UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
X |
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended June 30, 2017
OR
__ |
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Commission File Number: 0-11757
J.B. HUNT TRANSPORT SERVICES, INC.
(Exact name of registrant as specified in its charter)
Arkansas |
71-0335111 |
(State or other jurisdiction |
(I.R.S. Employer |
of incorporation or |
Identification No.) |
organization) |
|
615 J.B. Hunt Corporate Drive, Lowell, Arkansas 72745
(Address of principal executive offices)
479-820-0000
(Registrant's telephone number, including area code)
www.jbhunt.com
(Registrant's web site)
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to the filing requirements for the past 90 days.
Yes X No
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).
Yes X No
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer X Accelerated filer Non-accelerated filer
Smaller reporting company Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. [ ]
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes No X
The number of shares of the registrant’s $0.01 par value common stock outstanding on June 30, 2017 was 109,435,453.
J.B. HUNT TRANSPORT SERVICES, INC.
Form 10-Q
For The Quarterly Period Ended June 30, 2017
Table of Contents
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Part I. Financial Information | ||
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Item 1. |
Financial Statements |
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Condensed Consolidated Statements of Earnings for the Three and Six Months Ended June 30, 2017 and 2016 |
3 |
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Condensed Consolidated Balance Sheets as of June 30, 2017 and December 31, 2016 |
4 |
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Condensed Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2017 and 2016 |
5 |
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Notes to Condensed Consolidated Financial Statements as of June 30, 2017 |
6 |
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Item 2. |
Management's Discussion and Analysis of Financial Condition and Results of Operations |
12 |
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Item 3. |
Quantitative and Qualitative Disclosures About Market Risk |
19 |
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Item 4. |
Controls and Procedures |
20 |
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Part II. Other Information | ||
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Item 1. |
Legal Proceedings |
20 |
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Item 1A. |
Risk Factors |
21 |
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Item 2. |
Unregistered Sales of Equity Securities and Use of Proceeds |
21 |
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Item 3. |
Defaults Upon Senior Securities |
21 |
Item 4. |
Mine Safety Disclosures |
21 |
Item 5. |
Other Information |
21 |
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Item 6. |
Exhibits |
21 |
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Signatures |
23 | |
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Exhibits |
24 |
Part I. Financial Information
ITEM 1. FINANCIAL STATEMENTS
J.B. HUNT TRANSPORT SERVICES, INC.
Condensed Consolidated Statements of Earnings
(in thousands, except per share amounts)
(unaudited)
Three Months Ended |
Six Months Ended |
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June 30, |
June 30, |
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2017 |
2016 |
2017 |
2016 |
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Operating revenues, excluding fuel surcharge revenues |
$ | 1,551,051 | $ | 1,483,354 | $ | 3,012,820 | $ | 2,910,008 | ||||||||
Fuel surcharge revenues |
175,864 | 131,672 | 343,253 | 233,730 | ||||||||||||
Total operating revenues |
1,726,915 | 1,615,026 | 3,356,073 | 3,143,738 | ||||||||||||
Operating expenses: |
||||||||||||||||
Rents and purchased transportation |
871,122 | 794,907 | 1,677,562 | 1,535,310 | ||||||||||||
Salaries, wages and employee benefits |
389,873 | 371,969 | 770,184 | 734,480 | ||||||||||||
Depreciation and amortization |
93,050 | 90,364 | 185,238 | 178,716 | ||||||||||||
Fuel and fuel taxes |
79,072 | 71,489 | 159,719 | 130,903 | ||||||||||||
Operating supplies and expenses |
64,486 | 56,495 | 122,507 | 111,031 | ||||||||||||
Insurance and claims |
27,461 | 19,094 | 50,466 | 36,522 | ||||||||||||
General and administrative expenses, net of asset dispositions |
21,728 | 18,711 | 45,209 | 40,545 | ||||||||||||
Operating taxes and licenses |
10,905 | 11,365 | 21,585 | 22,491 | ||||||||||||
Communication and utilities |
5,603 | 4,840 | 10,599 | 10,058 | ||||||||||||
Total operating expenses |
1,563,300 | 1,439,234 | 3,043,069 | 2,800,056 | ||||||||||||
Operating income |
163,615 | 175,792 | 313,004 | 343,682 | ||||||||||||
Net interest expense |
7,393 | 6,420 | 14,211 | 12,862 | ||||||||||||
Earnings before income taxes |
156,222 | 169,372 | 298,793 | 330,820 | ||||||||||||
Income taxes |
58,353 | 64,361 | 98,222 | 125,711 | ||||||||||||
Net earnings |
$ | 97,869 | $ | 105,011 | $ | 200,571 | $ | 205,109 | ||||||||
Weighted average basic shares outstanding |
109,630 | 112,669 | 110,250 | 112,871 | ||||||||||||
Basic earnings per share |
$ | 0.89 | $ | 0.93 | $ | 1.82 | $ | 1.82 | ||||||||
Weighted average diluted shares outstanding |
110,822 | 113,761 | 111,420 | 113,882 | ||||||||||||
Diluted earnings per share |
$ | 0.88 | $ | 0.92 | $ | 1.80 | $ | 1.80 | ||||||||
Dividends declared per common share |
$ | 0.23 | $ | 0.22 | $ | 0.46 | $ | 0.44 |
See Notes to Condensed Consolidated Financial Statements.
J.B. HUNT TRANSPORT SERVICES, INC.
Condensed Consolidated Balance Sheets
(in thousands)
June 30, 2017 |
December 31, 2016 |
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(unaudited) |
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ASSETS |
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Current assets: |
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Cash and cash equivalents |
$ | 7,274 | $ | 6,377 | ||||
Trade accounts receivable, net |
749,042 | 745,288 | ||||||
Prepaid expenses and other |
152,035 | 194,016 | ||||||
Total current assets |
908,351 | 945,681 | ||||||
Property and equipment, at cost |
4,384,981 | 4,258,915 | ||||||
Less accumulated depreciation |
1,564,951 | 1,440,124 | ||||||
Net property and equipment |
2,820,030 | 2,818,791 | ||||||
Other assets |
50,001 | 64,516 | ||||||
Total assets |
$ | 3,778,382 | $ | 3,828,988 | ||||
LIABILITIES AND STOCKHOLDERS' EQUITY |
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Current liabilities: |
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Trade accounts payable |
$ | 419,306 | $ | 384,308 | ||||
Claims accruals |
114,073 | 109,745 | ||||||
Accrued payroll |
46,288 | 51,929 | ||||||
Other accrued expenses |
28,425 | 27,152 | ||||||
Total current liabilities |
608,092 | 573,134 | ||||||
Long-term debt |
943,174 | 986,278 | ||||||
Other long-term liabilities |
66,118 | 64,881 | ||||||
Deferred income taxes |
753,277 | 790,634 | ||||||
Stockholders' equity |
1,407,721 | 1,414,061 | ||||||
Total liabilities and stockholders' equity |
$ | 3,778,382 | $ | 3,828,988 |
See Notes to Condensed Consolidated Financial Statements.
J.B. HUNT TRANSPORT SERVICES, INC.
Condensed Consolidated Statements of Cash Flows
(in thousands)
(unaudited)
Six Months Ended |
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June 30, |
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2017 |
2016 |
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Cash flows from operating activities: |
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Net earnings |
$ | 200,571 | $ | 205,109 | ||||
Adjustments to reconcile net earnings to net cash provided by operating activities: |
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Depreciation and amortization |
185,238 | 178,716 | ||||||
Share-based compensation |
23,110 | 22,915 | ||||||
Loss on sale of revenue equipment and other |
3,393 | 1,030 | ||||||
Benefit from deferred income taxes |
(37,357 | ) | 2,354 | |||||
Changes in operating assets and liabilities: |
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Trade accounts receivable |
(3,754 | ) | (75,703 | ) | ||||
Other assets |
47,274 | 33,501 | ||||||
Trade accounts payable |
13,269 | 11,267 | ||||||
Income taxes payable or receivable |
11,370 | 72,041 | ||||||
Claims accruals |
4,329 | 11,408 | ||||||
Accrued payroll and other accrued expenses |
(3,996 | ) | 11,500 | |||||
Net cash provided by operating activities |
443,447 | 474,138 | ||||||
Cash flows from investing activities: |
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Additions to property and equipment |
(176,660 | ) | (351,507 | ) | ||||
Net proceeds from sale of equipment |
11,568 | 93,549 | ||||||
Changes in other assets |
(3,464 | ) | (7 | ) | ||||
Net cash used in investing activities |
(168,556 | ) | (257,965 | ) | ||||
Cash flows from financing activities: |
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Proceeds from revolving lines of credit and other |
1,247,227 | 676,687 | ||||||
Payments on revolving lines of credit and other |
(1,291,200 | ) | (738,198 | ) | ||||
Purchase of treasury stock |
(179,813 | ) | (100,000 | ) | ||||
Stock option exercises and other |
1,100 | 1,342 | ||||||
Stock repurchased for payroll taxes |
(431 | ) | (975 | ) | ||||
Tax benefit of stock options exercised |
- | 280 | ||||||
Dividends paid |
(50,877 | ) | (49,598 | ) | ||||
Net cash used in financing activities |
(273,994 | ) | (210,462 | ) | ||||
Net change in cash and cash equivalents |
897 | 5,711 | ||||||
Cash and cash equivalents at beginning of period |
6,377 | 5,566 | ||||||
Cash and cash equivalents at end of period |
$ | 7,274 | $ | 11,277 | ||||
Supplemental disclosure of cash flow information: |
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Cash paid during the period for: |
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Interest |
$ | 14,477 | $ | 12,855 | ||||
Income taxes |
$ | 122,718 | $ | 49,039 |
See Notes to Condensed Consolidated Financial Statements.
J.B. HUNT TRANSPORT SERVICES, INC.
Notes to Condensed Consolidated Financial Statements
(Unaudited)
1. |
General |
Basis of Presentation
The accompanying unaudited interim Condensed Consolidated Financial Statements have been prepared in accordance with U.S. generally accepted accounting principles (GAAP) for interim financial information. We believe such statements include all adjustments (consisting only of normal recurring adjustments) necessary for the fair presentation of our financial position, results of operations and cash flows at the dates and for the periods indicated. Pursuant to the requirements of the Securities and Exchange Commission (SEC) applicable to quarterly reports on Form 10-Q, the accompanying financial statements do not include all disclosures required by GAAP for annual financial statements. While we believe the disclosures presented are adequate to make the information not misleading, these unaudited interim Condensed Consolidated Financial Statements should be read in conjunction with the Consolidated Financial Statements and related notes included in our Annual Report on Form 10-K for the year ended December 31, 2016. Operating results for the periods presented in this report are not necessarily indicative of the results that may be expected for the calendar year ending December 31, 2017, or any other interim period. Our business is somewhat seasonal with slightly higher freight volumes typically experienced during August through early November in our full-load freight transportation business.
Recent Accounting Pronouncements
In May 2014, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2014-09, Revenue from Contracts with Customers, which supersedes virtually all existing revenue recognition guidance. The new standard requires an entity to recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration the entity expects to receive in exchange for those goods or services. This update also requires additional disclosure about the nature, amount, timing, and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and changes in judgments and assets recognized from costs incurred to obtain or fulfill a contract.
In August 2015, the FASB issued ASU 2015-14, Revenue from Contracts with Customers: Deferral of the Effective Date, which deferred the effective date of ASU 2014-09, one year to interim and annual periods beginning after December 15, 2017. Early adoption is permitted after the original effective date of December 15, 2016.
We have selected an implementation team and are in the process of contract review and documentation in accordance with the standard. We intend to adopt this new standard in the first quarter 2018, using the modified retrospective transition approach. Based on our work to date, we do not expect the standard to have a material impact on our financial statements.
In February 2016, the FASB issued ASU 2016-02, Leases, which requires lessees to recognize a right-of-use asset and a lease liability for most leases in the balance sheet as well as other qualitative and quantitative disclosures. ASU 2016-02 is to be applied using a modified retrospective method and is effective for interim and annual periods beginning after December 15, 2018, but early adoption is permitted. We are currently evaluating the potential effects of the adoption of this update on our financial statements.
