EX-99.1 2 ex_125665.htm EXHIBIT 99.1 ex_125665.htm

Exhibit 99.1

 

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

    

 

FOR IMMEDIATE RELEASE

 

 

J.B. HUNT TRANSPORT SERVICES, INC. REPORTS EARNINGS FOR THE THIRD QUARTER 2018 AND SCHEDULES CONFERENCE CALL

 

Third Quarter 2018 Revenue:  $2.21 billion; up 20%
Third Quarter 2018 Operating Income: $174.7 million; up 6%
Third Quarter 2018 EPS: $1.19 vs. 91 cents

 

LOWELL, ARKANSAS, October 15, 2018 - J.B. Hunt Transport Services, Inc., (NASDAQ:JBHT) announced third quarter 2018 net earnings of $131.1 million, or diluted earnings per share of $1.19 vs. third quarter 2017 net earnings of $100.4 million, or 91 cents per diluted share. Included in the current quarter results are the pre-announced after-tax charges of $31.1 million or 28 cents per share.

 

Total operating revenue for the current quarter was $2.21 billion, compared with $1.84 billion for the third quarter 2017. A revenue per load increase of 15% in Intermodal (JBI), a 15% increase in revenue producing trucks and an increase of 7% in asset productivity in Dedicated Contract Services (DCS), a 41% increase in load growth in Integrated Capacity Solutions (ICS) and a 19% increase in rates per loaded mile in Truck (JBT). Current quarter total operating revenue, excluding fuel surcharges, increased 17% vs. the comparable quarter 2017.

 

Operating income for the current quarter totaled $174.7 million vs. $165 million for the third quarter 2017. Operating income increased from third quarter 2017 primarily from customer rate increases partially offset by increases in driver wages and recruiting costs, higher than normal implementation expenses for new long term DCS contracts, increased rail purchase transportation and third party dray rates, increased technology spend on new applications and legacy operating systems as well as the $39 million in pre-announced charges reflected in increased rail purchase transportation expense, insurance and claims costs and bad debt expense.

 

Interest expense in the current quarter increased primarily from higher debt balances, higher interest rates and costs to refinance our revolving line of credit compared to third quarter 2017. The effective income tax rate for the current quarter is 20.4%, which includes discrete tax benefits related to vesting of equity compensation awards and the statute expiration of uncertain tax positions. The tax rate was 35.9% in the third quarter 2017. We expect our 2018 annual tax rate to be approximately 24%.

 

 

 

 

Segment Information:

 

Intermodal (JBI)

 

Third Quarter 2018 Segment Revenue: $1.22 billion; up 16%
Third Quarter 2018 Operating Income: $120.3 million; up 10%

 

Overall volumes increased 1% over the same period in 2017. The Eastern network realized load growth of 9.5% while Transcontinental loads declined 5% compared to the third quarter 2017. The network disruption caused from five major derailments in our national intermodal network and the service disruption from hurricane Florence combined to limit our ability to handle approximately 4,000 loads in the current period. Revenue increased 16% reflecting the 1% volume growth and an approximate 15% increase in revenue per load, which is the combination of changes in customer rate, freight mix and fuel surcharges. Revenue per load excluding fuel surcharges increased approximately 12% compared to third quarter 2017.

 

Operating income increased 10% over prior year. Benefits from customer rate increases were partially offset by increased costs to attract, place and retain drivers; increases in costs from inefficiencies due to rail congestion including additional third-party dray expense; $18.3 million of the pre-announced increase in rail purchase transportation costs; $8.6 million of the pre-announced charge to insurance and claims expense and $0.4 million of the pre-announced charge due to a customer bankruptcy. The current period ended with approximately 93,000 units of trailing capacity and 5,600 power units assigned to the dray fleet.

 

 

Dedicated Contract Services (DCS)

 

Third Quarter 2018 Segment Revenue: $543 million; up 24%
Third Quarter 2018 Operating Income: $35.0 million; down 18%

 

DCS revenue increased 24% during the current quarter over the same period in 2017. Productivity (revenue per truck per week) increased by approximately 7% vs. 2017. Productivity excluding fuel surcharge revenue increased approximately 4% from a year ago primarily from customer rate increases, improved integration of assets between customer accounts and increased customer supply chain fluidity. Included in the DCS revenue growth, Final Mile Services (FMS) recorded an increase in revenue of $23 million (including approximately $10.3 million from the July 2017 acquisition) compared to the third quarter 2017. A net additional 1,261 revenue producing trucks, 598 net additions sequentially from second quarter 2018, were in the fleet by the end of the quarter. Approximately 42% of these additions represent private fleet conversions and 5% represent FMS versus traditional dedicated capacity services. Customer retention rates remain above 98%.

