EX-99.1 2 a04-11693_1ex99d1.htm EX-99.1

Exhibit 99.1

 

J.B. Hunt Transport Services, Inc.

Contact:

Kirk Thompson

615 J.B. Hunt Corporate Drive

 

President and

Lowell, Arkansas 72745

 

Chief Executive Officer

(NASDAQ: JBHT)

 

(479) 820-8110

 

FOR IMMEDIATE RELEASE

 

J. B. HUNT TRANSPORT SERVICES, INC. REPORTS RECORD REVENUES AND EARNINGS
FOR THE THIRD QUARTER OF 2004

 

 

LOWELL, ARKANSAS, October 15, 2004 - J. B. Hunt Transport Services, Inc., (NASDAQ:JBHT) announced record third quarter net earnings of $47.9 million, or diluted earnings per share of 57 cents, compared with 2003 third quarter earnings of $32.7 million, or 40 cents per diluted share.

 

Total operating revenue for the current quarter was $719 million, compared with $622 million during the third quarter of 2003.  During the third quarter of 2004, Truck segment revenue, excluding fuel surcharges, increased 8%, while the Intermodal segment revenue, excluding fuel surcharges, rose 14% over the comparable period of 2003.  Dedicated Contract Services (DCS) segment revenue, excluding fuel surcharge revenue, increased 15% during the current quarter.

 

Operating income rose 44% from $57.6 million in 2003 to $82.7 in 2004 on a 12% rise in revenues net of fuel surcharges.  The overall operating ratio for the Company improved 220 basis points to 88.5% compared to 90.7% in 2003.  The Truck operating ratio continued to improve, compared to the previous year, as this year’s third quarter was 87.1% vs. 91.6% in last year’s third quarter.  The Intermodal segment operating ratio was 88.4% vs. 89.6% and DCS operating ratio was 90.6% vs. 91.4%, third quarter this year vs. third quarter last year.

 

“Once again we are delighted to report significant improvement in our financial results relative to the prior year.  And once again, our team has significantly exceeded our internal expectations and plan for a quarter.  The achievement of these results occurred despite historically high fuel prices that continued to rise during the quarter, a tight driver market that prompted driver pay increases in all three of our business segments during the quarter and a couple of bankruptcy proceedings by our customers.  Two serious accidents in the earlier part of the quarter were largely offset by a very successful safety month in September and lower cost per accident overall. This is a risky business that requires tremendous focus on safety and a keen sense of responsibility to our drivers, our customers and the motoring public.  We take this responsibility very seriously.  We are very proud of the safety record we have achieved over the last several years and intend to maintain the focus required to retain our industry leading position in safe operations.  We are equally committed to providing best-in-class service to our customers.  During the quarter, we received Ford Motor Company’s prestigious Q1 designation, the highest recognition of superior quality that Ford can bestow to a supplier for quality service as well as the Quest for Quality award from an industry publication that is based on voting by customers.  To perpetuate quality in all areas of our company, we must also produce margins that allow us to attract and retain the best talent, provide the best equipment and technology and return a reasonable profit to our shareholders.  Safety, service and strong financial performance are our primary goals and we are happy with the success in each area.  The improvement that we have witnessed and continue to expect is a tribute to the finest transportation professionals in the business.  Yet we can still do better”, stated Kirk Thompson, President and Chief Executive Officer.

 

The Truck operating ratio was 87.1% for the quarter, a 450 basis point improvement versus the comparable period last year. This represents the fourteenth quarter in a row, relative to prior years, that the segment has shown improvement. Rate yields continued to improve as the loaded rate per mile (excluding fuel surcharges) increased 9.3% relative to a year ago. Empty miles were 10.5% vs. 10.2% for the third quarter a year ago.  A significant amount of empty miles were incurred in the third quarter as paid deadhead to meet customers shortages of equipment in certain areas of the country.  Safety continues to be at the top of our priorities and as a result of intense focus, we enjoyed another quarter of relatively low claims cost.  Driver availability remains tight with no sign of improvement for the foreseeable future.  A

 


 

new driver pay scale was implemented in September to ensure that we have enough safe, experienced drivers manning our fleet.  One month of the pay increase is included in the quarter.   A rate increase to cover the increased drivers’ pay was proposed to customers with an effective date of October 1, 2004.  Based upon rate increases already agreed upon and implemented, we are confident most, if not all, of the driver pay increase will be recovered by the end of 2004.   We do not anticipate significant capacity additions in the truckload market place for the immediate future for a number of reasons, but the difficulty in expanding the industry’s driver base alone would be enough to preclude any meaningful additions to capacity.  The average number of trucks in the Truck segment was 5,404 for the third quarter 2004 and 5,607 for the third quarter 2003.