Accounting Pronouncement Adopted in 2017
In March 2016, the FASB issued ASU 2016-09, Compensation – Stock Compensation: Improvements to Employee Share-Based Payment Accounting, which amended and simplified certain aspects of accounting for share-based payment award transactions, including the income tax consequences, classification of awards as either equity or liabilities, and classification on the statement of cash flows. The amendments were effective for interim and annual periods beginning after December 15, 2016. The application methods used in adoption varied with each component of the standard. We prospectively adopted ASU 2016-09 during the first quarter 2017, which, upon vesting of share-based awards, will result in the recognition of excess tax benefits or tax deficiencies from share-based compensation as a discrete item in our income tax expense. Historically, these amounts were recorded as additional paid-in capital. Effectively all of our outstanding share-based awards vest within the third quarter of the vesting year. In addition, cash flows from excess tax benefits from share-based compensation, which historically have been reported as cash flows from financing activities are now reported, on a prospective basis, as cash flows from operating activities in our Condensed Consolidated Statement of Cash Flows. The remaining amendments within the standard had no impact on our Condensed Consolidated Financial Statements.
2. |
Earnings Per Share |
We compute basic earnings per share by dividing net earnings available to common stockholders by the actual weighted average number of common shares outstanding for the reporting period. Diluted earnings per share reflects the potential dilution that could occur if holders of unvested restricted and performance share units or vested and unvested stock options exercised or converted their holdings into common stock. The dilutive effect of restricted and performance share units and stock options was 1.2 million shares during the second quarter 2017, compared to 1.1 million shares during second quarter 2016. During the six months ended June 30, 2017 and 2016, the dilutive effect of restricted and performance share units and stock options was 1.2 million shares and 1.0 million shares, respectively.
3. |
Share-based Compensation |
The following table summarizes the components of our share-based compensation program expense (in thousands):
Three Months Ended June 30, |
Six Months Ended June 30, |
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2017 |
2016 |
2017 |
2016 |
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Restricted share units: |
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Pretax compensation expense |
$ | 8,873 | $ | 8,939 | $ | 17,010 | $ | 16,907 | ||||||||
Tax benefit |
3,314 | 3,397 | 5,596 | 6,425 | ||||||||||||
Restricted share unit expense, net of tax |
$ | 5,559 | $ | 5,542 | $ | 11,414 | $ | 10,482 | ||||||||
Performance share units: |
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Pretax compensation expense |
$ | 3,067 | $ | 3,004 | $ | 6,100 | $ | 6,008 | ||||||||
Tax benefit |
1,146 | 1,142 | 2,007 | 2,283 | ||||||||||||
Performance share unit expense, net of tax |
$ | 1,921 | $ | 1,862 | $ | 4,093 | $ | 3,725 |
As of June 30, 2017, we had $59.0 million and $13.3 million of total unrecognized compensation expense related to restricted share units and performance share units, respectively, that is to be recognized over the remaining weighted-average period of approximately 3.8 years for restricted share units and 2.4 years for performance share units. During the six months ended June 30, 2017, we issued 14,623 shares for vested restricted share units. Of this total, 5,514 shares for vested restricted share units were issued during the second quarter 2017.
4. |
Financing Arrangements |
Outstanding borrowings, net of unamortized discount and debt issuance cost, under our current financing arrangements consist of the following (in millions):
June 30, 2017 | December 31, 2016 | |||||||
Senior revolving line of credit |
$ | 94.4 | $ | 139.0 | ||||
Senior notes |
848.8 | 847.3 | ||||||
Total long-term debt |
$ | 943.2 | $ | 986.3 |
Senior Revolving Line of Credit
At June 30, 2017, we were authorized to borrow up to $500 million under a senior revolving line of credit, which is supported by a credit agreement with a group of banks and expires in September 2020. This senior credit facility allows us to request an increase in the total commitment by up to $250 million and to request a one-year extension of the maturity date. The applicable interest rate under this agreement is based on either the Prime Rate, the Federal Funds Rate or LIBOR, depending upon the specific type of borrowing, plus an applicable margin based on our credit rating and other fees. At June 30, 2017, we had $95 million outstanding at an average interest rate of 2.33% under this agreement.
Senior Notes
Our senior notes consist of three separate issuances. The first and second issuances are $250 million of 2.40% senior notes due March 2019 and $250 million of 3.85% senior notes due March 2024, respectively, both of which were issued in March 2014. Interest payments under both notes are due semiannually in March and September of each year, beginning September 2014. The third is $350 million of 3.30% senior notes due August 2022, issued in August 2015. Interest payments under this note are due semiannually in February and August of each year, beginning February 2016. All three senior notes were issued by J.B. Hunt Transport Services, Inc., a parent-level holding company with no significant assets or operations. The notes are guaranteed on a full and unconditional basis by a wholly-owned subsidiary. All other subsidiaries of the parent are minor. We registered these offerings and the sale of the notes under the Securities Act of 1933, pursuant to a shelf registration statement filed in February 2014. All notes are unsecured obligations and rank equally with our existing and future senior unsecured debt. We may redeem for cash some or all of the notes based on a redemption price set forth in the note indenture. See Note 5, Derivative Financial Instruments, for terms of interest rate swaps entered into on the $250 million of 2.40% senior notes due March 2019 and the $350 million of 3.30% senior notes due August 2022.
Our financing arrangements require us to maintain certain covenants and financial ratios. We were in compliance with all covenants and financial ratios at June 30, 2017.
5. |
Derivative Financial Instruments |
We periodically utilize derivative instruments for hedging and non-trading purposes to manage exposure to changes in interest rates and to maintain an appropriate mix of fixed and variable-rate debt. At inception of a derivative contract, we document relationships between derivative instruments and hedged items, as well as our risk-management objective and strategy for undertaking various derivative transactions, and assess hedge effectiveness. If it is determined that a derivative is not highly effective as a hedge, or if a derivative ceases to be a highly effective hedge, we discontinue hedge accounting prospectively.
We entered into receive fixed-rate and pay variable-rate interest rate swap agreements simultaneously with the issuance of our $250 million of 2.40% senior notes due March 2019 and $350 million of 3.30% senior notes due August 2022, to effectively convert this fixed-rate debt to variable-rate. The notional amounts of these interest rate swap agreements equal those of the corresponding fixed-rate debt. The applicable interest rates under these agreements is based on LIBOR plus an established margin, resulting in an interest rate of 2.09% for our $250 million of 2.40% senior notes and 2.54% for our $350 million of 3.30% senior notes at June 30, 2017. The swaps expire when the corresponding senior notes are due. The fair values of these swaps are recorded in other assets in our Condensed Consolidated Balance Sheet at June 30, 2017. See Note 7, Fair Value Measurements, for disclosure of fair value. These derivatives meet the required criteria to be designated as fair value hedges, and as the specific terms and notional amounts of these derivative instruments match those of the fixed-rate debt being hedged, these derivative instruments are assumed to perfectly hedge the related debt against changes in fair value due to changes in the benchmark interest rate. Accordingly, any change in the fair value of these interest rate swaps recorded in earnings is offset by a corresponding change in the fair value of the related debt.
6. |
Capital Stock |
On October 22, 2015, our Board of Directors authorized the purchase of $500 million of our common stock. On April 20, 2017, our Board of Directors authorized an additional purchase of up to $500 million of our common stock. At June 30, 2017, $521 million of the combined authorization was remaining. We purchased approximately 1,892,000 shares, or $180 million, of our common stock under our repurchase authorizations during the six months ended June 30, 2017. On April 20, 2017, our Board of Directors declared a regular quarterly dividend of $0.23 per common share, which was paid on May 19, 2017, to stockholders of record on May 5, 2017. On July 20, 2017, our Board of Directors declared a regular quarterly dividend of $0.23 per common share, which will be paid on August 18, 2017, to stockholders of record on August 7, 2017.
7. |
Fair Value Measurements |
Assets and Liabilities Measured at Fair Value on a Recurring Basis
Our assets and liabilities measured at fair value are based on valuation techniques which consider prices and other relevant information generated by market transactions involving identical or comparable assets and liabilities. These valuation methods are based on either quoted market prices (Level 1) or inputs, other than quoted prices in active markets, that are observable either directly or indirectly (Level 2). The following are assets and liabilities measured at fair value on a recurring basis at June 30, 2017 (in millions):
Asset/(Liability) Balance |
Input Level |
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Trading investments |
$ | 15.6 | 1 | |||||
Interest rate swap |
$ | 3.7 | 2 | |||||
Senior notes |
$ | (600.3 | ) | 2 |
The fair value of trading investments has been measured using the market approach (Level 1) and reflect quoted market prices. The fair values of interest rate swaps and corresponding senior notes have been measured using the income approach (Level 2), which include relevant interest rate curve inputs. Trading investments and interest rate swaps are classified in other assets in our Condensed Consolidated Balance Sheets and the senior notes are classified in long-term debt in our Condensed Consolidated Balance Sheets.
Financial Instruments
The carrying amount and estimated fair value at June 30, 2017, using the income approach (Level 2), based on their net present value, discounted at our current borrowing rate, of our senior revolving line of credit and remaining senior notes not measured at fair value on a recurring basis, were $342.9 million and $358.7 million, respectively.
The carrying amounts of all other instruments at June 30, 2017, approximate their fair value due to the short maturity of these instruments.
8. |
Income Taxes |
Our effective income tax rate was 37.4% for the three months ended June 30, 2017, compared to 38.0% for the three months ended June 30, 2016. Our effective income tax rate was 32.9% for the first six months of 2017, compared to 38.0% in 2016. In determining our quarterly provision for income taxes, we use an estimated annual effective tax rate, adjusted for discrete items. This rate is based on our expected annual income, statutory tax rates, best estimate of nontaxable and nondeductible items of income and expense, and the ultimate outcome of tax audits. Income tax expense for the first six months of 2017 included a one-time after-tax benefit of $13.6 million for the claiming of federal research and development tax credits and domestic production tax deductions for the 2012 through 2016 tax years, recorded in the first quarter of 2017.
At June 30, 2017, we had a total of $35.2 million in gross unrecognized tax benefits, which are a component of other long-term liabilities on our Condensed Consolidated Balance Sheets. Of this amount, $22.9 million represents the amount of unrecognized tax benefits that, if recognized, would impact our effective tax rate. The total amount of accrued interest and penalties for such unrecognized tax benefits was $5.2 million at June 30, 2017.
9. |
Legal Proceedings |
We are a defendant in certain class-action lawsuits in which the plaintiffs are current and former California-based drivers who allege claims for unpaid wages, failure to provide meal and rest periods, and other items. During the first half of 2014, the Court in the lead class-action granted judgment in our favor with regard to all claims. The plaintiffs have appealed the case to the Ninth Circuit Court of Appeals where it is currently pending. The overlapping claims in the remaining actions have been stayed pending a decision in the lead class-action case. We cannot reasonably estimate at this time the possible loss or range of loss, if any, that may arise from these lawsuits.
In January, 2017, we exercised our right to utilize the arbitration process to review the division of revenue collected beginning May 1, 2016, as well as to clarify other issues, under our Joint Service Agreement with BNSF Railway Company (BNSF). BNSF has requested the same, and the arbitration process has commenced. BNSF provides a significant amount of rail transportation services to our JBI business segment. At this time, we are unable to reasonably predict the outcome of the arbitration, and, as such, no gain or loss contingency can be determined or recorded. Normal commercial business activity between the parties, including load tendering, load tracing, billing and payments, is expected to continue on a timely basis.
We are involved in certain other claims and pending litigation arising from the normal conduct of business. Based on present knowledge of the facts and, in certain cases, opinions of outside counsel, we believe the resolution of these claims and pending litigation will not have a material adverse effect on our financial condition, results of operations or liquidity.
10. |
Subsequent Event |
On July 20, 2017, we entered into an agreement to acquire Special Logistics Dedicated, LLC, and its affiliated entities, subject to customary closing conditions. The purchase price is $136 million with no assumption of debt. Upon closing of this acquisition we will acquire net working capital, revenue equipment and customer contracts, and we will assume facility leases. We anticipate using our existing revolving credit facility to finance this transaction and to provide liquidity for future operations.
