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8-K - FORM 8-K - HUNT J B TRANSPORT SERVICES INCjbht20180419_8k.htm

Exhibit 99.1

 

J.B. Hunt Transport Services, Inc. Contact: David G. Mee
615 J.B. Hunt Corporate Drive Executive Vice President, Finance/Administration
Lowell, Arkansas 72745 and Chief Financial Officer
(NASDAQ: JBHT) (479) 820-8363

 

 

FOR IMMEDIATE RELEASE

 

 

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

FOR THE FIRST QUARTER 2018

 

 

■      First Quarter 2018 Revenue:  $1.95 billion; up 20%
■      First Quarter 2018 Operating Income: $169 million; up 13%
■      First Quarter 2018 EPS: $1.07 vs. 92 cents   

 

 

LOWELL, ARKANSAS, April 16, 2018 - J.B. Hunt Transport Services, Inc., (NASDAQ:JBHT) announced first quarter 2018 net earnings of $118.1 million, or diluted earnings per share of $1.07 vs. first quarter 2017 net earnings of $102.7 million, or 92 cents per diluted share.

 

Total operating revenue for the current quarter was $1.95 billion, compared with $1.63 billion for the first quarter 2017. Current quarter total operating revenue, excluding fuel surcharges, increased 17% vs. first quarter 2017. Intermodal (JBI) load growth was 6% and revenue per load excluding fuel surcharges increased approximately 4% over first quarter 2017 levels. Dedicated Contract Services (DCS) segment revenue increased by 26% over prior year primarily from additional customer contracts from a year ago and customer rate increases. Integrated Capacity Solutions (ICS) load growth was 6% and revenue per load increased approximately 34% over the same period in 2017. Truck (JBT) segment revenue decreased 1% primarily from fewer seated trucks compared to a year ago.

 

Operating income for the current quarter totaled $169 million vs. $149 million for the first quarter 2017. Benefits from volume growth, higher customer rates, new customer contracts and a continuing vibrant spot pricing market were partially offset by increased purchased transportation costs; lower intermodal network utilization; lower productivity in winter weather affected regions; higher driver and non-driver salaries, wages and benefits; higher Final Mile Services (FMS) network facilities costs; higher maintenance costs on equipment scheduled to be traded in 2018; increased technology spend on legacy system upgrades; continuing branch network expansion; increased equipment ownership costs and increased insurance and claims costs.

 

Net interest expense for the current quarter increased 34% from the same period in 2017 due to higher effective interest rates on our debt.

 

The effective income tax rate decreased to 26.0% in the current quarter compared to 28.0% in the first quarter 2017 due to the estimated impact of the Tax Cuts and Jobs Act of 2017. First quarter 2017 recorded a one-time tax benefit of $13.6 million or 12 cents per diluted share from the claiming of research and development tax credits and domestic production tax deductions incurred during the 2012 through 2016 tax years. The annual tax rate for 2018 is estimated to be 26.0%.

 

 

 

 

Segment Information:

 

 

Intermodal (JBI)

First Quarter 2018 Segment Revenue:  $1.07 billion; up 14%
First Quarter 2018 Operating Income:  $114 million; up 20%  

 

JBI load volumes grew 6% over the same period 2017. Transcontinental loads grew 2%, and the Eastern network load volume grew 12% compared to prior year. Revenue grew approximately 14% reflecting the 6% volume growth and an 8% increase in revenue per load, which is determined by the combination of customer rates, fuel surcharges and freight mix. Revenue per load excluding fuel surcharge revenue increased approximately 4% year over year.

 

Operating income increased 20% from prior year. Benefits from volume growth, customer rate increases and freight mix were partially offset by an increase in rail purchased transportation costs; reduced network utilization and lower dray efficiency created from rail congestion, customer equipment pool utilization and a tight third party dray market; higher equipment ownership costs; increased driver wages and recruiting costs; increased costs for onboarding and integration of container tracking technologies and insurance and claims costs compared to the same period in 2017. The current period ended with approximately 89,500 units of trailing capacity and 5,450 power units assigned to the dray fleet.