 

In the Intermodal segment, the operating ratio was 88.4% for the third quarter of 2004, a 120 basis point improvement versus the comparable period last year.  Intermodal revenue rose 14% excluding fuel surcharges in the third quarter of 2004 vs. the third quarter of 2003.  Revenue growth was supported by volume growth of 7.4% and a 4.6% increase in revenue per loaded mile. Continued lane mix changes also contributed positively to the increased revenue.  While the increase in rates in our intermodal segment is significantly better than any prior period, the need to increase those rates at even a faster pace is evident.   In spite of these rate increases, our costs grew faster than our revenue in the third quarter which contributed to a slight (50 basis points) deterioration in the operating ratio compared to the second quarter of 2004. Primary drivers of cost increases were fuel, driver wages, and purchased transportation from both dray carriers and railroads. Utilization of company containers declined by more than 4% from the second quarter of 2004 as a result of increases in transit time in the rail network.  Driver productivity and the associated dray costs were also negatively impacted as a result of congestion and service inconsistency in the rail network.  As previously reported, the Burlington Northern Santa Fe railroad (BNSF) and J.B. Hunt are currently engaged in an arbitration process to clarify certain terms in our Joint Services Agreement (JSA).  According to the JSA, any amounts due us or payable to BNSF will be retroactive to July 7, 2004.  At this time we are unable to reasonably predict the outcome and, as such, no loss or gain contingency can be determined.  Normal commercial business activity between the parties including load tendering, load tracing, billing and payments continues on a timely basis.

 

The operating ratio for the DCS segment was 90.6% for the third quarter 2004 versus 91.4% for the third quarter 2003.  Driving the improvement was a continued focus on strategic asset deployment, utilization and productivity improvement and effective cost management during the quarter.  Expense control continues to be a key focal point for DCS as the segment seeks to drive revenue growth to the bottom line.  A couple of serious accidents during the quarter and higher fuel prices negatively impacted the operating ratio for the quarter.  Revenue excluding fuel surcharge in the third quarter 2004 was up 15% versus the same period a year ago.  The improvement in revenue was a combination of a 10% increase in average tractors assigned to the business unit and a 6% improvement in productivity.  Much of the increase in the DCS tractor fleet was due to timing of trade-ins of replacement units.  Continued focus on efficient use of assets resulted in a 3% improvement in utilization compared to the third quarter of 2003.  Operating income was a record $18.9 million, a 29% increase over the same quarter of 2003.  DCS continues to look for opportunities to grow, or reposition existing assets, when justified by appropriate financial returns.  Average tractors assigned to the segment were 5,056 for the third quarter 2004 versus 4,610 for the third quarter 2003.

 

During the quarter, we paid off $95 million in medium term notes bearing an interest rate of 7.0% and purchased the remaining equipment under capital leases.  At the end of the quarter, we owed $40 million on our bank line-of-credit and $10 million of subordinated notes that are to be paid in October of this year.  We anticipate all of our on-balance sheet debt will be repaid soon.  With the repayment of debt and a projected reduction in net capital expenditures in 2005 of approximately $60 million, combined with anticipated cash generated from operations, the management of cash stands to become a meaningful financial management opportunity in the near future.

 

This report contains 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 7 of our Annual Report filed on Form 10-K for the year ended December 31, 2003.  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 related information will be available immediately to interested parties at the Company’s 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

 

 

 

2004

 

2003

 

 

 

Amount

 

% Of
Revenue

 

Amount

 

% Of
Revenue

 

 

 

 

 

 

 

 

 

 

 

Operating revenues

 

$

718,614

 

100.0

%

$

621,644

 

100.0

%

 

 

 

 

 

 

 

 

 

 

Operating expenses

 

 

 

 

 

 

 

 

 

Salaries, wages and employee benefits

 

214,760

 

29.9

%

197,618

 

31.8

%

Rents and purchased transportation

 