11. |
Business Segments |
We reported four distinct business segments during the three and six months ended June 30, 2017 and 2016. These segments included Intermodal (JBI), Dedicated Contract Services® (DCS), Integrated Capacity Solutions (ICS), and Truckload (JBT). The operation of each of these businesses is described in Note 11, Segment Information, of our Annual Report (Form 10-K) for the year ended December 31, 2016. A summary of certain segment information is presented below (in millions):
Assets (Excludes intercompany accounts) As of |
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June 30, 2017 |
December 31, 2016 |
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JBI |
$ | 2,026 | $ | 2,032 | ||||
DCS |
942 | 951 | ||||||
ICS |
130 | 136 | ||||||
JBT |
270 | 279 | ||||||
Other (includes corporate) |
410 | 431 | ||||||
Total |
$ | 3,778 | $ | 3,829 |
Operating Revenues | ||||||||||||||||
Three Months Ended June 30, |
Six Months Ended June 30, |
|||||||||||||||
2017 |
2016 |
2017 |
2016 |
|||||||||||||
JBI |
$ | 1,001 | $ | 933 | $ | 1,939 | $ | 1,829 | ||||||||
DCS |
412 | 383 | 804 | 741 | ||||||||||||
ICS |
222 | 204 | 432 | 387 | ||||||||||||
JBT |
95 | 98 | 188 | 194 | ||||||||||||
Subtotal |
1,730 | 1,618 | 3,363 | 3,151 | ||||||||||||
Inter-segment eliminations |
(3 | ) | (3 | ) | (7 | ) | (7 | ) | ||||||||
Total |
$ | 1,727 | $ | 1,615 | $ | 3,356 | $ | 3,144 |
Operating Income |
||||||||||||||||
Three Months Ended June 30, |
Six Months Ended June 30, |
|||||||||||||||
2017 |
2016 |
2017 |
2016 |
|||||||||||||
JBI |
$ | 109.7 | $ | 105.6 | $ | 205.0 | $ | 208.8 | ||||||||
DCS |
48.6 | 50.5 | 93.3 | 95.2 | ||||||||||||
ICS |
(0.2 | ) | 10.9 | 4.2 | 21.7 | |||||||||||
JBT |
5.5 | 8.8 | 10.5 | 18.0 | ||||||||||||
Other (includes corporate) |
- | - | - | - | ||||||||||||
Total |
$ | 163.6 | $ | 175.8 | $ | 313.0 | $ | 343.7 |
Depreciation and Amortization Expense |
||||||||||||||||
Three Months Ended June 30, |
Six Months Ended June 30, |
|||||||||||||||
2017 |
2016 |
2017 |
2016 |
|||||||||||||
JBI |
$ | 40.4 | $ | 40.0 | $ | 80.8 | $ | 79.0 | ||||||||
DCS |
37.2 | 35.8 | 73.6 | 70.6 | ||||||||||||
ICS |
0.3 | 0.1 | 0.6 | 0.2 | ||||||||||||
JBT |
10.3 | 10.1 | 20.5 | 20.2 | ||||||||||||
Other (includes corporate) |
4.9 | 4.4 | 9.7 | 8.7 | ||||||||||||
Total |
$ | 93.1 | $ | 90.4 | $ | 185.2 | $ | 178.7 |
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
You should refer to the attached interim Condensed Consolidated Financial Statements and related notes and also to our Annual Report (Form 10-K) for the year ended December 31, 2016, as you read the following discussion. We may make statements in this report that reflect our current expectation regarding future results of operations, performance, and achievements. These are “forward-looking” statements as defined in the Private Securities Litigation Reform Act of 1995, and are based on our belief or interpretation of information currently available. You should realize there are many risks and uncertainties that could cause actual results to differ materially from those described. Some of the factors and events that are not within our control and could have a significant impact on future operating results are general economic conditions, interference with or termination of our relationships with certain railroads, cost and availability of fuel, accidents, adverse weather conditions, disruption or failure of information technology systems, competitive rate fluctuations, availability of drivers, adverse legal decisions and audits or tax assessments of various federal, state, or local taxing authorities. Additionally, our business is somewhat seasonal with slightly higher freight volumes typically experienced during August through early November in our full-load transportation business. You should also refer to Item 1A of our Annual Report (Form 10-K) for the year ended December 31, 2016, for additional information on risk factors and other events that are not within our control. Our future financial and operating results may fluctuate as a result of these and other risk factors as described from time to time in our filings with the SEC.
GENERAL
We are one of the largest surface transportation, delivery, and logistics companies in North America. We operate four distinct, but complementary, business segments and provide a wide range of transportation and delivery services to a diverse group of customers throughout the continental United States, Canada, and Mexico. Our service offerings include transportation of full-truckload containerized freight, which we directly transport utilizing our company-controlled revenue equipment and company drivers or independent contractors. We have arrangements with most of the major North American rail carriers to transport freight in containers or trailers, while we perform the majority of the pickup and delivery services. We also provide customized freight movement, revenue equipment, labor, systems, and delivery services that are tailored to meet individual customers’ requirements and typically involve long-term contracts. These arrangements are generally referred to as dedicated services and may include multiple pickups and drops, local and home deliveries, freight handling, specialized equipment, and freight network design. Our local and home delivery services typically are provided through a network of cross-dock service centers throughout the continental United States. Utilizing a network of thousands of reliable third-party carriers, we also provide comprehensive transportation and logistics services. In addition to dry-van, full-load operations, these unrelated outside carriers also provide flatbed, refrigerated, less-than-truckload (LTL), and other specialized equipment, drivers, and services. Also, we utilize a combination of company-owned and contracted power units to provide traditional over-the-road full truckload delivery services. We account for our business on a calendar year basis, with our full year ending on December 31 and our quarterly reporting periods ending on March 31, June 30, and September 30. The operation of each of our four business segments is described in Note 11, Segment Information, of our Annual Report (Form 10-K) for the year ended December 31, 2016.
Critical Accounting Policies and Estimates
The preparation of our financial statements in conformity with U.S. GAAP requires us to make estimates and assumptions that impact the amounts reported in our Condensed Consolidated Financial Statements and accompanying notes. Therefore, the reported amounts of assets, liabilities, revenues, expenses and associated disclosures of contingent liabilities are affected by these estimates. We evaluate these estimates on an ongoing basis, utilizing historical experience, consultation with experts and other methods considered reasonable in the particular circumstances. Nevertheless, actual results may differ significantly from our estimates. Any effects on our business, financial position or results of operations resulting from revisions to these estimates are recognized in the accounting period in which the facts that give rise to the revision become known.
Information regarding our Critical Accounting Policies and Estimates can be found in our Annual Report (Form 10-K). The critical accounting policies that we believe require us to make more significant judgments and estimates when we prepare our financial statements include those relating to self-insurance accruals, revenue equipment, revenue recognition and income taxes. We have discussed the development and selection of these critical accounting policies and estimates with the Audit Committee of our Board of Directors. In addition, Note 2, Summary of Significant Accounting Policies, to the financial statements in our Annual Report (Form 10-K) for the year ended December 31, 2016, contains a summary of our critical accounting policies. There have been no material changes to the methodology we apply for critical accounting estimates as previously disclosed in our Annual Report on Form 10-K.
RESULTS OF OPERATIONS
Comparison of Three Months Ended June 30, 2017 to Three Months Ended June 30, 2016
Summary of Operating Segment Results For the Three Months Ended June 30, (in millions) |
||||||||||||||||
Operating Revenues |
Operating Income |
|||||||||||||||
2017 |
2016 |
2017 |
2016 |
|||||||||||||
JBI |
$ | 1,001 | $ | 933 | $ | 109.7 | $ | 105.6 | ||||||||
DCS |
412 | 383 | 48.6 | 50.5 | ||||||||||||
ICS |
222 | 204 | (0.2 | ) | 10.9 | |||||||||||
JBT |
95 | 98 | 5.5 | 8.8 | ||||||||||||
Other (includes corporate) |
- | - | - | - | ||||||||||||
Subtotal |
1,730 | 1,618 | 163.6 | 175.8 | ||||||||||||
Inter-segment eliminations |
(3 | ) | (3 | ) | - | - | ||||||||||
Total |
$ | 1,727 | $ | 1,615 | $ | 163.6 | $ | 175.8 |
Total consolidated operating revenues were $1.73 billion for second quarter 2017, compared with $1.62 billion for the second quarter 2016. Current quarter total operating revenue, excluding fuel surcharge revenue, increased 5% versus the comparable quarter in 2016. This increase was primarily due to load growth of 5% in JBI, a 5% increase in revenue producing trucks in DCS, and load growth of 20% in ICS.
JBI segment revenue increased 7%, to $1.0 billion during the second quarter 2017, compared with $933 million in 2016. This increase in segment revenue was primarily a result of a 5% increase in load volume and a 2% increase in revenue per load, which is the combination of changes in freight mix, customer rate changes, and fuel surcharge revenue, compared to a year ago. Revenue per load, excluding fuel surcharges, decreased 1% from the second quarter 2016. Transcontinental load volume increased 10% while Eastern network volumes decreased 2% over the second quarter 2016. Operating income of the JBI segment increased 4% to $109.7 million in the second quarter 2017, from $105.6 million in 2016. Benefits from volume growth and dray fleet productivity were offset by increased rail purchased transportation costs, higher driver wage and retention costs, higher driver recruiting expenses, increased technology development and modernization costs and higher equipment ownership costs. The current period ended with approximately 85,600 units of trailing capacity and 5,300 power units available to the dray fleet.
DCS segment revenue increased 8%, to $412 million in the second quarter 2017, from $383 million in 2016. Productivity, defined as revenue per truck per week, increased by approximately 2% versus 2016, while productivity excluding fuel surcharges was flat from a year ago. The increase in revenue was primarily a result of better integration of assets between customer accounts and customer rate increases, partially offset by lower productivity under new customer contracts implemented during the current quarter. A net additional 486 revenue producing trucks were in the fleet by the end of the current quarter compared to prior year, primarily from private fleet conversions in the current and prior periods. Customer retention rates remain above 98%. Operating income of our DCS segment decreased 4% to $48.6 million in 2017, from $50.5 million in 2016. The decrease is primarily due to increased insurance and claims costs, driven by higher incident volume, and higher start-up expenses for new customer contracts compared to the prior year.
ICS revenue increased 9% to $222 million in the second quarter of 2017, from $204 million in 2016. Overall volumes increased 20%. Contractual business represented approximately 73% of total load volume and 58% of total revenue in the current period compared to 72% and 65%, respectively, in second quarter 2016. Revenue per load decreased 9% primarily due to freight mix changes driven by customer demand. ICS segment operating income decreased 102% to an operating loss of $0.2 million, from operating income of $10.9 million in 2016, primarily due to lower gross profit margins, increased claims cost, higher technology development costs, and increased number of branches less than two years old. These younger start-up branches typically produce less revenue and lower gross margins than more mature branches, resulting in a higher proportion of personnel costs to net revenue. ICS had 16 of these start-up branches during the second quarter 2017, compared to ten in the second quarter 2016. Gross profit margin decreased to 11.6% in the current quarter versus 15.0% last year primarily due to higher purchased transportation costs that outpaced customer rate increases implemented on contractual business compared to second quarter 2016. ICS’s carrier base increased 9% and employee count increased 21% compared to second quarter 2016.
JBT segment revenue decreased 4% to $95 million in the second quarter of 2017, from $98 million in 2016. Revenue excluding fuel surcharges decreased 6%, compared to a year ago, while load volume remained flat. Revenue per loaded mile excluding fuel surcharges increased approximately 1% primarily from changes in customer driven freight mix and decreased length of haul. Core customer rates increased 0.4% compared to the same period in 2016. At the end of the current quarter, JBT operated 2,072 tractors compared to 2,186 in 2016. JBT segment operating income decreased 37% to $5.5 million in 2017, compared with $8.8 million in 2016. The decrease in operating income was driven primarily by increased driver wage and retention costs, higher driver recruiting expenses, higher independent contractor cost per mile and increased tractor maintenance costs compared to second quarter 2016.
Consolidated Operating Expenses
The following table sets forth items in our Condensed Consolidated Statements of Earnings as a percentage of operating revenues and the percentage increase or decrease of those items as compared with the prior period.
