017 Operating Income:   $624 million; down 13%
  Full Year 2017 EPS:   $6.18 vs. $3.81; up 62%

 

LOWELL, ARKANSAS, January 18, 2018 - J.B. Hunt Transport Services, Inc., (NASDAQ:JBHT) announced fourth quarter 2017 net earnings of $385.3 million, or diluted earnings per share of $3.48 vs. fourth quarter 2016 net earnings of $117.6 million, or $1.05 per diluted share. Fourth quarter 2017 net earnings included pre-announced pretax charges of $20.3 million for a reserve on a cash advance for the purchase of new trailing equipment from a manufacturer that will not meet delivery and $18.6 million for an increase in reserves for certain insurance and claims. Additionally, quarter results include a $309.2 million decrease in income taxes from our reasonable estimate of the change in future tax rates on deferred tax balances at December 31, 2017, as a result of the Tax Cuts and Jobs Act enacted in the quarter. Fourth quarter 2016 net earnings included a pretax benefit of $15.2 million for a change in the company’s paid time off policy.

 

Total operating revenue for the current quarter was $1.99 billion, compared with $1.72 billion for the fourth quarter 2016. Load growth of 5% and an increase in revenue per load in Intermodal (JBI) yielded a 10% increase in segment revenue. Dedicated Contract Services (DCS) segment revenue increased by 20%, primarily from the addition of new customer accounts and improved asset utilization. Integrated Capacity Solutions (ICS) segment revenue increased by 40% primarily from a 19% increase in revenue per load and a 17% increase in load growth. Truck (JBT) segment revenue increased 1% primarily from customer rate per mile increases offset by a decrease in load count. Current quarter total operating revenue, excluding fuel surcharges, increased 13% vs. the comparable quarter 2016.

 

Operating income for the current quarter decreased to $145.8 million vs. $194.4 million for the fourth quarter 2016. The preannounced pretax charges of $38.9 million in fourth quarter 2017 and the $15.2 pretax benefit in fourth quarter 2016 were allocated to the business segments as described below. After consideration of these specific charges, the benefit from increased revenues was partly offset with cost increases to attract and retain drivers and independent contractors, higher insurance and claims costs, inefficiencies from rail network congestion and maintenance schedules, higher salary and wage expenses and lower asset utilization due to the time trucks remain unseated.

 

Net earnings increased to $385.3 million in the current quarter from $117.6 million in 2016, primarily due to the $309.2 million benefit from estimating the effect of the change in future tax rates on deferred tax balances at December 31, 2017. The fourth quarter effective tax rates for 2017 and 2016 were (175.65)% and 37.63%, respectively. The annual effective tax rates for 2017 and 2016 were (15.29)% and 37.90%, respectively.

 

 

 

 

Segment Information:

 

Intermodal (JBI)

Fourth quarter 2017 Segment Revenue: $1.1 billion; up 10%
Fourth quarter 2017 Operating Income: $93.3 million; down 25%

            

JBI total volumes grew 5% over the same period in 2016. Eastern network loads grew at 7% and transcontinental loads increased 4% compared to the fourth quarter 2016. Revenue increased 10%, reflecting volume growth of 5% and a 5% increase 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 2% compared to a year ago.

 

Operating income decreased 25% from the prior year. Benefits from increased volume and revenue per load were offset by increased costs to attract and retain drivers, higher third-party dray costs, increased insurance and claims costs and inefficiencies in the rail networks due to congestion and track and yard maintenance. JBI recorded $28.7 million of the preannounced charges during the fourth quarter 2017. In fourth quarter 2016, JBI recorded approximately $5.7 million from the change in paid time off policy. The current period ended with approximately 89,000 units of trailing capacity and approximately 5,500 power units in the dray fleet.