236,656

 

32.9

%

205,905

 

33.1

%

Fuel and fuel taxes

 

74,529

 

10.4

%

55,161

 

8.9

%

Depreciation and amortization

 

37,458

 

5.2

%

38,197

 

6.1

%

Operating supplies and expenses

 

32,760

 

4.6

%

31,212

 

5.0

%

Insurance and claims

 

14,956

 

2.1

%

13,946

 

2.2

%

Operating taxes and licenses

 

9,088

 

1.3

%

8,219

 

1.3

%

General and administrative expenses, net of gains

 

9,902

 

1.4

%

7,996

 

1.3

%

Communication and utilities

 

5,837

 

0.8

%

5,815

 

0.9

%

Total operating expenses

 

635,946

 

88.5

%

564,069

 

90.7

%

Operating income

 

82,668

 

11.5

%

57,575

 

9.3

%

Interest expense

 

(1,558

)

(0.2

)%

(4,445

)

(0.7

)%

Equity in earnings (loss) of associated companies

 

(647

)

(0.1

)%

(23

)

(0.0

)%

Earnings before income taxes

 

80,463

 

11.2

%

53,107

 

8.5

%

Income taxes

 

32,588

 

4.5

%

20,446

 

3.3

%

Net earnings

 

$

47,875

 

6.7

%

$

32,661

 

5.3

%

Average basic shares outstanding

 

81,066

 

 

 

79,802

 

 

 

Basic earnings per share

 

$

0.59

 

 

 

$

0.41

 

 

 

Average diluted shares outstanding

 

83,678

 

 

 

82,558

 

 

 

Diluted earnings per share

 

$

0.57

 

 

 

$

0.40

 

 

 

 

 

 

Nine Months Ended September 30

 

 

 

2004

 

2003

 

 

 

Amount

 

% Of
Revenue

 

Amount

 

% Of
Revenue

 

 

 

 

 

 

 

 

 

 

 

Operating revenues

 

$

2,015,349

 

100.0

%

$

1,792,723

 

100.0

%

 

 

 

 

 

 

 

 

 

 

Operating expenses

 

 

 

 

 

 

 

 

 

Salaries, wages and employee benefits

 

612,211

 

30.4

%

584,255

 

32.6

%

Rents and purchased transportation

 

662,006

 

32.8

%

584,004

 

32.6

%

Fuel and fuel taxes

 

205,010

 

10.2

%

174,853

 

9.8

%

Depreciation and amortization

 

111,233

 

5.5

%

113,006

 

6.3

%

Operating supplies and expenses

 

92,560

 

4.6

%

90,942

 

5.1

%

Insurance and claims

 

43,348

 

2.2

%

49,137

 

2.7

%

Operating taxes and licenses

 

26,576

 

1.3

%

24,621

 

1.4

%

General and administrative expenses, net of gains

 

24,950

 

1.2

%

26,208

 

1.5

%

Communication and utilities

 

17,395

 

0.9

%

17,822

 

1.0

%

Total operating expenses

 

1,795,289

 

89.1

%

1,664,848

 

92.9

%

Operating income

 

220,060

 

10.9

%

127,875

 

7.1

%

Interest expense

 

(5,468

)

(0.3

)%

(15,132

)

(0.8

)%

Equity in earnings (loss) of associated companies

 

(2,030

)

(0.1

)%

(600

)

(0.0

)%

Earnings before income taxes

 

212,562

 

10.5

%

112,143

 

6.3

%

Income taxes

 

86,088

 

4.3

%

43,175

 

2.4

%

Net earnings

 

$

126,474

 

6.3

%

$

68,968

 

3.8

%

Average basic shares outstanding

 

80,578

 

 

 

79,174

 

 

 

Basic earnings per share

 

$

1.57

 

 

 

$

0.87

 

 

 

Average diluted shares outstanding

 

83,285

 

 

 

81,487

 

 

 

Diluted earnings per share

 

$

1.52

 

 

 

$

0.85

 

 

 

 


 

Financial Information By Segment

(dollars in thousands)

(unaudited)

 

 

 

Three Months Ended September 30

 

 

 

2004

 

2003

 

 

 

 

 

 

 

Gross revenue

 

 

 

 

 

 

 

 

 

 

 

Truck

 

$

237,538

 