Three Months Ended June 30, | ||||||||||||
Dollar Amounts as a Percentage of Total Operating Revenues |
Percentage Change of Dollar Amounts Between Quarters |
|||||||||||
2017 |
2016 |
2017 vs. 2016 |
||||||||||
Total operating revenues |
100.0 |
% |
100.0 |
% |
6.9 |
% | ||||||
Operating expenses: |
||||||||||||
Rents and purchased transportation |
50.4 | 49.2 | 9.6 | |||||||||
Salaries, wages and employee benefits |
22.6 | 23.0 | 4.8 | |||||||||
Depreciation and amortization |
5.4 | 5.6 | 3.0 | |||||||||
Fuel and fuel taxes |
4.6 | 4.4 | 10.6 | |||||||||
Operating supplies and expenses |
3.7 | 3.5 | 14.1 | |||||||||
Insurance and claims |
1.6 | 1.2 | 43.8 | |||||||||
General and administrative expenses, net of asset dispositions |
1.3 | 1.2 | 16.1 | |||||||||
Operating taxes and licenses |
0.6 | 0.7 | (4.0 |
) | ||||||||
Communication and utilities |
0.3 | 0.3 | 15.8 | |||||||||
Total operating expenses |
90.5 | 89.1 | 8.6 | |||||||||
Operating income |
9.5 | 10.9 | (6.9 |
) | ||||||||
Net interest expense |
0.4 | 0.4 | 15.2 | |||||||||
Earnings before income taxes |
9.1 | 10.5 | (7.8 |
) | ||||||||
Income taxes |
3.4 | 4.0 | (9.3 |
) | ||||||||
Net earnings |
5.7 |
% |
6.5 |
% |
(6.8 |
)% |
Total operating expenses increased 8.6%, while operating revenues increased 6.9%, during the second quarter 2017, from the comparable period 2016. Operating income decreased to $163.6 million during the second quarter 2017, from $175.8 million in 2016.
Rents and purchased transportation costs increased 9.6% in 2017. This increase was primarily the result of increased rail and truck purchased transportation rates and the increase in load volume which increased services provided by third-party rail and truck carriers within JBI and ICS segments.
Salaries, wages and employee benefits costs increased 4.8% during the second quarter 2017, compared with 2016. This increase was primarily related to increases in driver pay and office personnel compensation due to a tighter supply of qualified drivers and an increase in the number of employees.
Depreciation and amortization expense increased 3.0% in 2017, primarily due to additions to our JBI segment tractor, container and chassis fleets to support additional business demand and equipment purchased related to new DCS long-term customer contracts. Fuel costs increased 10.6% in 2017, compared with 2016, due to increases in the price of fuel and increased road miles.
Operating supplies and expenses increased 14.1%, driven primarily by increased tire expense, higher nondriver travel costs and higher equipment maintenance expenses. Insurance and claims expense increased 43.8% in 2017 compared with 2016, primarily due to higher incident volume and accident severity. General and administrative expenses increased 16.1% for the current quarter from the comparable period in 2016, primarily due to increased net losses from asset sales and disposals, increased building and computer rentals, and higher professional fees. Net loss from sale or disposal of assets was $1.7 million in 2017, compared to a net loss of $1.0 million in 2016.
Net interest expense increased 15.2% in 2017 primarily due to higher effective interest rates on our debt. Our effective income tax rate was 37.4% for the three months ended June 30, 2017, compared with 38.0% for the three months ended June 30, 2016. Our annual tax rate for 2017 is expected to be 35.0% and the normalized annual tax rate, excluding one-time benefits or costs, is expected to be 37.0%. In determining our quarterly provision for income taxes, we use an estimated annual effective tax rate, adjusted for discrete items. This rate is based on our expected annual income, statutory tax rates, best estimate of nontaxable and nondeductible items of income and expense, and the ultimate outcome of tax audits.
Comparison of Six Months Ended June 30, 2017 to Six Months Ended June 30, 2016
Summary of Operating Segment Results For the Six Months Ended June 30, (in millions) |
||||||||||||||||
Operating Revenues |
Operating Income |
|||||||||||||||
2017 |
2016 |
2017 |
2016 |
|||||||||||||
JBI |
$ | 1,939 | $ | 1,829 | $ | 205.0 | $ | 208.8 | ||||||||
DCS |
804 | 741 | 93.3 | 95.2 | ||||||||||||
ICS |
432 | 387 | 4.2 | 21.7 | ||||||||||||
JBT |
188 | 194 | 10.5 | 18.0 | ||||||||||||
Other (includes corporate) |
- | - | - | - | ||||||||||||
Subtotal |
3,363 | 3,151 | 313.0 | 343.7 | ||||||||||||
Inter-segment eliminations |
(7 | ) | (7 | ) | - | - | ||||||||||
Total |
$ | 3,356 | $ | 3,144 | $ | 313.0 | $ | 343.7 |
Total consolidated operating revenues increased to $3.36 billion for the first six months of 2017, a 7% increase from the $3.14 billion for the comparable period 2016. Fuel surcharge revenues were $343.3 million during the first six months in 2017, compared with $233.7 million in 2016. If fuel surcharges were excluded from both periods, the increase in revenue from 2016 to 2017 was 4%.
JBI segment revenue increased 6%, to $1.94 billion during the first six months of 2017, compared with $1.83 billion in 2016. This increase in revenue was primarily a result of a 3% increase in load volume and a 3% increase in revenue per load, which is the combination of changes in freight mix, customer rate changes, and fuel surcharge revenue, compared to a year ago. Competitive truckload pricing originating from the 2016 bid season within the shorter length of haul Eastern network continued to carry over into 2017, pressuring intermodal rates and conversion. Revenue per load, excluding fuel surcharge revenue, decreased 1% from the first six months of 2016. JBI operating income segment decreased to $205.0 million in the first six months of 2017, from $208.8 million in 2016. Benefits from volume growth were more than offset by lower revenue per load excluding fuel surcharges, increases in rail purchased transportation costs, higher driver wages and recruiting costs, higher equipment ownership costs, increased insurance and claims costs and, increased technology development and modernization costs.
DCS segment revenue increased 9%, to $804 million during the first six months of 2017, from $741 million in 2016. Productivity, defined as revenue per truck per week, increased by approximately 4% from a year ago. Productivity excluding fuel surcharges for the first six months of 2017 increased 2% from a year ago. The increase in revenue was primarily a result of better integration of assets between customer accounts and customer rate increases, partially offset by lower productivity under new customer contracts and a more impactful winter weather season during the first quarter of 2017 compared to 2016. Operating income of our DCS segment decreased to $93.3 million in 2017, from $95.2 million in 2016. Increased revenue and improved asset integration was offset by higher driver wages, increased insurance and claims cost, and increased start up expenditures for new customer contracts compared to the first six months of 2016.
ICS revenue increased 12% to $432 million during the first six months of 2017, from $387 million in 2016. Overall volumes increased 28%. Revenue per load decreased 13% primarily due to freight mix changes driven by customer demand. ICS segment operating income decreased 80% to $4.2 million, from $21.7 million in 2016, primarily due to lower gross profit margins, increased claims cost, increased number of branches less than two years old, and higher technology development costs. Gross profit margin decreased to 12.9% in the current period versus 16.1% last year primarily due to higher purchased transportation costs that outpaced customer rate increases implemented on contractual business and lower customer spot rates, compared to a year ago.
JBT segment revenue decreased 3% to $188 million for the first six months of 2017, from $194 million in 2016. Revenue excluding fuel surcharges decreased 6%, primarily from a 7% decrease in revenue per load partially offset by a 1% increase in load count. The decrease in revenue per load when compared to 2016 was primarily due to a 6% decrease in length of haul. Our JBT segment operating income decreased 42% to $10.5 million during the first six months 2017, from $18.0 million in 2016. The decrease in operating income was driven primarily by lower revenue, increased driver wages and recruiting costs, higher independent contractor cost per mile, higher insurance and claims cost, and increased tractor maintenance costs compared to second quarter 2016.
Consolidated Operating Expenses
The following table sets forth items in our Condensed Consolidated Statements of Earnings as a percentage of operating revenues and the percentage increase or decrease of those items as compared with the prior period.
Six Months Ended June 30, | ||||||||||||
Dollar Amounts as a Percentage of Total Operating Revenues |
Percentage Change of Dollar Amounts Between Periods |
|||||||||||
2017 |
2016 |
2017 vs. 2016 |
||||||||||
Total operating revenues |
100.0 |
% |
100.0 |
% |
6.8 |
% | ||||||
Operating expenses: |
||||||||||||
Rents and purchased transportation |
50.0 | 48.8 | 9.3 | |||||||||
Salaries, wages and employee benefits |
22.9 | 23.4 | 4.9 | |||||||||
Depreciation and amortization |
5.5 | 5.7 | 3.6 | |||||||||
Fuel and fuel taxes |
4.8 | 4.2 | 22.0 | |||||||||
Operating supplies and expenses |
3.7 | 3.5 | 10.3 | |||||||||
Insurance and claims |
1.5 | 1.2 | 38.2 | |||||||||
General and administrative expenses, net of asset dispositions |
1.4 | 1.3 | 11.5 | |||||||||
Operating taxes and licenses |
0.6 | 0.7 | (4.0 |
) | ||||||||
Communication and utilities |
0.3 | 0.3 | 5.4 | |||||||||
Total operating expenses |
90.7 | 89.1 | 8.7 | |||||||||
Operating income |
9.3 | 10.9 | (8.9 |
) | ||||||||
Net interest expense |
0.4 | 0.4 | 10.5 | |||||||||
Earnings before income taxes |
8.9 | 10.5 | (9.7 |
) | ||||||||
Income taxes |
2.9 | 4.0 | (21.9 |
) | ||||||||
Net earnings |
6.0 |
% |
6.5 |
% |
(2.2 |
)% |
Total operating expenses increased 8.7%, while operating revenues increased 6.8%, during the first six months 2017, from the comparable period of 2016. Operating income decreased to $313.0 million during the first six months 2017, from $343.7 million in 2016.
Rents and purchased transportation costs increased 9.3% in 2017. This increase was primarily the result of increased rail and truck purchased transportation rates and the increase in load volume which increased services provided by third-party rail and truck carriers within JBI and ICS segments.
Salaries, wages and employee benefits costs increased 4.9% in 2017 from 2016. This increase was primarily related to increases in driver pay and office personnel compensation due to a tighter supply of qualified drivers and an increase in the number of employees.
Depreciation and amortization expense increased 3.6% in 2017 primarily due to additions to our JBI segment tractor, container and chassis fleets to support additional business demand and equipment purchased related to new DCS long-term customer contracts. Fuel costs increased 22.0% in 2017, compared with 2016, due to increases in the price of fuel and increased road miles.
Operating supplies and expenses increased 10.3% driven primarily by increased tire expense, higher nondriver travel costs and higher equipment maintenance expenses. Insurance and claims expense increased 38.2% in 2017 compared with 2016, primarily due to higher incident volume and accident severity. General and administrative expenses increased 11.5% from the comparable period in 2016, primarily due to increased net losses from asset sales and disposals, increased building and computer rentals, and higher professional fees, partially offset by a reduction in charitable contributions. Net loss from sale or disposal of assets was $3.4 million in 2017, compared to a net loss of $1.0 million in 2016.
Net interest expense increased 10.5% in 2017, primarily due to higher effective interest rates on our debt. Income tax expense decreased 21.9% in 2017, compared with 2016, primarily due to a one-time after-tax benefit of $13.6 million for the claiming of federal research and development tax credits and domestic production tax deductions for the 2012 through 2016 tax years, recorded in the first quarter of 2017. Our effective income tax rate was 32.9% for the first six months of 2017, compared to 38.0% in 2016. Our annual tax rate for 2017 is expected to be 35.0% and the normalized annual tax rate, excluding one-time benefits or costs, is expected to be 37.0%. In determining our quarterly provision for income taxes, we use an estimated annual effective tax rate, adjusted for discrete items. This rate is based on our expected annual income, statutory tax rates, best estimate of nontaxable and nondeductible items of income and expense, and the ultimate outcome of tax audits.
Liquidity and Capital Resources
Cash Flow
Net cash provided by operating activities totaled $443.4 million during the first six months of 2017, compared with $474.1 million for the same period 2016. Operating cash flows decreased due to the timing of general working capital activities. Net cash used in investing activities totaled $168.6 million in 2017, compared with $258.0 million in 2016. The decrease resulted from a decrease in equipment purchases in 2017, partially offset by a decrease in proceeds from the sale of equipment during the same period. Net cash used in financing activities was $274.0 million in 2017, compared with $210.5 million in 2016. This change resulted primarily from an increase in treasury stock purchased.