 

 

Dedicated Contract Services (DCS)

Fourth quarter 2017 Segment Revenue: $477 million; up 20%
Fourth quarter 2017 Operating Income: $34.9 million; down 39%

 

DCS revenue increased 20% during the current quarter over the same period 2016. Productivity (revenue per truck per week) increased approximately 4% vs. 2016. Productivity excluding fuel surcharge revenue increased approximately 2% from a year ago primarily from improved integration of assets between customer accounts and customer rate increases partially offset by lower productivity at new contracts implemented during the quarter. A year over year net additional 1,326 revenue producing trucks, 331 net additions compared to third quarter 2017, were in the fleet by the end of the quarter. Approximately 53% 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 98%.

 

Operating income decreased by 39% from a year ago. The increase in revenue and improved asset utilization was offset with higher driver wages including the timing between wage increases and recovery through customer contracts, higher driver recruiting costs including the length of time to fill open positions, increased insurance and claims costs, higher equipment ownership costs and $1.9 million in intangible asset amortization compared to the same period in 2016. DCS recorded $7.6 million of the preannounced charges during the fourth quarter 2017 and recognized a $7.3 million benefit in the fourth quarter 2016 from the change in paid time off policy.

 

 

Integrated Capacity Solutions (ICS)

Fourth Quarter 2017 Segment Revenue:  $323 million; up 40%
Fourth Quarter 2017 Operating Income: $11.3 million; up 86%

   

ICS revenue increased 40% in the current quarter vs. the fourth quarter 2016. Revenue per load increased 19% and volume increased 17% mostly due to increased spot market activity. While continuing to meet customer commitments, the increased spot market activity created a better balance between contractual and spot market revenues. Contractual volumes represent approximately 66% of the total load volume but only 46% of the total revenue in the current quarter compared to 75% and 62%, respectively, in fourth quarter 2016.

 

 

 

 

Operating income increased 86% over the same period in 2016. Gross profit margin increased to 14.1% in the current period from 12.9% last year primarily from the increased spot market activity which more than offset the margin compression realized in the contractual volumes. The increase in gross margin was partially offset with higher technology spending as JBHunt360 continues to be rolled out to more customers. ICS recorded $1.8 million of the preannounced charges in the fourth quarter 2017 and recognized a $1.0 million benefit in the fourth quarter 2016 for the change in paid time off policy. Total branches at the end of the period grew to 44 from 42 at the end of the same period in 2016. ICS’s carrier base increased 11% and the employee count increased 16% from a year ago.

 

 

Truck (JBT)

Fourth quarter 2017 Segment Revenue:

$97 million; up 1%

Fourth quarter 2017 Operating Income:

$6.4 million; down 5%  

 

JBT revenue for the current quarter increased 1% from the same period in 2016. Revenue excluding fuel surcharges was flat compared to a year ago. Revenue per load increased 13% primarily from a 12% increase in rates per loaded mile on an equivalent length of haul compared to fourth quarter 2016 but was offset with an 10% decreased in load count. At the end of the period, JBT operated 2,032 tractors compared to 2,128 a year ago.

 

Operating income decreased 5% from fourth quarter 2016 levels. Favorable changes from higher revenue per load were offset by higher driver wages and independent contractor costs per mile, lower tractor utilization from an increase in unseated trucks and higher insurance and claims costs compared to fourth quarter 2016. JBT recorded approximately $0.7 million of the preannounced charges in the fourth quarter 2017 and recorded a $1.2 million benefit in the fourth quarter 2016 from the change in paid time off policy.

 

 

 

Cash Flow and Capitalization:

 

At December 31, 2017, we had total debt outstanding of $1.09 billion on various debt instruments compared to $986 million at December 31, 2016 and $1.08 billion at September 30, 2017.

 

Our net capital expenditures for 2017 approximated $511 million vs. $485 million in 2016. At December 31, 2017, we had cash and cash equivalents of $14.6 million.