$

213,799

 

Intermodal

 

283,509

 

240,734

 

Dedicated

 

201,239

 

170,348

 

Subtotal

 

722,286

 

624,881

 

Intersegment eliminations

 

(3,672

)

(3,237

)

Consolidated revenue

 

$

718,614

 

$

621,644

 

 

 

 

 

 

 

Operating income (loss)

 

 

 

 

 

 

 

 

 

 

 

Truck

 

$

30,556

 

$

17,926

 

Intermodal

 

32,951

 

25,061

 

Dedicated

 

18,923

 

14,629

 

Other (1)

 

238

 

(41

)

Operating income

 

$

82,668

 

$

57,575

 

 

 

 

Nine Months Ended September 30

 

 

 

2004

 

2003

 

 

 

 

 

 

 

Gross revenue

 

 

 

 

 

 

 

 

 

 

 

Truck

 

$

680,453

 

$

621,224

 

Intermodal

 

788,939

 

681,682

 

Dedicated

 

557,841

 

501,195

 

Subtotal

 

2,027,233

 

1,804,101

 

Intersegment eliminations

 

(11,884

)

(11,378

)

Consolidated revenue

 

$

2,015,349

 

$

1,792,723

 

 

 

 

 

 

 

Operating income (loss)

 

 

 

 

 

 

 

 

 

 

 

Truck

 

$

74,434

 

$

31,617

 

Intermodal

 

93,882

 

65,841

 

Dedicated

 

50,942

 

30,458

 

Other (1)

 

802

 

(41

)

Operating income

 

$

220,060

 

$

127,875

 

 

(1) Includes unallocated corporate support and insurance expenses.

 


 

Operating Statistics by Segment

(unaudited)

 

 

 

Three Months Ended September 30

 

 

 

2004

 

2003

 

 

 

 

 

 

 

Truck

 

 

 

 

 

Operating ratio

 

87.1

%

91.6

%

Loads

 

224,916

 

243,564

 

Net revenue (excl. fuel surcharge) per tractor per week*

 

$

3,048

 

$

2,780

 

Length of haul

 

547

 

529

 

RPLM (excl.fsc)

 

$

1.698

 

$

1.554

 

Loaded miles (000)

 

125,478

 

130,890

 

Total miles (000)

 

140,230

 

145,777

 

Empty miles%

 

10.5

%

10.2

%

Average tractors during the period

 

5,404

 

5,607

 

Tractors (end of period)

 

 

 

 

 

Company owned

 

4,304

 

4,712

 

Independent contractor

 

1,024

 

926

 

Total tractors

 

5,328

 

5,638

 

Trailers (end of period)

 

20,053

 

19,931

 

Average effective trailing equipment usage

 

14,756

 

15,030

 

 

 

 

 

 

 

Intermodal

 

 

 

 

 

Operating ratio

 

88.4

%

89.6

%

Loads

 

146,563

 

136,531

 

Net change in revenue per loaded mile (excl. fsc)

 

4.6

%

0.6

%

Revenue per load (excl. fsc)

 

$

1,816

 

$

1,707

 

Tractors (end of period)

 

1,186

 

983

 

Containers (end of period)

 

21,905

 

20,340

 

Average effective trailing equipment usage

 

21,624

 

19,800

 

 

 

 

 

 

 

Dedicated

 

 

 

 

 

Operating ratio

 

90.6

%

91.4

%

Loads

 

349,455

 

346,511

 

Net revenue (excl. fuel surcharge) per tractor per week*

 

$

3,041

 

$

2,871

 

Average tractors during the period**

 

5,056

 

4,610

 

Tractors (end of period)

 

 

 

 

 

Company owned

 

4,710

 

4,411

 

Independent contractor

 

166

 

—

 

Customer owned (DCS Operated)

 

177

 

141

 

Total tractors

 

5,053

 

4,552

 

Trailers (end of period)

 

5,874

 

6,158

 

Average effective trailing equipment usage

 

11,323

 

11,475

 

 

* Using weighted work days

** Includes company owned, independent contractor, and customer owned tractors

 


 

 

 

Nine Months Ended September 30

 

 

 

2004

 

2003

 

 

 

 

 

 

 

Truck

 

 

 

 

 

Operating ratio

 

89.1

%

94.9

%

Loads

 