Debt and Liquidity Data
June 30, 2017 |
December 31, 2016 |
June 30, 2016 |
||||||||||
Working capital ratio |
1.49 | 1.65 | 1.50 | |||||||||
Total debt (millions) |
$ | 943.2 | $ | 986.3 | $ | 957.6 | ||||||
Total debt to equity |
0.67 | 0.70 | 0.69 | |||||||||
Total debt as a percentage of total capital |
40 | % | 41 | % | 41 | % |
Liquidity
Our need for capital has typically resulted from the acquisition of containers, chassis, trucks, tractors and trailers required to support our growth and the replacement of older equipment. We are frequently able to accelerate or postpone a portion of equipment replacements depending on market conditions. We have, during the past few years, obtained capital through cash generated from operations, revolving lines of credit, and long-term debt issuances. We have also periodically utilized operating leases to acquire revenue equipment.
We believe our liquid assets, cash generated from operations and revolving line of credit will provide sufficient funds for our operating and capital requirements for the foreseeable future. The following table summarizes our expected obligations and commitments as of June 30, 2017 (in millions):
Total |
One Year Or Less |
One to Three Years |
Three to Five Years |
After Five Years |
||||||||||||||||
Operating leases |
$ | 41.8 | $ | 17.0 | $ | 17.9 | $ | 6.9 | $ | - | ||||||||||
Debt obligations |
945.3 | - | 250.0 | 95.3 | 600.0 | |||||||||||||||
Interest payments on debt (1) |
127.3 | 26.0 | 45.4 | 37.6 | 18.3 | |||||||||||||||
Commitments to acquire revenue equipment and facilities |
881.8 | 174.2 | 707.6 | - | - | |||||||||||||||
Total |
$ | 1,996.2 | $ | 217.2 | $ | 1,020.9 | $ | 139.8 | $ | 618.3 |
(1) |
Interest payments on debt are based on the debt balance and applicable rate at June 30, 2017. |
Our net capital expenditures were approximately $165 million during the first six months of 2017, compared with $258 million for the same period 2016. Our net capital expenditures include net additions to revenue equipment and non-revenue producing assets that are necessary to contribute to and support the future growth of our various business segments. Capital expenditures in 2017 were primarily for tractors, additional intermodal containers and chassis, and other trailing equipment. We are currently committed to spend approximately $882 million during the remainder of 2017 and 2018. We expect to spend in the range of $450 million to $475 million for net capital expenditures during calendar year 2017. The table above excludes $40.4 million of potential liabilities for uncertain tax positions, including interest and penalties, which are recorded on our Condensed Consolidated Balance Sheets. However, we are unable to reasonably estimate the ultimate timing of any settlements.
On July 20, 2017, we entered into an agreement to acquire Special Logistics Dedicated, LLC, and its affiliated entities, see Note 10, Subsequent Event, in our Condensed Consolidated Financial Statements. We anticipate using our existing revolving credit facility to finance this transaction and to provide liquidity for future operations. The transaction is not expected to have a material impact on interest expense.
Off-Balance Sheet Arrangements
Our only off-balance sheet arrangements as of June 30, 2017 were operating leases related to facility lease obligations.
Risk Factors
You should refer to Item 1A of our Annual Report (Form 10-K) for the year ended December 31, 2016, under the caption “Risk Factors” for specific details on the following factors and events that are not within our control and could affect our financial results.
|
● |
Our business is subject to general economic and business factors, any of which could have a material adverse effect on our results of operations. Economic trends and tightening of credit in financial markets could adversely affect our ability, and the ability of our suppliers, to obtain financing for operations and capital expenditures. |
● |
We depend on third parties in the operation of our business. |
|
● |
Rapid changes in fuel costs could impact our periodic financial results. |
|
● |
Insurance and claims expenses could significantly reduce our earnings. |
|
● |
We derive a significant portion of our revenue from a few major customers, the loss of one or more of which could have a material adverse effect on our business. |
|
● |
We operate in a regulated industry, and increased direct and indirect costs of compliance with, or liability for violation of, existing or future regulations could have a material adverse effect on our business. |
|
● |
Difficulty in attracting and retaining drivers, delivery personnel and third-party carriers could affect our profitability and ability to grow. |
|
● |
We rely significantly on our information technology systems, a disruption, failure or security breach of which could have a material adverse effect on our business. |
|
● |
We operate in a competitive and highly fragmented industry. Numerous factors could impair our ability to maintain our current profitability and to compete with other carriers and private fleets. |
|
● |
Extreme or unusual weather conditions can disrupt our operations, impact freight volumes and increase our costs, all of which could have a material adverse effect on our business results. |
|
● |
Our operations are subject to various environmental laws and regulations, the violation of which could result in substantial fines or penalties. |
In addition to the above, the following risk factor should also be carefully considered when evaluating our business.
Acquisitions or business combinations may disrupt or have a material adverse effect on our operations or earnings.
We could have difficulty integrating acquired companies’ assets, personnel and operations with our own. Regardless of whether we are successful in making an acquisition or completing a business combination, the negotiations could disrupt our ongoing business, distract our management and employees and increase our operating costs. Acquisitions and business combinations are accompanied by a number of inherent risks, including, without limitation, the following:
● | the difficulty of integrating acquired companies and operations; | |
● |
the potential disruption of our ongoing businesses and distraction of our management or the management of acquired companies; | |
● |
difficulties in maintaining controls, procedures and policies; | |
● |
the potential impairment of relationships with employees and partners as a result of any integration of new management personnel; | |
● |
the potential inability to manage an increased number of locations and employees: | |
● |
the failure to realize expected efficiencies, synergies and cost savings; or | |
● |
the effect of any government regulations which relate to the businesses acquired. |
Our business could be materially impacted to the extent that we are unable to succeed in addressing any of these risks or other problems encountered in connection with an acquisition or business combination, many of which cannot be presently identified. These risks could disrupt our ongoing business, distract our management and employees, increase our costs and adversely affect our results of operations.
ITEM 3. Quantitative And Qualitative Disclosures AbouT Market Risk
Our outstanding debt at June 30, 2017 includes our senior revolving line of credit and senior notes issuances. Our senior notes have fixed interest rates ranging from 2.40% to 3.85%. Our senior revolving line of credit has variable interest rates, which are based on the Prime Rate, the Federal Funds Rate, or LIBOR, depending upon the specific type of borrowing, plus any applicable margins. We currently have interest rate swap agreements which effectively convert our $250 million of 2.40% and $350 million of 3.30% fixed rate senior notes due March 2019 and August 2022, respectfully, to variable rates, to allow us to maintain a desired mix of variable and fixed rate debt. The applicable interest rates under these agreements are based on LIBOR plus an established margin. Risk can be quantified by measuring the financial impact of a near-term adverse increase in short-term interest rates. Our earnings would be affected by changes in these short-term variable interest rates. At our current level of borrowing, a one percentage point increase in our applicable rate would reduce annual pretax earnings by $7.0 million.
Although we conduct business in foreign countries, international operations are not material to our consolidated financial position, results of operations or cash flows. Additionally, foreign currency transaction gains and losses were not material to our results of operations for the three or six months ended June 30, 2017. Accordingly, we are not currently subject to material foreign currency exchange rate risks from the effects that exchange rate movements of foreign currencies would have on our future costs or on future cash flows we would receive from our foreign investment. As of June 30, 2017, we had no foreign currency forward exchange contracts or other derivative financial instruments to hedge the effects of adverse fluctuations in foreign currency exchange rates.
The price and availability of diesel fuel are subject to fluctuations due to changes in the level of global oil production, seasonality, weather and other market factors. Historically, we have been able to recover a majority of fuel price increases from our customers in the form of fuel surcharges. We cannot predict the extent to which high fuel price levels may occur in the future, or the extent to which fuel surcharges could be collected to offset such increases. As of June 30, 2017, we had no derivative financial instruments to reduce our exposure to fuel price fluctuations.
ITEM 4. CONTROLS AND PROCEDURES
We maintain controls and procedures designed to ensure that the information we are required to disclose in the reports we file with the SEC is recorded, processed, summarized and reported, within the time periods specified in the SEC rules, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. As of the end of the period covered by this report, we carried out an evaluation, under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended). Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective as of June 30, 2017.
There were no changes in our internal control over financial reporting during the second quarter of 2017 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
Part II. Other Information
ITEM 1. LEGAL PROCEEDINGS
We are a defendant in certain class-action lawsuits in which the plaintiffs are current and former California-based drivers who allege claims for unpaid wages, failure to provide meal and rest periods, and other items. During the first half of 2014, the Court in the lead class-action granted judgment in our favor with regard to all claims. The plaintiffs have appealed the case to the Ninth Circuit Court of Appeals where it is currently pending. The overlapping claims in the remaining actions have been stayed pending a decision in the lead class-action case. We cannot reasonably estimate at this time the possible loss or range of loss, if any, that may arise from these lawsuits.
In January 2017, we exercised our right to utilize the arbitration process to review the division of revenue collected beginning May 1, 2016, as well as to clarify other issues, under our Joint Service Agreement with BNSF. BNSF has requested the same, and the arbitration process has commenced. BNSF provides a significant amount of rail transportation services to our JBI business segment. At this time, we are unable to reasonably predict the outcome of the arbitration, and, as such, no gain or loss contingency can be determined or recorded. Normal commercial business activity between the parties, including load tendering, load tracing, billing and payments, is expected to continue on a timely basis.
We are involved in certain other claims and pending litigation arising from the normal conduct of business. Based on present knowledge of the facts and, in certain cases, opinions of outside counsel, we believe the resolution of these claims and pending litigation will not have a material adverse effect on our financial condition, results of operations or liquidity.
ITEM 1A. |
RISK FACTORS |
Information regarding risk factors appears in Part I, Item 2, Management’s Discussion and Analysis of Financial Condition and Results of Operations of this report on Form 10-Q and in Part I, Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2016.
ITEM 2. |
UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS |
Purchases of Equity Securities
The following table summarizes purchases of our common stock during the three months ended June 30, 2017:
Period |
Number of Common Shares Purchased |
Average Price Paid Per Common Share Purchased |
Total Number of Shares Purchased as Part of a Publicly Announced Plan (1) |
Maximum Dollar Amount of Shares That May Yet Be Purchased Under the Plan (in millions) |
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April 1 through April 30, 2017 |
- | $ | - | - | $ | 571 | ||||||||||
May 1 through May 31, 2017 |
563,700 | 88.79 | 563,700 | 521 | ||||||||||||
June 1 through June 30, 2017 |
- | - | - | 521 | ||||||||||||
Total |
563,700 | $ | 88.79 | 563,700 | $ | 521 |
(1) On October 22, 2015 our Board of Directors authorized the purchase of up to $500 million of our common stock. On April 20, 2017 our Board of Directors authorized an additional purchase of up to $500 million of our common stock.
ITEM 3. |
DEFAULTS UPON SENIOR SECURITIES |
Not applicable.
ITEM 4. |
MINE SAFETY DISCLOSURES |
Not applicable.
ITEM 5. |
OTHER INFORMATION |
Not applicable.
ITEM 6. |
EXHIBITS |
Index to Exhibits
Exhibit Number |
Exhibits | |
3.1 |
Amended and Restated Articles of Incorporation of J.B. Hunt Transport Services, Inc. dated May 19, 1988 (incorporated by reference from Exhibit 3.1 of the Company’s Quarterly Report on Form 10-Q for the period ended March 31, 2005, filed April 29, 2005) | |
3.2 |
Amended and Restated Bylaws of J.B. Hunt Transport Services, Inc. dated April 23, 2015 (incorporated by reference from Exhibit 3.1 of the Company’s current report on Form 8-K, filed April 27, 2015) | |
31.1 |
Rule 13a-14(a)/15d-14(a) Certification | |
31.2 |
Rule 13a-14(a)/15d-14(a) Certification | |
32.1 |
Section 1350 Certification | |
32.2 |
Section 1350 Certification | |
101.INS |
XBRL Instance Document | |
101.SCH |
XBRL Taxonomy Extension Schema Document | |
101.CAL |
XBRL Taxonomy Extension Calculation Linkbase Document | |
101.DEF |
XBRL Taxonomy Extension Definition Linkbase Document | |
101.LAB |
XBRL Taxonomy Extension Label Linkbase Document | |
101.PRE |
XBRL Taxonomy Extension Presentation Linkbase Document |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized, in the city of Lowell, Arkansas, on the 28th day of July, 2017.