 

In the fourth quarter 2017, we had no purchases of our common stock. At December 31, 2017, we had approximately $521 million remaining under our share repurchase authorizations. Actual shares outstanding at December 31, 2017 approximated 109.8 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, 2016. 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

 
   

2017

   

2016

 
           

% Of

           

% Of

 
   

Amount

   

Revenue

   

Amount

   

Revenue

 
                                 

Operating revenues, excluding fuel surcharge revenues

  $ 1,765,658             $ 1,558,638          

Fuel surcharge revenues

    224,502               162,424          

Total operating revenues

    1,990,160       100.0%       1,721,062       100.0%  
                                 

Operating expenses

                               

Rents and purchased transportation

    1,026,100       51.6%       874,144       50.8%  

Salaries, wages and employee benefits

    429,853       21.6%       360,190       20.9%  

Depreciation and amortization

    102,320       5.1%       91,794       5.3%  

Fuel and fuel taxes

    100,848       5.1%       78,355       4.6%  

Operating supplies and expenses

    67,154       3.4%       60,001       3.5%  

General and administrative expenses, net of asset dispositions

    51,279       2.6%       25,483       1.4%  

Insurance and claims

    46,649       2.3%       20,026       1.2%  

Operating taxes and licenses

    12,496       0.6%       11,798       0.7%  

Communication and utilities

    7,647       0.4%       4,910       0.3%  

Total operating expenses

    1,844,346       92.7%       1,526,701       88.7%  

Operating income

    145,814       7.3%       194,361       11.3%  

Net interest expense

    6,030       0.3%       5,876       0.3%  

Earnings before income taxes

    139,784       7.0%       188,485       11.0%  

Income taxes

    (245,524 )     (12.4%)       70,929       4.2%  

Net earnings

  $ 385,308       19.4%     $ 117,556       6.8%  

Average diluted shares outstanding

    110,737               112,327          

Diluted earnings per share

  $ 3.48             $ 1.05          

 

J.B. HUNT TRANSPORT SERVICES, INC.

Condensed Consolidated Statements of Earnings

(in thousands, except per share data)

(unaudited)

 

   

Twelve Months Ended December 31

 
   

2017

   

2016

 
           

% Of

           

% Of

 
   

Amount

   

Revenue

   

Amount

   

Revenue

 
                                 

Operating revenues, excluding fuel surcharge revenues

  $ 6,435,858             $ 6,007,347          

Fuel surcharge revenues

    753,710               548,112          

Total operating revenues

    7,189,568       100.0%       6,555,459       100.0%  
                                 

Operating expenses

                               

Rents and purchased transportation

    3,650,806       50.8%       3,255,692       49.7%  

Salaries, wages and employee benefits

    1,608,378       22.4%       1,469,187       22.4%  

Depreciation and amortization

    383,518       5.3%       361,510       5.5%  

Fuel and fuel taxes

    347,573       4.8%       283,437       4.3%  

Operating supplies and expenses

    257,239       3.6%       233,223       3.6%  

General and administrative expenses, net of asset dispositions

    125,878       1.8%       87,053       1.3%  

Insurance and claims

    123,579       1.7%       78,410       1.2%  

Operating taxes and licenses

    44,825       0.6%       45,954       0.7%  

Communication and utilities

    23,983       0.3%       19,973       0.3%  

Total operating expenses

    6,565,779       91.3%       5,834,439       89.0%  

Operating income

    623,789       8.7%       721,020       11.0%  

Net interest expense

    28,550       0.4%       25,223       0.4%  

Earnings before income taxes

    595,239       8.3%       695,797       10.6%  

Income taxes

    (91,024 )     (1.2%)       263,707       4.0%  

Net earnings

  $ 686,263       9.5%     $ 432,090       6.6%  

Average diluted shares outstanding

    111,049               113,361          

Diluted earnings per share

  $ 6.18             $ 3.81          

 

 

 

 

Financial Information By Segment 

(in thousands)

(unaudited)

 

   

Three Months Ended December 31

 
   

2017

   

2016

 
           

% Of

           

% Of

 
   

Amount

   

Total

   

Amount

   

Total

 

Revenue

                               