 

 

Dedicated Contract Services (DCS)

First Quarter 2018 Segment Revenue: $494.5 million; up 26%
First Quarter 2018 Operating Income: $41 million; down 9%

     

DCS revenue increased 26% during the current quarter over the same period 2017. Productivity (revenue per truck per week) increased approximately 5% vs. 2017. Productivity excluding fuel surcharges increased approximately 2% primarily from customer rate increases partially offset by lower productivity and operating velocity (loads per week) at accounts in the winter weather affected areas of the Midwest and Northeast regions compared to 2017. Included in the DCS revenue growth, Final Mile Services (FMS) recorded an increase of $35 million (including approximately $25 million from the July 2017 acquisition), a 75% increase in FMS revenue, compared to first quarter 2017.

 

A net additional 1,329 revenue producing trucks, 184 net additions compared to fourth quarter 2017, were in the fleet by the end of the quarter compared to prior year. Approximately 55% of these additions represent private fleet conversions and 32% represent FMS vs. traditional dedicated capacity fleets. Customer retention rates remain above 98%.

 

Operating income decreased 9% from a year ago primarily from winter weather inefficiencies, higher insurance and claims costs, increased driver wages and recruiting costs, higher non-driver salaries wages and benefits, higher facilities rent and costs from the expanded FMS network, increased maintenance costs on equipment scheduled to be traded in 2018 and approximately $1.9 million in additional non-cash amortization expense compared to the same period a year ago.

 

 

Integrated Capacity Solutions (ICS)

First Quarter 2018 Segment Revenue: $296.1 million; up 41%
First Quarter 2018 Operating Income: $9 million; up 99%

           

ICS revenue increased 41% vs. first quarter 2017. Volumes increased 6% while revenue per load increased approximately 34% primarily due to a more vibrant spot pricing market compared to the same period a year ago. Spot volumes increased 43% and contractual volumes decreased approximately 7% from a year ago. Contractual business represents approximately 67% of total load volume and 44% of total revenue in the current period compared to 76% and 63%, respectively, in first quarter 2017. Of the total reported ICS revenue, approximately $96 million was executed through the marketplace for J.B. Hunt 360.

 

 

 

 

 

Operating income increased 99% over the same period in 2017 primarily from a higher revenue per load, a higher gross profit margin and a higher number of Mature branches (more than two years old) partially offset with continuing personnel growth costs and increased technology spending as marketplace for J.B. Hunt 360 continues its rollout. Gross profit margin increased to 14.4% in the current quarter vs. 14.3% last year primarily due to increased spot market activity. Total branch count grew to 44 locations compared to 42 at the end of the comparable period last year. ICS’s carrier base increased over 15% and employee count increased 14% compared to first quarter 2017.

 

 

Truck (JBT)

First Quarter 2018 Segment Revenue: $92.7 million; down 1%
First Quarter 2018 Operating Income: $5 million; up 4%

 

JBT revenue decreased 1% from the same quarter 2017. Revenue excluding fuel surcharge decreased approximately 3% primarily from a 15% decrease in load count partially offset by an increase in revenue per load. Revenue per load excluding fuel surcharge increased 14% primarily from a 10% increase in rates per loaded mile and a 3% increase in length of haul compared to the same period in 2017. At the end of the current quarter JBT operated 1,926 tractors compared to 2,144 in 2017.

 

Operating income for the current quarter increased by 4% compared to first quarter 2017. Benefits from the higher revenue per load were mostly offset by an approximate 10% decrease in tractor count, an average of 162 unseated trucks during the quarter, higher driver and independent contractor costs per mile and higher recruiting costs per driver and independent contractor compared to first quarter 2017.