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J.B. HUNT TRANSPORT SERVICES, INC. |
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(Registrant) | |||
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BY: |
/s/ John N. Roberts, III |
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John N. Roberts, III |
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President and Chief Executive Officer (Principal Executive Officer) |
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BY: |
/s/ David G. Mee |
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David G. Mee |
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Executive Vice President, Finance and Administration and Chief Financial Officer (Principal Financial Officer) |
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BY: |
/s/ John K. Kuhlow |
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John K. Kuhlow |
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Senior Vice President Finance, Controller, Chief Accounting Officer (Principal Accounting Officer) |
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23
Exhibit 31.1
RULE 13a-14(a)/15d-14(a) CERTIFICATION
I, John N. Roberts, III, Principal Executive Officer, certify that:
1. |
I have reviewed this quarterly report on Form 10-Q of J.B. Hunt Transport Services, Inc.; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for the periods presented in this report; |
4. | The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c) evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d) disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent calendar quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5. |
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors: |
a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
Date: July 28, 2017 |
/s/ John N. Roberts, III |
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John N. Roberts, III President and Chief Executive Officer (Principal Executive Officer) |
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Exhibit 31.2
RULE 13a-14(a)/15d-14(a) CERTIFICATION
I, David G. Mee, Principal Financial Officer, certify that:
1. |
I have reviewed this quarterly report on Form 10-Q of J.B. Hunt Transport Services, Inc.; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for the periods presented in this report; |
4. | The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c) evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d) disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent calendar quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
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The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors: |
a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
Date: July 28, 2017 |
/s/ David G. Mee |
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David G. Mee Executive Vice President, Finance and Administration and Chief Financial Officer (Principal Financial Officer) |
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Exhibit 32.1
SECTION 1350 CERTIFICATION
In connection with the Quarterly Report of J.B. Hunt Transport Services, Inc. (the “Company”) on Form 10-Q for the period ended June 30, 2017 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, John N. Roberts, III, Chief Executive Officer, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002:
1. |
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
2. |
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company as of the dates presented and consolidated results of operations of the Company for the periods presented. |
Date: July 28, 2017 |
/s/ John N. Roberts, III |
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John N. Roberts, III President and Chief Executive Officer (Principal Executive Officer) |
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Exhibit 32.2
SECTION 1350 CERTIFICATION
In connection with the Quarterly Report of J.B. Hunt Transport Services, Inc. (the “Company”) on Form 10-Q for the period ended June 30, 2017 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, David G. Mee, Chief Financial Officer, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002:
1. |
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
2. |
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company as of the dates presented and consolidated results of operations of the Company for the periods presented. |
Date: July 28, 2017 |
/s/ David G. Mee |
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David G. Mee Executive Vice President, Finance and Administration and Chief Financial Officer (Principal Financial Officer) |
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Document And Entity Information |
6 Months Ended |
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Jun. 30, 2017
shares
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Document Information [Line Items] | |
Entity Registrant Name | HUNT J B TRANSPORT SERVICES INC |
Entity Central Index Key | 0000728535 |
Trading Symbol | jbht |
Current Fiscal Year End Date | --12-31 |
Entity Filer Category | Large Accelerated Filer |
Entity Current Reporting Status | Yes |
Entity Voluntary Filers | No |
Entity Well-known Seasoned Issuer | Yes |
Entity Common Stock, Shares Outstanding (in shares) | 109,435,453 |
Document Type | 10-Q |
Document Period End Date | Jun. 30, 2017 |
Document Fiscal Year Focus | 2017 |
Document Fiscal Period Focus | Q2 |
Amendment Flag | false |
Condensed Consolidated Statements of Earnings (Unaudited) - USD ($) shares in Thousands, $ in Thousands |
3 Months Ended | 6 Months Ended | ||
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Jun. 30, 2017 |
Jun. 30, 2016 |
Jun. 30, 2017 |
Jun. 30, 2016 |
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Operating revenues, excluding fuel surcharge revenues | $ 1,551,051 | $ 1,483,354 | $ 3,012,820 | $ 2,910,008 |
Fuel surcharge revenues | 175,864 | 131,672 | 343,253 | 233,730 |
Total operating revenues | 1,726,915 | 1,615,026 | 3,356,073 | 3,143,738 |
Operating expenses: | ||||
Rents and purchased transportation | 871,122 | 794,907 | 1,677,562 | 1,535,310 |
Salaries, wages and employee benefits | 389,873 | 371,969 | 770,184 | 734,480 |
Depreciation and amortization | 93,050 | 90,364 | 185,238 | 178,716 |
Fuel and fuel taxes | 79,072 | 71,489 | 159,719 | 130,903 |
Operating supplies and expenses | 64,486 | 56,495 | 122,507 | 111,031 |
Insurance and claims | 27,461 | 19,094 | 50,466 | 36,522 |
General and administrative expenses, net of asset dispositions | 21,728 | 18,711 | 45,209 | 40,545 |
Operating taxes and licenses | 10,905 | 11,365 | 21,585 | 22,491 |
Communication and utilities | 5,603 | 4,840 | 10,599 | 10,058 |
Total operating expenses | 1,563,300 | 1,439,234 | 3,043,069 | 2,800,056 |
Operating income | 163,615 | 175,792 | 313,004 | 343,682 |
Net interest expense | 7,393 | 6,420 | 14,211 | 12,862 |
Earnings before income taxes | 156,222 | 169,372 | 298,793 | 330,820 |
Income taxes | 58,353 | 64,361 | 98,222 | 125,711 |
Net earnings | $ 97,869 | $ 105,011 | $ 200,571 | $ 205,109 |
Weighted average basic shares outstanding (in shares) | 109,630 | 112,669 | 110,250 | 112,871 |
Basic earnings per share (in dollars per share) | $ 0.89 | $ 0.93 | $ 1.82 | $ 1.82 |
Weighted average diluted shares outstanding (in shares) | 110,822 | 113,761 | 111,420 | 113,882 |
Diluted earnings per share (in dollars per share) | $ 0.88 | $ 0.92 | $ 1.80 | $ 1.80 |
Dividends declared per common share (in dollars per share) | $ 0.23 | $ 0.22 | $ 0.46 | $ 0.44 |
Condensed Consolidated Balance Sheets (Current Period Unaudited) - USD ($) $ in Thousands |
Jun. 30, 2017 |
Dec. 31, 2016 |
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Current assets: | ||
Cash and cash equivalents | $ 7,274 | $ 6,377 |
Trade accounts receivable, net | 749,042 | 745,288 |
Prepaid expenses and other | 152,035 | 194,016 |
Total current assets | 908,351 | 945,681 |
Property and equipment, at cost | 4,384,981 | 4,258,915 |
Less accumulated depreciation | 1,564,951 | 1,440,124 |
Net property and equipment | 2,820,030 | 2,818,791 |
Other assets | 50,001 | 64,516 |
Total assets | 3,778,382 | 3,828,988 |
Current liabilities: | ||
Trade accounts payable | 419,306 | 384,308 |
Claims accruals | 114,073 | 109,745 |
Accrued payroll | 46,288 | 51,929 |
Other accrued expenses | 28,425 | 27,152 |
Total current liabilities | 608,092 | 573,134 |
Long-term debt | 943,174 | 986,278 |
Other long-term liabilities | 66,118 | 64,881 |
Deferred income taxes | 753,277 | 790,634 |
Stockholders' equity | 1,407,721 | 1,414,061 |
Total liabilities and stockholders' equity | $ 3,778,382 | $ 3,828,988 |
Note 1 - General |
6 Months Ended | ||
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Jun. 30, 2017 | |||
Notes to Financial Statements | |||
Organization, Consolidation and Presentation of Financial Statements Disclosure [Text Block] |
Basis of Presentation The accompanying unaudited interim Condensed Consolidated Financial Statements have been prepared in accordance with U.S. generally accepted accounting principles (GAAP) for interim financial information. We believe such statements include all adjustments (consisting only of normal recurring adjustments) necessary for the fair presentation of our financial position, results of operations and cash flows at the dates and for the periods indicated. Pursuant to the requirements of the Securities and Exchange Commission (SEC) applicable to quarterly reports on Form 10 -Q, the accompanying financial statements do not include all disclosures required by GAAP for annual financial statements. While we believe the disclosures presented are adequate to make the information not misleading, these unaudited interim Condensed Consolidated Financial Statements should be read in conjunction with the Consolidated Financial Statements and related notes included in our Annual Report on Form 10 -K for the year ended December 31, 2016. Operating results for the periods presented in this report are not necessarily indicative of the results that may be expected for the calendar year ending December 31, 2017, or any other interim period. Our business is somewhat seasonal with slightly higher freight volumes typically experienced during August through early November in our full-load freight transportation business.Recent Accounting Pronouncements In May 2014, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2014 -09, Revenue from Contracts with Customers, which supersedes virtually all existing revenue recognition guidance. The new standard requires an entity to recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration the entity expects to receive in exchange for those goods or services. This update also requires additional disclosure about the nature, amount, timing, and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and changes in judgments and assets recognized from costs incurred to obtain or fulfill a contract. In August 2015, the FASB issued ASU 2015 -14, Revenue from Contracts with Customers: Deferral of the Effective Date, which deferred the effective date of ASU 2014 -09, one year to interim and annual periods beginning after December 15, 2017. Early adoption is permitted after the original effective date of December 15, 2016. We have selected an implementation team and are in the process of contract review and documentation in accordance with the standard. We intend to adopt this new standard in the first quarter 2018, using the modified retrospective transition approach. Based on our work to date, we do not expect the standard to have a material impact on our financial statements. In February 2016, the FASB issued ASU 2016 -02, Leases, which requires lessees to recognize a right-of-use asset and a lease liability for most leases in the balance sheet as well as other qualitative and quantitative disclosures. ASU 2016 -02 is to be applied using a modified retrospective method and is effective for interim and annual periods beginning after December 15, 2018, but early adoption is permitted. We are currently evaluating the potential effects of the adoption of this update on our financial statements.Accounting Prono uncement Adopted in 201 7 In March 2016, the FASB issued ASU 2016 -09, Compensation – Stock Compensation: Improvements to Employee Share-Based Payment Accounting, which amended and simplified certain aspects of accounting for share-based payment award transactions, including the income tax consequences, classification of awards as either equity or liabilities, and classification on the statement of cash flows. The amendments were effective for interim and annual periods beginning after December 15, 2016. The application methods used in adoption varied with each component of the standard. We prospectively adopted ASU 2016 -09 during the first quarter 2017, which, upon vesting of share-based awards, will result in the recognition of excess tax benefits or tax deficiencies from share-based compensation as a discrete item in our income tax expense. Historically, these amounts were recorded as additional paid-in capital. Effectively all of our outstanding share-based awards vest within the third quarter of the vesting year. In addition, cash flows from excess tax benefits from share-based compensation, which historically have been reported as cash flows from financing activities are now reported, on a prospective basis, as cash flows from operating activities in our Condensed Consolidated Statement of Cash Flows. The remaining amendments within the standard had no impact on our Condensed Consolidated Financial Statements. |
Note 2 - Earnings Per Share |
6 Months Ended | ||
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Jun. 30, 2017 | |||
Notes to Financial Statements | |||
Earnings Per Share [Text Block] |
We compute basic earnings per share by dividing net earnings available to common stockholders by the actual weighted average number of common shares outstanding for the reporting period. Diluted earnings per share reflects the potential dilution that could occur if holders of unvested restricted and performance share units or vested and unvested stock options exercised or converted their holdings into common stock. The dilutive effect of restricted and performance share units and stock options was 1.2 million shares during the second quarter 2017, compared to 1.1 million shares during second quarter 2016. During the six months ended June 30, 2017 and 2016, the dilutive effect of restricted and performance share units and stock options was 1.2 million shares and 1.0 million shares, respectively. |