Intermodal

  $ 1,097,671       55%     $ 997,967       58%  

Dedicated

    476,660       24%       398,325       23%  

Integrated Capacity Solutions

    323,241       16%       231,594       13%  

Truck

    97,466       5%       96,296       6%  

Subtotal

    1,995,038       100%       1,724,182       100%  

Intersegment eliminations

    (4,878 )     (0%)       (3,120 )     (0%)  

Consolidated revenue

  $ 1,990,160       100%     $ 1,721,062       100%  
                                 
                                 

Operating income

                               

Intermodal

  $ 93,271       64%     $ 124,143       64%  

Dedicated

    34,918       24%       57,539       30%  

Integrated Capacity Solutions

    11,277       8%       6,074       3%  

Truck

    6,380       4%       6,750       3%  

Other (1)

    (32 )     (0%)       (145 )     (0%)  

Operating income

  $ 145,814       100%     $ 194,361       100%  

 

   

Twelve Months Ended December 31

 
   

2017

   

2016

 
           

% Of

           

% Of

 
   

Amount

   

Total

   

Amount

   

Total

 

Revenue

                               

Intermodal

  $ 4,084,418       57%     $ 3,796,251       58%  

Dedicated

    1,718,559       24%       1,533,186       23%  

Integrated Capacity Solutions

    1,024,576       14%       851,550       13%  

Truck

    378,361       5%       387,764       6%  

Subtotal

    7,205,914       100%       6,568,751       100%  

Intersegment eliminations

    (16,346 )     (0%)       (13,292 )     (0%)  

Consolidated revenue

  $ 7,189,568       100%     $ 6,555,459       100%  
                                 
                                 

Operating income

                               

Intermodal

  $ 407,376       65%     $ 449,768       62%  

Dedicated

    171,113       27%       205,240       29%  

Integrated Capacity Solutions

    22,797       4%       36,260       5%  

Truck

    22,597       4%       29,862       4%  

Other (1)

    (94 )     (0%)       (110 )     (0%)  

Operating income

  $ 623,789       100%     $ 721,020       100%  

 

      (1) Includes corporate support activity

 

 

 

 

Operating Statistics by Segment

(unaudited)

 

   

Three Months Ended December 31

 
   

2017

   

2016

 
                 

Intermodal

               
                 

Loads

    515,669       491,570  

Average length of haul

    1,684       1,685  

Revenue per load

  $ 2,129     $ 2,030  

Average tractors during the period *

    5,547       5,274  
                 

Tractors (end of period)

               

Company-owned

    4,776       4,581  

Independent contractor

    764       695  

Total tractors

    5,540       5,276  
                 

Net change in trailing equipment during the period

    1,305       1,773  

Trailing equipment (end of period)

    88,610       84,594  

Average effective trailing equipment usage

    87,522       81,654  
                 
                 

Dedicated

               
                 

Loads

    686,475       606,900  

Average length of haul

    178       181  

Revenue per truck per week**

  $ 4,426     $ 4,247  

Average trucks during the period***

    8,571       7,390  
                 

Trucks (end of period)

               

Company-owned

    8,124       6,976  

Independent contractor

    59       15  

Customer-owned (Dedicated operated)

    544       410  

Total trucks

    8,727       7,401  
                 

Trailing equipment (end of period)

    25,811       22,688  

Average effective trailing equipment usage

    25,823       23,334  
                 
                 

Integrated Capacity Solutions

               
                 

Loads

    277,911       237,845  

Revenue per load

  $ 1,163     $ 974  

Gross profit margin

    14.1 %     12.9 %

Employee count (end of period)

    954       824  

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

    56,700       50,900  
                 
                 

Truck

               
                 

Loads

    87,538       96,906  

Average length of haul

    432       439  

Loaded miles (000)

    37,852       42,476  

Total miles (000)

    45,206       50,472  

Average nonpaid empty miles per load

    84.0       82.6  

Revenue per tractor per week**

  $ 3,782     $ 3,540  

Average tractors during the period *

    2,085       2,158  
                 

Tractors (end of period)

               