 

 

Cash Flow and Capitalization:

At March 31, 2018, we had a total of $1.0 billion outstanding on various debt instruments compared to $951 million at March 31, 2017, and $1.09 billion at December 31, 2017. At March 31, 2018, we had cash and cash equivalents of $7 million.

 

Our net capital expenditures for the first quarter 2018 approximated $179 million compared to $91 million for the first quarter 2017.

 

We did not purchase any shares of our common stock during the quarter. At March 31, 2018, we had approximately $521 million remaining under our share repurchase authorizations. Actual shares outstanding at March 31, 2018, 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, 2017. 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 to interested parties on our website, www.jbhunt.com.

 

 

 

 

J.B. HUNT TRANSPORT SERVICES, INC.

Condensed Consolidated Statements of Earnings

(in thousands, except per share data)

 

(unaudited)

 

   

Three Months Ended March 31

 
   

2018

   

2017

 
           

% Of

           

% Of

 
   

Amount

   

Revenue

   

Amount

   

Revenue

 
                                 

Operating revenues, excluding fuel surcharge revenues

  $ 1,712,934             $ 1,461,768          

Fuel surcharge revenues

    235,311               167,390          

Total operating revenues

    1,948,245       100.0 %     1,629,158       100.0 %
                                 

Operating expenses

                               

Rents and purchased transportation

    964,892       49.5 %     806,439       49.5 %

Salaries, wages and employee benefits

    450,265       23.1 %     380,311       23.3 %

Fuel and fuel taxes

    107,881       5.5 %     80,646       5.0 %

Depreciation and amortization

    105,583       5.4 %     92,189       5.7 %

Operating supplies and expenses

    70,681       3.6 %     58,022       3.6 %

General and administrative expenses, net of asset dispositions

    32,326       1.7 %     23,481       1.3 %

Insurance and claims

    28,499       1.5 %     23,005       1.4 %

Operating taxes and licenses

    11,588       0.6 %     10,680       0.7 %

Communication and utilities

    7,749       0.4 %     4,996       0.3 %

Total operating expenses

    1,779,464       91.3 %     1,479,769       90.8 %

Operating income

    168,781       8.7 %     149,389       9.2 %

Net interest expense

    9,152       0.5 %     6,817       0.4 %

Earnings before income taxes

    159,629       8.2 %     142,572       8.8 %

Income taxes

    41,487       2.1 %     39,870       2.5 %

Net earnings

  $ 118,142       6.1 %   $ 102,702       6.3 %

Average diluted shares outstanding

    110,863               112,026          

Diluted earnings per share

  $ 1.07             $ 0.92          

 

 

Financial Information By Segment 

(in thousands)

(unaudited)

 

   

Three Months Ended March 31

 
   

2018

   

2017

 
           

% Of

           

% Of

 
   

Amount

   

Total

   

Amount

   

Total

 
                                 

Revenue

                               
                                 

Intermodal

  $ 1,070,264       55 %   $ 937,118       57 %

Dedicated

    494,480       25 %     392,461       24 %

Integrated Capacity Solutions

    296,105       15 %     209,419       13 %

Truck

    92,718       5 %     93,688       6 %

Subtotal

    1,953,567       100 %     1,632,686       100 %

Intersegment eliminations

    (5,322 )     (0 %)     (3,528 )     (0 %)

Consolidated revenue

  $ 1,948,245       100 %   $ 1,629,158       100 %
                                 
                                 

Operating income

                               
                                 

Intermodal

  $ 114,242       68 %   $ 95,261       64 %

Dedicated

    40,562       24 %     44,754       30 %

Integrated Capacity Solutions

    8,876       5 %     4,469       3 %

Truck

    5,130       3 %     4,941       3 %

Other (1)

    (29 )     (0 %)     (36 )     (0 %)

Operating income

  $ 168,781       100 %   $ 149,389       100 %

 

(1) Includes corporate support activity

 

 

 

 

