8-K

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C.   20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): April 16, 2018

J.B. HUNT TRANSPORT SERVICES, INC.

(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

Arkansas	0-11757	71-0335111
(State or other Jurisdiction of	Commission File Number	(IRS Employer
Incorporation or Organization		Identification No.)
615 J.B. Hunt Corporate Drive	72745	(479) 820-0000
Lowell, Arkansas	(Zip Code)	(Registrant’s telephone number)
(Address of Principal Executive Offices)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 or Rule 12b-2 of the Securities Exchange Act of 1934.

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. ☐

The information in this Current Report is being furnished and shall not be deemed “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that Section. The information in this Current Report shall not be incorporated by reference into any registration statement or other document pursuant to the Securities Act of 1933, as amended.

ITEM 2.02.      RESULTS OF OPERATIONS AND FINANCIAL CONDITION.

On April 16, 2018, we issued a news release announcing our revenues and earnings for the first quarter ended March 31, 2018. A copy of the news release is attached as Exhibit 99.1 and is incorporated herein by reference.

ITEM 9.01.     FINANCIAL STATEMENTS AND EXHIBITS

(d)     Exhibits.     

99.1 News release dated April 16, 2018, issued by J.B. Hunt Transport Services, Inc.

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 on the 19th day of April 2018.

J.B. HUNT TRANSPORT SERVICES, INC.

BY:     /s/ John N. Roberts, III                         

John N. Roberts, III

President and Chief Executive Officer

(Principal Executive Officer)

BY:     /s/ David G. Mee                                  

David G. Mee

Executive Vice President, Finance and

Administration and Chief Financial Officer

(Principal Financial Officer)

EX-99.1

Exhibit 99.1

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

FOR IMMEDIATE RELEASE

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

FOR THE FIRST QUARTER 2018

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

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

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

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

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

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

Segment Information:

Intermodal (JBI)

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

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

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

Dedicated Contract Services (DCS)

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

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

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

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

Integrated Capacity Solutions (ICS)

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

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

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

Truck (JBT)

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

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

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

Cash Flow and Capitalization:

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

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

We did not purchase any shares of our common stock during the quarter. At March 31, 2018, we had approximately $521 million remaining under our share repurchase authorizations. Actual shares outstanding at March 31, 2018, approximated 109.8 million.

This press release may contain forward-looking statements, which are based on information currently available. Actual results may differ materially from those currently anticipated due to a number of factors, including, but not limited to, those discussed in Item 1A of our Annual Report filed on Form 10-K for the year ended December 31, 2017. We assume no obligation to update any forward-looking statement to the extent we become aware that it will not be achieved for any reason. This press release and additional information will be available to interested parties on our website, www.jbhunt.com.

J.B. HUNT TRANSPORT SERVICES, INC. Condensed Consolidated Statements of Earnings (in thousands, except per share data)

(unaudited)

	Three Months Ended March 31
	2018					2017
			% Of					% Of
	Amount		Revenue			Amount		Revenue
Operating revenues, excluding fuel surcharge revenues	$	1,712,934				$	1,461,768
Fuel surcharge revenues		235,311					167,390
Total operating revenues		1,948,245		100.0	%		1,629,158		100.0	%
Operating expenses
Rents and purchased transportation		964,892		49.5	%		806,439		49.5	%
Salaries, wages and employee benefits		450,265		23.1	%		380,311		23.3	%
Fuel and fuel taxes		107,881		5.5	%		80,646		5.0	%
Depreciation and amortization		105,583		5.4	%		92,189		5.7	%
Operating supplies and expenses		70,681		3.6	%		58,022		3.6	%
General and administrative expenses, net of asset dispositions		32,326		1.7	%		23,481		1.3	%
Insurance and claims		28,499		1.5	%		23,005		1.4	%
Operating taxes and licenses		11,588		0.6	%		10,680		0.7	%
Communication and utilities		7,749		0.4	%		4,996		0.3	%
Total operating expenses		1,779,464		91.3	%		1,479,769		90.8	%
Operating income		168,781		8.7	%		149,389		9.2	%
Net interest expense		9,152		0.5	%		6,817		0.4	%
Earnings before income taxes		159,629		8.2	%		142,572		8.8	%
Income taxes		41,487		2.1	%		39,870		2.5	%
Net earnings	$	118,142		6.1	%	$	102,702		6.3	%
Average diluted shares outstanding		110,863					112,026
Diluted earnings per share	$	1.07				$	0.92

Financial Information By Segment 

(in thousands)