697,637

 

713,454

 

Net revenue (excl. fuel surcharge) per tractor per week*

 

$

2,930

 

$

2,675

 

Length of haul

 

535

 

536

 

RPLM (excl fsc)

 

$

1.624

 

$

1.506

 

Loaded miles (000)

 

380,468

 

387,867

 

Total miles (000)

 

422,944

 

430,450

 

Empty miles%

 

10.0

%

9.9

%

Average tractors during the period

 

5,440

 

5,604

 

Tractors (end of period)

 

 

 

 

 

Company owned

 

4,304

 

4,712

 

Independent contractor

 

1,024

 

926

 

Total tractors

 

5,328

 

5,638

 

Trailers (end of period)

 

20,053

 

19,931

 

Average effective trailing equipment usage

 

14,889

 

14,960

 

 

 

 

 

 

 

Intermodal

 

 

 

 

 

Operating ratio

 

88.1

%

90.3

%

Loads

 

426,408

 

385,513

 

Net change in revenue per loaded mile (excl. fsc)

 

1.9

%

0.8

%

Revenue per load (excl. fsc)

 

1,752

 

1,704

 

Tractors (end of period)

 

1,186

 

983

 

Containers (end of period)

 

21,905

 

20,340

 

Average effective trailing equipment usage

 

21,225

 

19,459

 

 

 

 

 

 

 

Dedicated

 

 

 

 

 

Operating ratio

 

90.9

%

93.9

%

Loads

 

1,009,723

 

1,016,315

 

Net revenue (excl. fuel surcharge) per tractor per week*

 

$

2,950

 

$

2,780

 

Average tractors during the period**

 

4,846

 

4,696

 

Tractors (end of period)

 

 

 

 

 

Company owned

 

4,710

 

4,411

 

Independent contractor

 

166

 

—

 

Customer owned (DCS Operated)

 

177

 

141

 

Total tractors

 

5,053

 

4,552

 

Trailers (end of period)

 

5,874

 

6,158

 

Average effective trailing equipment usage

 

11,163

 

11,470

 

 

* Using weighted work days

** Includes company owned, independent contractor, and customer owned tractors

 


 

J.B. HUNT TRANSPORT SERVICES, INC.

Condensed Consolidated Balance Sheets

(in thousands)

(unaudited)

 

 

 

 

September 30, 2004

 

December 31, 2003

 

 

 

 

 

 

 

ASSETS

 

 

 

 

 

Current assets:

 

 

 

 

 

Cash and cash equivalents

 

$

41,819

 

$

61,229

 

Accounts receivable

 

309,201

 

256,032

 

Prepaid expenses and other

 

57,755

 

105,743

 

Total current assets

 

408,775

 

423,004

 

 

 

 

 

 

 

Property and equipment

 

1,379,162

 

1,345,521

 

Less accumulated depreciation

 

410,749

 

460,556

 

Net property and equipment

 

968,413

 

884,965

 

 

 

 

 

 

 

Other assets

 

28,597

 

39,102

 

 

 

$

1,405,785

 

$

1,347,071

 

 

 

 

 

 

 

LIABILITIES & STOCKHOLDERS’ EQUITY

 

 

 

 

 

Current liabilities:

 

 

 

 

 

Current maturities of long-term debt

 

$

50,000

 

$

104,933

 

Current installments of obligations under capital leases

 

—

 

66,844

 

Trade accounts payable

 

139,595

 

158,886

 

Claims accruals

 

6,544

 

7,775

 

Accrued payroll

 

60,025

 

51,235

 

Other accrued expenses

 

12,235

 

12,478

 

Deferred income taxes

 

36,061

 

23,499

 

Total current liabilities

 

304,460

 

425,650

 

 

 

 

 

 

 

Claims accruals and other liabilities

 

6,923

 

4,291

 

Deferred income taxes

 

256,413

 

213,994

 

Stockholders’ equity

 

837,989

 

703,136

 

 

 

$

1,405,785

 

$

1,347,071

 

 

Supplemental Data

(unaudited)

 

 

 

September 30, 2004

 

December 31, 2003

 

 

 

 

 

 

 

Actual basic shares outstanding at end of period (000)

 

81,232

 

80,110

 

 

 

 

 

 

 

Actual book value at end of period

 

$

10.32

 

$

8.78