Operating Statistics by Segment

(unaudited)

 

   

Three Months Ended March 31

 
   

2018

   

2017

 
                 

Intermodal

               
                 

Loads

    495,764       466,840  

Average length of haul

    1,661       1,680  

Revenue per load

  $ 2,159     $ 2,007  

Average tractors during the period *

    5,494       5,222  
                 

Tractors (end of period)

               

Company-owned

    4,763       4,506  

Independent contractor

    682       664  

Total tractors

    5,445       5,170  
                 

Net change in trailing equipment during the period

    883       624  

Trailing equipment (end of period)

    89,493       85,218  

Average effective trailing equipment usage

    87,265       77,370  
                 
                 

Dedicated

               
                 

Loads

    688,350       596,740  

Average length of haul

    182       180  

Revenue per truck per week**

  $ 4,332     $ 4,113  

Average trucks during the period***

    8,855       7,438  
                 

Trucks (end of period)

               

Company-owned

    8,383       7,041  

Independent contractor

    52       12  

Customer-owned (Dedicated operated)

    476       529  

Total trucks

    8,911       7,582  
                 

Trailing equipment (end of period)

    26,514       22,963  

Average effective trailing equipment usage

    27,069       23,564  
                 
                 

Integrated Capacity Solutions

               
                 

Loads

    251,521       238,058  

Revenue per load

  $ 1,177     $ 880  

Gross profit margin

    14.4 %     14.3 %

Employee count (end of period)

    971       853  

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

    59,800       52,100  
                 
                 

Truck

               
                 

Loads

    81,499       95,636  

Average length of haul

    453       438  

Loaded miles (000)

    36,925       41,886  

Total miles (000)

    43,845       50,018  

Average nonpaid empty miles per load

    84.9       85.0  

Revenue per tractor per week**

  $ 3,775     $ 3,411  

Average tractors during the period *

    1,943       2,151  
                 

Tractors (end of period)

               

Company-owned

    1,267       1,379  

Independent contractor

    659       765  

Total tractors

    1,926       2,144  
                 

Trailers (end of period)

    7,036       7,514  

Average effective trailing equipment usage

    6,560       7,163  

 

* 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)

 

   

March 31, 2018

   

December 31, 2017

 

ASSETS

               

Current assets:

               

Cash and cash equivalents

  $ 7,082     $ 14,612  

Accounts Receivable

    900,903       920,767  

Prepaid expenses and other

    335,705       403,349  

Total current assets

    1,243,690       1,338,728  

Property and equipment

    4,764,722       4,670,464  

Less accumulated depreciation

    1,720,446       1,687,133  

Net property and equipment

    3,044,276       2,983,331  

Other assets

    141,318       143,290  
    $ 4,429,284     $ 4,465,349  
                 
                 

LIABILITIES & STOCKHOLDERS' EQUITY

               

Current liabilities:

               

Current debt

  $ 247,609     $ -  

Trade accounts payable

    505,839       598,594  

Claims accruals

    264,523       251,980  

Accrued payroll

    58,599       42,382  

Other accrued expenses

    23,573       28,888  

Total current liabilities

    1,100,143       921,844  
                 

Long-term debt

    752,423       1,085,649  

Other long-term liabilities

    88,373       76,661  

Deferred income taxes

    545,282       541,870  

Stockholders' equity

    1,943,063       1,839,325  
    $ 4,429,284     $ 4,465,349  

 

 

Supplemental Data

(unaudited)

 

   

March 31, 2018

   

December 31, 2017

 
                 

Actual shares outstanding at end of period (000)

    109,756       109,753  
                 

Book value per actual share outstanding at end of period

  $ 17.70     $ 16.76  

 

 

   

Three Months Ended March 31

 
   

2018

   

2017

 
                 

Net cash provided by operating activities (000)

  $ 261,618     $ 285,633  
                 

Net capital expenditures (000)

  $ 179,045     $ 91,007