(unaudited)

	Three Months Ended March 31
	2018						2017
				% Of						% Of
	Amount			Total			Amount			Total
Revenue
Intermodal	$	1,070,264			55	%	$	937,118			57	%
Dedicated		494,480			25	%		392,461			24	%
Integrated Capacity Solutions		296,105			15	%		209,419			13	%
Truck		92,718			5	%		93,688			6	%
Subtotal		1,953,567			100	%		1,632,686			100	%
Intersegment eliminations		(5,322	)		(0	%)		(3,528	)		(0	%)
Consolidated revenue	$	1,948,245			100	%	$	1,629,158			100	%
Operating income
Intermodal	$	114,242			68	%	$	95,261			64	%
Dedicated		40,562			24	%		44,754			30	%
Integrated Capacity Solutions		8,876			5	%		4,469			3	%
Truck		5,130			3	%		4,941			3	%
Other (1)		(29	)		(0	%)		(36	)		(0	%)
Operating income	$	168,781			100	%	$	149,389			100	%

(1) Includes corporate support activity

Operating Statistics by Segment

(unaudited)

	Three Months Ended March 31
	2018			2017
Intermodal
Loads		495,764			466,840
Average length of haul		1,661			1,680
Revenue per load	$	2,159		$	2,007
Average tractors during the period *		5,494			5,222
Tractors (end of period)
Company-owned		4,763			4,506
Independent contractor		682			664
Total tractors		5,445			5,170
Net change in trailing equipment during the period		883			624
Trailing equipment (end of period)		89,493			85,218
Average effective trailing equipment usage		87,265			77,370
Dedicated
Loads		688,350			596,740
Average length of haul		182			180
Revenue per truck per week**	$	4,332		$	4,113
Average trucks during the period***		8,855			7,438
Trucks (end of period)
Company-owned		8,383			7,041
Independent contractor		52			12
Customer-owned (Dedicated operated)		476			529
Total trucks		8,911			7,582
Trailing equipment (end of period)		26,514			22,963
Average effective trailing equipment usage		27,069			23,564
Integrated Capacity Solutions
Loads		251,521			238,058
Revenue per load	$	1,177		$	880
Gross profit margin		14.4	%		14.3	%
Employee count (end of period)		971			853
Approximate number of third-party carriers (end of period)		59,800			52,100
Truck
Loads		81,499			95,636
Average length of haul		453			438
Loaded miles (000)		36,925			41,886
Total miles (000)		43,845			50,018
Average nonpaid empty miles per load		84.9			85.0
Revenue per tractor per week**	$	3,775		$	3,411
Average tractors during the period *		1,943			2,151
Tractors (end of period)
Company-owned		1,267			1,379
Independent contractor		659			765
Total tractors		1,926			2,144
Trailers (end of period)		7,036			7,514
Average effective trailing equipment usage		6,560			7,163

* Includes company-owned and independent contractor tractors

** Using weighted workdays

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

J.B. HUNT TRANSPORT SERVICES, INC.

Condensed Consolidated Balance Sheets

(in thousands)

(unaudited)

	March 31, 2018		December 31, 2017
ASSETS
Current assets:
Cash and cash equivalents	$	7,082	$	14,612
Accounts Receivable		900,903		920,767
Prepaid expenses and other		335,705		403,349
Total current assets		1,243,690		1,338,728
Property and equipment		4,764,722		4,670,464
Less accumulated depreciation		1,720,446		1,687,133
Net property and equipment		3,044,276		2,983,331
Other assets		141,318		143,290
	$	4,429,284	$	4,465,349
LIABILITIES & STOCKHOLDERS' EQUITY
Current liabilities:
Current debt	$	247,609	$	-
Trade accounts payable		505,839		598,594
Claims accruals		264,523		251,980
Accrued payroll		58,599		42,382
Other accrued expenses		23,573		28,888
Total current liabilities		1,100,143		921,844
Long-term debt		752,423		1,085,649
Other long-term liabilities		88,373		76,661
Deferred income taxes		545,282		541,870
Stockholders' equity		1,943,063		1,839,325
	$	4,429,284	$	4,465,349

Supplemental Data

(unaudited)

	March 31, 2018		December 31, 2017
Actual shares outstanding at end of period (000)		109,756		109,753
Book value per actual share outstanding at end of period	$	17.70	$	16.76

	Three Months Ended March 31
	2018		2017
Net cash provided by operating activities (000)	$	261,618	$	285,633
Net capital expenditures (000)	$	179,045	$	91,007