Note 3 - Share-based Compensation |
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Disclosure of Compensation Related Costs, Share-based Payments [Text Block] |
The following table summarizes the components of our share-based compensation program expense (in thousands):
As of June 30, 2017, we had $59.0 million and $13.3 million of total unrecognized compensation expense related to restricted share units and performance share units, respectively, that is to be recognized over the remaining weighted-average period of approximately 3.8 years for restricted share units and 2.4 years for performance share units. During the six months ended June 30, 2017, we issued 14,623 shares for vested restricted share units. Of this total, 5,514 shares for vested restricted share units were issued during the second quarter 2017. |
Note 4 - Financing Arrangements |
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Debt Disclosure [Text Block] |
Outstanding borrowings, net of unamortized discount and debt issuance cost, under our current financing arrangements consist of the following (in millions):
Senior Revolving Line of Credit At June 30, 2017, we were authorized to borrow up to $500 million under a senior revolving line of credit, which is supported by a credit agreement with a group of banks and expires in September 2020. This senior credit facility allows us to request an increase in the total commitment by up to $250 million and to request a one -year extension of the maturity date. The applicable interest rate under this agreement is based on either the Prime Rate, the Federal Funds Rate or LIBOR, depending upon the specific type of borrowing, plus an applicable margin based on our credit rating and other fees. At June 30, 2017, we had $95 million outstanding at an average interest rate of 2.33% under this agreement. Seni or Notes Our senior notes consist of three separate issuances. The first and second issuances are $250 million of 2.40% senior notes due March 2019 and $250 million of 3.85% senior notes due March 2024, respectively, both of which were issued in March 2014. Interest payments under both notes are due semiannually in March and September of each year, beginning September 2014. The third is $350 million of 3.30% senior notes due August 2022, issued in August 2015. Interest payments under this note are due semiannually in February and August of each year, beginning February 2016. All three senior notes were issued by J.B. Hunt Transport Services, Inc., a parent-level holding company with no significant assets or operations. The notes are guaranteed on a full and unconditional basis by a wholly-owned subsidiary. All other subsidiaries of the parent are minor. We registered these offerings and the sale of the notes under the Securities Act of 1933, pursuant to a shelf registration statement filed in February 2014. All notes are unsecured obligations and rank equally with our existing and future senior unsecured debt. We may redeem for cash some or all of the notes based on a redemption price set forth in the note indenture. See Note 5, Derivative Financial Instruments, for terms of interest rate swaps entered into on the $250 million of 2.40% senior notes due March 2019 and the $350 million of 3.30% senior notes due August 2022. Our financing arrangements require us to maintain certain covenants and financial ratios. We were in compliance with all covenants and financial ratios at June 30, 2017. |
Note 5 - Derivative Financial Instruments |
6 Months Ended | ||
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Jun. 30, 2017 | |||
Notes to Financial Statements | |||
Derivative Instruments and Hedging Activities Disclosure [Text Block] |
We periodically utilize derivative instruments for hedging and non-trading purposes to manage exposure to changes in interest rates and to maintain an appropriate mix of fixed and variable-rate debt. At inception of a derivative contract, we document relationships between derivative instruments and hedged items, as well as our risk-management objective and strategy for undertaking various derivative transactions, and assess hedge effectiveness. If it is determined that a derivative is not highly effective as a hedge, or if a derivative ceases to be a highly effective hedge, we discontinue hedge accounting prospectively. We entered into receive fixed-rate and pay variable-rate interest rate swap agreements simultaneously with the issuance of our $250 million of 2.40% senior notes due March 2019 and $350 million of 3.30% senior notes due August 2022, to effectively convert this fixed-rate debt to variable-rate. The notional amounts of these interest rate swap agreements equal those of the corresponding fixed-rate debt. The applicable interest rates under these agreements is based on LIBOR plus an established margin, resulting in an interest rate of 2.09% for our $250 million of 2.40% senior notes and 2.54% for our $350 million of 3.30% senior notes at June 30, 2017. The swaps expire when the corresponding senior notes are due. The fair values of these swaps are recorded in other assets in our Condensed Consolidated Balance Sheet at June 30, 2017. See Note 7, Fair Value Measurements, for disclosure of fair value. These derivatives meet the required criteria to be designated as fair value hedges, and as the specific terms and notional amounts of these derivative instruments match those of the fixed-rate debt being hedged, these derivative instruments are assumed to perfectly hedge the related debt against changes in fair value due to changes in the benchmark interest rate. Accordingly, any change in the fair value of these interest rate swaps recorded in earnings is offset by a corresponding change in the fair value of the related debt. |
Note 6 - Capital Stock |
6 Months Ended | ||
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Jun. 30, 2017 | |||
Notes to Financial Statements | |||
Stockholders' Equity Note Disclosure [Text Block] |
On October 22, 2015, our Board of Directors authorized the purchase of $500 million of our common stock. On April 20, 2017, our Board of Directors authorized an additional purchase of up to $500 million of our common stock. At June 30, 2017, $521 million of the combined authorization was remaining. We purchased approximately 1,892,000 shares, or $180 million, of our common stock under our repurchase authorizations during the six months ended June 30, 2017. On April 20, 2017, our Board of Directors declared a regular quarterly dividend of $0.23 per common share, which was paid on May 19, 2017 , May 5, 2017 . July 20, 2017, our Board of Directors declared a regular quarterly dividend of $0.23 per common share, which will be paid on August 18, 2017 , August 7, 2017 . |
Note 7 - Fair Value Measurements |
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Fair Value Disclosures [Text Block] |
Assets and Liabilities Measured at Fair Value on a Recurring Basis Our assets and liabilities measured at fair value are based on valuation techniques which consider prices and other relevant information generated by market transactions involving identical or comparable assets and liabilities. These valuation methods are based on either quoted market prices (Level 1 ) or inputs, other than quoted prices in active markets, that are observable either directly or indirectly (Level 2 ). The following are assets and liabilities measured at fair value on a recurring basis at June 30, 2017 ( in millions):
The fair value of trading investments has been measured using the market approach (Level 1 ) and reflect quoted market prices. The fair values of interest rate swaps and corresponding senior notes have been measured using the income approach (Level 2 ), which include relevant interest rate curve inputs. Trading investments and interest rate swaps are classified in other assets in our Condensed Consolidated Balance Sheets and the senior notes are classified in long-term debt in our Condensed Consolidated Balance Sheets.Financial Instruments The carrying amount and estimated fair value at June 30, 2017, using the income approach (Level 2 ), based on their net present value, discounted at our current borrowing rate, of our senior revolving line of credit and remaining senior notes not measured at fair value on a recurring basis, were $342.9 million and $358.7 million, respectively. The carrying amounts of all other instruments at June 30, 2017, approximate their fair value due to the short maturity of these instruments. |
Note 8 - Income Taxes |
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Jun. 30, 2017 | |||
Notes to Financial Statements | |||
Income Tax Disclosure [Text Block] |
Our effective income tax rate was 37.4% for the three months ended June 30, 2017, compared to 38.0% for the three months ended June 30, 2016. Our effective income tax rate was 32.9% for the first six months of 2017, compared to 38.0% in 2016. In determining our quarterly provision for income taxes, we use an estimated annual effective tax rate, adjusted for discrete items. This rate is based on our expected annual income, statutory tax rates, best estimate of nontaxable and nondeductible items of income and expense, and the ultimate outcome of tax audits. Income tax expense for the first six months of 2017 included a one -time after-tax benefit of $13.6 million for the claiming of federal research and development tax credits and domestic production tax deductions for the 2012 through 2016 tax years, recorded in the first quarter of 2017. At June 30, 2017, we had a total of $35.2 million in gross unrecognized tax benefits, which are a component of other long-term liabilities on our Condensed Consolidated Balance Sheets. Of this amount, $22.9 million represents the amount of unrecognized tax benefits that, if recognized, would impact our effective tax rate. The total amount of accrued interest and penalties for such unrecognized tax benefits was $5.2 million at June 30, 2017. |
Note 9 - Legal Proceedings |
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Notes to Financial Statements | |||
Commitments and Contingencies Disclosure [Text Block] |
We are a defendant in certain class-action lawsuits in which the plaintiffs are current and former California-based drivers who allege claims for unpaid wages, failure to provide meal and rest periods, and other items. During the first half of 2014, the Court in the lead class-action granted judgment in our favor with regard to all claims. The plaintiffs have appealed the case to the Ninth Circuit Court of Appeals where it is currently pending. The overlapping claims in the remaining actions have been stayed pending a decision in the lead class-action case. We cannot reasonably estimate at this time the possible loss or range of loss, if any, that may arise from these lawsuits.In January, 2017, we exercised our right to utilize the arbitration process to review the division of revenue collected beginning May 1, 2016, as well as to clarify other issues, under our Joint Service Agreement with BNSF Railway Company (BNSF). BNSF has requested the same, and the arbitration process has commenced. BNSF provides a significant amount of rail transportation services to our JBI business segment. At this time, we are unable to reasonably predict the outcome of the arbitration, and, as such, no gain or loss contingency can be determined or recorded. Normal commercial business activity between the parties, including load tendering, load tracing, billing and payments, is expected to continue on a timely basis.We are involved in certain other claims and pending litigation arising from the normal conduct of business. Based on present knowledge of the facts and, in certain cases, opinions of outside counsel, we believe the resolution of these claims and pending litigation will not have a material adverse effect on our financial condition, results of operations or liquidity. |
Note 10 - Subsequent Event |
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Notes to Financial Statements | |||
Subsequent Events [Text Block] |
On July 20, 2017, we entered into an agreement to acquire Special Logistics Dedicated, LLC, and its affiliated entities, subject to customary closing conditions. The purchase price is $136 million with no assumption of debt. Upon closing of this acquisition we will acquire net working capital, revenue equipment and customer contracts, and we will assume facility leases. We anticipate using our existing revolving credit facility to finance this transaction and to provide liquidity for future operations. |
Note 11 - Business Segments |
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Segment Reporting Disclosure [Text Block] |
We reported four three and six months ended June 30, 2017 and 2016. These segments included Intermodal (JBI), Dedicated Contract Services® (DCS), Integrated Capacity Solutions (ICS), and Truckload (JBT). The operation of each of these businesses is described in Note 11, Segment Information , of our Annual Report (Form 10 -K) for the year ended December 31, 2016. A summary of certain segment information is presented below (in millions):
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Significant Accounting Policies (Policies) |
6 Months Ended |
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Jun. 30, 2017 | |
Accounting Policies [Abstract] | |