Company-owned

    1,291       1,376  

Independent contractor

    741       752  

Total tractors

    2,032       2,128  
                 

Trailers (end of period)

    7,120       7,642  

Average effective trailing equipment usage

    6,771       7,287  

 

* 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

 
   

2017

   

2016

 
                 

Intermodal

               
                 

Loads

    1,999,807       1,916,303  

Average length of haul

    1,681       1,657  

Revenue per load

  $ 2,042     $ 1,981  

Average tractors during the period *

    5,362       5,222  
                 

Tractors (end of period)

               

Company-owned

    4,776       4,581  

Independent contractor

    764       695  

Total tractors

    5,540       5,276  
                 

Net change in trailing equipment during the period

    4,016       5,637  

Trailing equipment (end of period)

    88,610       84,594  

Average effective trailing equipment usage

    82,969       77,179  
                 
                 

Dedicated

               
                 

Loads

    2,575,245       2,401,332  

Average length of haul

    178       177  

Revenue per truck per week**

  $ 4,226     $ 4,077  

Average trucks during the period***

    7,946       7,307  
                 

Trucks (end of period)

               

Company-owned

    8,124       6,976  

Independent contractor

    59       15  

Customer-owned (Dedicated operated)

    544       410  

Total trucks

    8,727       7,401  
                 

Trailing equipment (end of period)

    25,811       22,688  

Average effective trailing equipment usage

    24,550       22,827  
                 
                 

Integrated Capacity Solutions

               
                 

Loads

    992,834       852,179  

Revenue per load

  $ 1,032     $ 999  

Gross profit margin

    13.3 %     14.3 %

Employee count (end of period)

    954       824  

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

    56,700       50,900  
                 
                 

Truck

               
                 

Loads

    370,591       385,298  

Average length of haul

    435       455  

Loaded miles (000)

    160,932       175,038  

Total miles (000)

    192,433       207,998  

Average nonpaid empty miles per load

    85.1       85.6  

Revenue per tractor per week**

  $ 3,556     $ 3,458  

Average tractors during the period*

    2,098       2,191  
                 

Tractors (end of period)

               

Company-owned

    1,291       1,376  

Independent contractor

    741       752  

Total tractors

    2,032       2,128  
                 

Trailers (end of period)

    7,120       7,642  

Average effective trailing equipment usage

    7,066       6,956  

 

* 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, 2017

   

December 31, 2016

 

ASSETS

               

Current assets:

               

Cash and cash equivalents

  $ 14,612     $ 6,377  

Accounts Receivable

    920,767       745,288  

Prepaid expenses and other

    286,135       194,016  

Total current assets

    1,221,514       945,681  

Property and equipment

    4,670,464       4,258,915  

Less accumulated depreciation

    1,687,133       1,440,124  

Net property and equipment

    2,983,331       2,818,791  

Other assets

    143,290       64,516  
    $ 4,348,135     $ 3,828,988  
                 
                 

LIABILITIES & STOCKHOLDERS' EQUITY

               

Current liabilities:

               

Trade accounts payable

  $ 598,594     $ 384,308  

Claims accruals

    134,766       109,745  

Accrued payroll

    42,382       51,929  

Other accrued expenses

    28,888       27,152  

Total current liabilities

    804,630       573,134  
                 

Long-term debt

    1,085,649       986,278  

Other long-term liabilities

    76,661       64,881  

Deferred income taxes

    541,870       790,634  

Stockholders' equity

    1,839,325       1,414,061  
    $ 4,348,135     $ 3,828,988  

 

 

Supplemental Data

 

(unaudited)

 
                 
   

December 31, 2017

   

December 31, 2016

 
                 

Actual shares outstanding at end of period (000)

    109,753       111,305  
                 

Book value per actual share outstanding at end of period

  $ 16.76     $ 12.70  

 

 

   

Twelve Months Ended December 31

 
   

2017

   

2016

 
                 

Net cash provided by operating activities (000)

  $ 834,913     $ 854,143  
                 

Net capital expenditures (000)

  $ 510,515     $ 485,256