 

Operating income decreased by 18% from a year ago primarily from $8.4 million of the pre-announced charge to insurance and claims costs, approximately $4 million in implementation costs for new contracts in the early stages of operations, increased costs to expand the FMS network, increased driver wages and recruiting costs including the length of time to fill open trucks and increased salaries and benefits costs.

 

 

Integrated Capacity Solutions (ICS)

 

Third Quarter 2018 Segment Revenue: $346 million; up 28%
Third Quarter 2018 Operating Income: $10.2 million; up 40%

     

ICS revenue increased 28% in the current quarter vs. the third quarter 2017. Volumes increased 41% while revenue per load decreased approximately 9% primarily due to an increased mix of contractual less-than-truckload volume compared to third quarter 2017. Total contractual volumes represented approximately 72% of total load volume and 49% of total revenue in the current period compared to 65% and 48%, respectively, in the third quarter 2017. Of the total reported ICS revenue, approximately $151 million was executed through the marketplace for J.B. Hunt 360 compared to $137 million in the second quarter 2018.

 

 

 

 

Operating income increased 40% over the same period 2017 primarily from a higher gross profit margin percentage and improved operating leverage in branches open more than two years. Gross profit margin increased to 15.5% in the current quarter vs. 12.8% compared to the prior year. Improvements in gross profit margins were partially offset by $2.2 million of the pre-announced charge due to a customer bankruptcy and approximately $0.8 million of the pre-announced charge in insurance and claims costs, higher personnel costs and increased technology development costs as the marketplace for J.B. Hunt 360 continues growth and adds additional functionality. Total location count decreased to 43 in the current period from 44 in 2017 as two locations were consolidated. ICS’s carrier base increased 26% and the employee count increased 26% vs. third quarter 2017.

 

 

Truck (JBT)

 

Third Quarter 2018 Segment Revenue: $106 million; up 14%
Third Quarter 2018 Operating Income: $9.2 million; up 61%

 

JBT revenue increased 14% from the same period in 2017. Revenue excluding fuel surcharge increased approximately 13%, primarily from a 19% increase in rates per loaded mile offset by a 5% decrease in length of haul compared to a year ago. Comparable contractual customer rates increased approximately 13% compared to the same period in 2017. At the end of the period, JBT operated 1,972 tractors compared to 2,040 a year ago.

 

Operating income increased 61% compared to third quarter 2017. Favorable changes from higher rates per loaded mile and lower equipment ownership costs were partially offset by $0.3 million of the pre-announced charge to insurance and claims expense, increased driver wages and independent contractor costs per mile and higher driver and independent contractor recruiting costs compared to third quarter 2017.

 

Cash Flow and Capitalization:

 

At September 30, 2018, we had a total of $1.07 billion outstanding on various debt instruments compared to $1.08 billion at September 30, 2017 and $1.09 billion at December 31, 2017.

 

Our net capital expenditures for the nine months ended September 30, 2018 approximated $585 million compared to $315 million for the same period 2017. At September 30, 2018, we had cash and cash equivalents of approximately $7.6 million.

 

We purchased approximately 422,000 shares of our common stock during the third quarter 2018 for approximately $50 million. At September 30, 2018, we had approximately $421 million remaining under our share repurchase authorization. Actual shares outstanding at September 30, 2018 approximated 109.2 million.

 

Conference Call Information:

 

The Company will hold a conference call today at 4:30-6:00 pm Central to discuss the quarterly earnings. The call-in number for participants is (866) 439-5964 and a replay of the call will be posted on its website www.jbhunt/investors within two hours following the call.

 

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 immediately to interested parties on our web site, www.jbhunt.com.

 

 

 

 

J.B. HUNT TRANSPORT SERVICES, INC.

Condensed Consolidated Statements of Earnings

(in thousands, except per share data)

(unaudited)

 

   

Three Months Ended September 30

   

2018

 

2017

           

% Of

         

% Of

   

Amount

   

Revenue

 

Amount

   

Revenue

                                 

Operating revenues, excluding fuel surcharge revenues

  $ 1,936,653             $ 1,657,380          

Fuel surcharge revenues

    273,107               185,954          

Total operating revenues

    2,209,760       100.0 %     1,843,334       100.0 %
                                 

Operating expenses

                               

Rents and purchased transportation

    1,125,386       50.9 %     947,145       51.4 %

Salaries, wages and employee benefits

    495,350       22.4 %     408,340       22.2 %

Fuel and fuel taxes

    117,976       5.3 %     87,006       4.7 %

Depreciation and amortization

    108,801       4.9 %     95,959       5.2 %

Operating supplies and expenses

    79,225       3.6 %     67,578       3.7 %

General and administrative expenses, net of asset dispositions

    42,449       1.9 %     29,389       1.6 %

Insurance and claims

    45,594       2.1 %     26,463       1.4 %

Operating taxes and licenses

    13,203       0.7 %     10,744       0.6 %

Communication and utilities

    7,088       0.3 %     5,738       0.3 %

Total operating expenses

    2,035,072       92.1 %     1,678,362       91.1 %

Operating income

    174,688       7.9 %     164,972       8.9 %

Net interest expense

    9,961       0.5 %     8,310       0.4 %

Earnings before income taxes

    164,727       7.4 %     156,662       8.5 %

Income taxes

    33,617       1.5 %     56,277       3.1 %

Net earnings

  $ 131,110       5.9 %   $ 100,385       5.4 %

Average diluted shares outstanding

    110,235               110,628          

Diluted earnings per share

  $ 1.19             $ 0.91          

 

 

J.B. HUNT TRANSPORT SERVICES, INC.