Basis of Accounting, Policy [Policy Text Block] | Basis of Presentation The accompanying unaudited interim Condensed Consolidated Financial Statements have been prepared in accordance with U.S. generally accepted accounting principles (GAAP) for interim financial information. We believe such statements include all adjustments (consisting only of normal recurring adjustments) necessary for the fair presentation of our financial position, results of operations and cash flows at the dates and for the periods indicated. Pursuant to the requirements of the Securities and Exchange Commission (SEC) applicable to quarterly reports on Form 10 -Q, the accompanying financial statements do not include all disclosures required by GAAP for annual financial statements. While we believe the disclosures presented are adequate to make the information not misleading, these unaudited interim Condensed Consolidated Financial Statements should be read in conjunction with the Consolidated Financial Statements and related notes included in our Annual Report on Form 10 -K for the year ended December 31, 2016. Operating results for the periods presented in this report are not necessarily indicative of the results that may be expected for the calendar year ending December 31, 2017, or any other interim period. Our business is somewhat seasonal with slightly higher freight volumes typically experienced during August through early November in our full-load freight transportation business. |
New Accounting Pronouncements, Policy [Policy Text Block] | Recent Accounting Pronouncements In May 2014, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2014 -09, Revenue from Contracts with Customers, which supersedes virtually all existing revenue recognition guidance. The new standard requires an entity to recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration the entity expects to receive in exchange for those goods or services. This update also requires additional disclosure about the nature, amount, timing, and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and changes in judgments and assets recognized from costs incurred to obtain or fulfill a contract. In August 2015, the FASB issued ASU 2015 -14, Revenue from Contracts with Customers: Deferral of the Effective Date, which deferred the effective date of ASU 2014 -09, one year to interim and annual periods beginning after December 15, 2017. Early adoption is permitted after the original effective date of December 15, 2016. We have selected an implementation team and are in the process of contract review and documentation in accordance with the standard. We intend to adopt this new standard in the first quarter 2018, using the modified retrospective transition approach. Based on our work to date, we do not expect the standard to have a material impact on our financial statements. In February 2016, the FASB issued ASU 2016 -02, Leases, which requires lessees to recognize a right-of-use asset and a lease liability for most leases in the balance sheet as well as other qualitative and quantitative disclosures. ASU 2016 -02 is to be applied using a modified retrospective method and is effective for interim and annual periods beginning after December 15, 2018, but early adoption is permitted. We are currently evaluating the potential effects of the adoption of this update on our financial statements.Accounting Prono uncement Adopted in 201 7 In March 2016, the FASB issued ASU 2016 -09, Compensation – Stock Compensation: Improvements to Employee Share-Based Payment Accounting, which amended and simplified certain aspects of accounting for share-based payment award transactions, including the income tax consequences, classification of awards as either equity or liabilities, and classification on the statement of cash flows. The amendments were effective for interim and annual periods beginning after December 15, 2016. The application methods used in adoption varied with each component of the standard. We prospectively adopted ASU 2016 -09 during the first quarter 2017, which, upon vesting of share-based awards, will result in the recognition of excess tax benefits or tax deficiencies from share-based compensation as a discrete item in our income tax expense. Historically, these amounts were recorded as additional paid-in capital. Effectively all of our outstanding share-based awards vest within the third quarter of the vesting year. In addition, cash flows from excess tax benefits from share-based compensation, which historically have been reported as cash flows from financing activities are now reported, on a prospective basis, as cash flows from operating activities in our Condensed Consolidated Statement of Cash Flows. The remaining amendments within the standard had no impact on our Condensed Consolidated Financial Statements. |
Note 3 - Share-based Compensation (Tables) |
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Schedule of Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Table Text Block] |
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Note 4 - Financing Arrangements (Tables) |
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Schedule of Debt [Table Text Block] |
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Note 7 - Fair Value Measurements (Tables) |
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Schedule of Fair Value, Assets and Liabilities Measured on Recurring Basis [Table Text Block] |
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Note 11 - Business Segments (Tables) |
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Reconciliation of Assets from Segment to Consolidated [Table Text Block] |
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Reconciliation of Revenue from Segments to Consolidated [Table Text Block] |
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Reconciliation of Operating Profit (Loss) from Segments to Consolidated [Table Text Block] |
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Reconciliation of Other Significant Reconciling Items from Segments to Consolidated [Table Text Block] |
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Note 2 - Earnings Per Share (Details Textual) - shares shares in Millions |
3 Months Ended | 6 Months Ended | ||
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Jun. 30, 2017 |
Jun. 30, 2016 |
Jun. 30, 2017 |
Jun. 30, 2016 |
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Incremental Common Shares Attributable to Dilutive Effect of Share-based Payment Arrangements | 1.2 | 1.1 | 1.2 | 1.0 |
Note 3 - Share-based Compensation (Details Textual) $ in Millions |
3 Months Ended | 6 Months Ended |
---|---|---|
Jun. 30, 2017
USD ($)
shares
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Jun. 30, 2017
USD ($)
shares
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Restricted Stock Units (RSUs) [Member] | ||
Employee Service Share-based Compensation, Nonvested Awards, Compensation Cost Not yet Recognized | $ 59.0 | $ 59.0 |
Employee Service Share-based Compensation, Nonvested Awards, Compensation Cost Not yet Recognized, Period for Recognition | 3 years 292 days | |
Share-based Compensation Arrangement by Share-based Payment Award, Shares Issued in Period | shares | 5,514 | 14,623 |
Performance Shares [Member] | ||
Employee Service Share-based Compensation, Nonvested Awards, Compensation Cost Not yet Recognized | $ 13.3 | $ 13.3 |
Employee Service Share-based Compensation, Nonvested Awards, Compensation Cost Not yet Recognized, Period for Recognition | 2 years 146 days |
Note 3 - Share-based Compensation - Components of Share-based Compensation (Details) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
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Jun. 30, 2017 |
Jun. 30, 2016 |
Jun. 30, 2017 |
Jun. 30, 2016 |
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Restricted Stock Units (RSUs) [Member] | ||||
Pretax compensation expense | $ 8,873 | $ 8,939 | $ 17,010 | $ 16,907 |
Tax benefit | 3,314 | 3,397 | 5,596 | 6,425 |
Restricted share unit expense, net of tax | 5,559 | 5,542 | 11,414 | 10,482 |
Performance Shares [Member] | ||||
Pretax compensation expense | 3,067 | 3,004 | 6,100 | 6,008 |
Tax benefit | 1,146 | 1,142 | 2,007 | 2,283 |
Restricted share unit expense, net of tax | $ 1,921 | $ 1,862 | $ 4,093 | $ 3,725 |
Note 4 - Financing Arrangements - Outstanding Borrowings (Details) - USD ($) $ in Thousands |
Jun. 30, 2017 |
Dec. 31, 2016 |
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Long-term debt | $ 943,174 | $ 986,278 |
Senior Debt Obligations [Member] | Line of Credit [Member] | ||
Long-term Debt | 94,400 | 139,000 |
Senior Debt Obligations [Member] | Senior Notes [Member] | ||
Long-term Debt | $ 848,800 | $ 847,300 |
Note 6 - Capital Stock (Details Textual) - USD ($) $ / shares in Units, $ in Millions |
3 Months Ended | 6 Months Ended | |||||
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Jul. 20, 2017 |
Apr. 20, 2017 |
Jun. 30, 2017 |
Jun. 30, 2016 |
Jun. 30, 2017 |
Jun. 30, 2016 |
Oct. 22, 2015 |
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Stock Repurchase Program, Authorized Amount | $ 500 | ||||||
Stock Repurchase Program, Additional Authorized Amount | $ 500 | ||||||
Stock Repurchase Program, Remaining Authorized Repurchase Amount | $ 521 | $ 521 | |||||
Treasury Stock, Shares, Acquired | 1,892,000 | ||||||
Dividends Payable, Date of Record | May 05, 2017 | ||||||
Treasury Stock, Value, Acquired | $ 180 | ||||||
Common Stock, Dividends, Per Share, Declared | $ 0.23 | $ 0.23 | $ 0.22 | $ 0.46 | $ 0.44 | ||
Dividends Payable, Date to be Paid | May 19, 2017 | ||||||
Subsequent Event [Member] | |||||||
Dividends Payable, Date of Record | Aug. 07, 2017 | ||||||
Common Stock, Dividends, Per Share, Declared | $ 0.23 | ||||||
Dividends Payable, Date to be Paid | Aug. 18, 2017 |
Note 7 - Fair Value Measurements (Details Textual) - Senior Notes [Member] - Fair Value, Measurements, Recurring [Member] $ in Millions |
Jun. 30, 2017
USD ($)
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Long-term Debt | $ 342.9 |
Estimate of Fair Value Measurement [Member] | |
Long-term Debt, Fair Value | $ 358.7 |
Note 7 - Fair Value Measurements - Assets and Liabilities Measured at Fair Value (Details) - Fair Value, Measurements, Recurring [Member] $ in Millions |
Jun. 30, 2017
USD ($)
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Fair Value, Inputs, Level 1 [Member] | |
Trading investments | $ 15.6 |
Fair Value, Inputs, Level 2 [Member] | |
Interest rate swap | 3.7 |
Senior notes | $ (600.3) |
Note 8 - Income Taxes (Details Textual) - USD ($) $ in Millions |
3 Months Ended | 6 Months Ended | ||
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Jun. 30, 2017 |
Jun. 30, 2016 |
Jun. 30, 2017 |
Jun. 30, 2016 |
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Effective Income Tax Rate Reconciliation, Percent | 37.40% | 38.00% | 32.90% | 38.00% |
Effective Income Tax Rate Reconciliation, Tax Credit, Research, Amount | $ 13.6 | |||
Unrecognized Tax Benefits that Would Impact Effective Tax Rate | $ 22.9 | 22.9 | ||
Unrecognized Tax Benefits, Income Tax Penalties and Interest Accrued | 5.2 | 5.2 | ||
Other Noncurrent Liabilities [Member] | ||||
Unrecognized Tax Benefits | $ 35.2 | $ 35.2 |
Note 10 - Subsequent Event (Details Textual) - Subsequent Event [Member] - Special Logistics Dedicated, LLC [Member] $ in Thousands |
Jul. 20, 2017
USD ($)
|
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Business Combination, Consideration Transferred | $ 136,000 |
Business Combination, Consideration Transferred, Liabilities Incurred | $ 0 |
Note 11 - Business Segments (Details Textual) |
3 Months Ended | 6 Months Ended | ||
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Jun. 30, 2017 |
Jun. 30, 2016 |
Jun. 30, 2017 |
Jun. 30, 2016 |
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Number of Reportable Segments | 4 | 4 | 4 | 4 |
Note 11 - Business Segments - Assets (Details) - USD ($) $ in Thousands |
Jun. 30, 2017 |
Dec. 31, 2016 |
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Assets | $ 3,778,382 | $ 3,828,988 |
Operating Segments [Member] | JBI [Member] | ||
Assets | 2,026,000 | 2,032,000 |
Operating Segments [Member] | DCS [Member] | ||
Assets | 942,000 | 951,000 |
Operating Segments [Member] | ICS [Member] | ||
Assets | 130,000 | 136,000 |
Operating Segments [Member] | JBT [Member] | ||
Assets | 270,000 | 279,000 |
Operating Segments [Member] | Corporate and Other [Member] | ||
Assets | $ 410,000 | $ 431,000 |
Note 11 - Business Segments - Operating Revenues (Details) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2017 |
Jun. 30, 2016 |
Jun. 30, 2017 |
Jun. 30, 2016 |
|
Revenues | $ 1,726,915 | $ 1,615,026 | $ 3,356,073 | $ 3,143,738 |
Operating Segments [Member] | ||||
Revenues | 1,730,000 | 1,618,000 | 3,363,000 | 3,151,000 |
Operating Segments [Member] | JBI [Member] | ||||
Revenues | 1,001,000 | 933,000 | 1,939,000 | 1,829,000 |
Operating Segments [Member] | DCS [Member] | ||||
Revenues | 412,000 | 383,000 | 804,000 | 741,000 |
Operating Segments [Member] | ICS [Member] | ||||
Revenues | 222,000 | 204,000 | 432,000 | 387,000 |
Operating Segments [Member] | JBT [Member] | ||||
Revenues | 95,000 | 98,000 | 188,000 | 194,000 |
Intersegment Eliminations [Member] | ||||
Revenues | $ (3,000) | $ (3,000) | $ (7,000) | $ (7,000) |
Note 11 - Business Segments - Operating Income (Details) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2017 |
Jun. 30, 2016 |
Jun. 30, 2017 |
Jun. 30, 2016 |
|
Operating income | $ 163,615 | $ 175,792 | $ 313,004 | $ 343,682 |
JBI [Member] | Operating Segments [Member] | ||||
Operating income | 109,700 | 105,600 | 205,000 | 208,800 |
DCS [Member] | Operating Segments [Member] | ||||
Operating income | 48,600 | 50,500 | 93,300 | 95,200 |
ICS [Member] | Operating Segments [Member] | ||||
Operating income | (200) | 10,900 | 4,200 | 21,700 |
JBT [Member] | Operating Segments [Member] | ||||
Operating income | 5,500 | 8,800 | 10,500 | 18,000 |
Corporate and Other [Member] | Operating Segments [Member] | ||||
Operating income |
Note 11 - Business Segments - Depreciation and Amortization (Details) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2017 |
Jun. 30, 2016 |
Jun. 30, 2017 |
Jun. 30, 2016 |
|
Depreciation and amortization | $ 93,050 | $ 90,364 | $ 185,238 | $ 178,716 |
JBI [Member] | Operating Segments [Member] | ||||
Depreciation and amortization | 40,400 | 40,000 | 80,800 | 79,000 |
DCS [Member] | Operating Segments [Member] | ||||
Depreciation and amortization | 37,200 | 35,800 | 73,600 | 70,600 |
ICS [Member] | Operating Segments [Member] | ||||
Depreciation and amortization | 300 | 100 | 600 | 200 |
JBT [Member] | Operating Segments [Member] | ||||
Depreciation and amortization | 10,300 | 10,100 | 20,500 | 20,200 |
Corporate and Other [Member] | Operating Segments [Member] | ||||
Depreciation and amortization | $ 4,900 | $ 4,400 | $ 9,700 | $ 8,700 |
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