Condensed Consolidated Statements of Earnings

(in thousands, except per share data)

(unaudited)

 

   

Nine Months Ended September 30

   

2018

 

2017

           

% Of

         

% Of

   

Amount

   

Revenue

 

Amount

   

Revenue

                                 

Operating revenues, excluding fuel surcharge revenues

  $ 5,523,974             $ 4,670,200          

Fuel surcharge revenues

    773,058               529,208          

Total operating revenues

    6,297,032       100.0 %     5,199,408       100.0 %
                                 

Operating expenses

                               

Rents and purchased transportation

    3,163,443       50.2 %     2,624,707       50.5 %

Salaries, wages and employee benefits

    1,410,942       22.4 %     1,178,524       22.7 %

Fuel and fuel taxes

    341,398       5.4 %     246,725       4.7 %

Depreciation and amortization

    321,807       5.1 %     281,198       5.4 %

Operating supplies and expenses

    226,352       3.6 %     190,085       3.7 %

General and administrative expenses, net of asset dispositions

    112,078       1.8 %     74,597       1.4 %

Insurance and claims

    102,464       1.6 %     76,930       1.5 %

Operating taxes and licenses

    37,025       0.6 %     32,329       0.6 %

Communication and utilities

    23,241       0.4 %     16,337       0.3 %

Total operating expenses

    5,738,750       91.1 %     4,721,432       90.8 %

Operating income

    558,282       8.9 %     477,976       9.2 %

Net interest expense

    28,969       0.5 %     22,521       0.4 %

Earnings before income taxes

    529,313       8.4 %     455,455       8.8 %

Income taxes

    128,409       2.0 %     154,499       3.0 %

Net earnings

  $ 400,904       6.4 %   $ 300,956       5.8 %

Average diluted shares outstanding

    110,591               111,154          

Diluted earnings per share

  $ 3.63             $ 2.71          

 

 

 

 

Financial Information By Segment 

(in thousands)

(unaudited)

 

   

Three Months Ended September 30

 
   

2018

   

2017

 
           

% Of

           

% Of

 
   

Amount

   

Total

   

Amount

   

Total

 
                                 

Revenue

                               

Intermodal

  $ 1,218,408       55 %   $ 1,048,187       57 %

Dedicated

    542,884       24 %     437,521       24 %

Integrated Capacity Solutions

    345,830       16 %     269,451       14 %

Truck

    105,685       5 %     92,632       5 %

Subtotal

    2,212,807       100 %     1,847,791       100 %

Intersegment eliminations

    (3,047 )     (0 %)     (4,457 )     (0 %)

Consolidated revenue

  $ 2,209,760       100 %   $ 1,843,334       100 %
                                 
                                 

Operating income

                               

Intermodal

  $ 120,319       69 %   $ 109,130       66 %

Dedicated

    34,990       20 %     42,867       26 %

Integrated Capacity Solutions

    10,216       6 %     7,291       4 %

Truck

    9,218       5 %     5,713       4 %

Other (1)

    (55 )     (0 %)     (29 )     (0 %)

Operating income

  $ 174,688       100 %   $ 164,972       100 %

 

 

   

Nine Months Ended September 30

 
   

2018

   

2017

 
           

% Of

           

% Of

 
   

Amount

   

Total

   

Amount

   

Total

 

Revenue

                               

Intermodal

  $ 3,453,180       55 %   $ 2,986,746       57 %

Dedicated

    1,567,346       25 %     1,241,899       24 %

Integrated Capacity Solutions

    989,230       15 %     701,335       14 %

Truck

    299,644       5 %     280,895       5 %

Subtotal

    6,309,400       100 %     5,210,875       100 %

Intersegment eliminations

    (12,368 )     (0 %)     (11,467 )     (0 %)

Consolidated revenue

  $ 6,297,032       100 %   $ 5,199,408       100 %
                                 
                                 

Operating income

                               

Intermodal

  $ 368,554       66 %   $ 314,105       66 %

Dedicated

    134,003       24 %     136,195       29 %

Integrated Capacity Solutions

    34,026       6 %     11,520       2 %

Truck

    21,832       4 %     16,216       3 %

Other (1)

    (133 )     (0 %)     (60 )     (0 %)

Operating income

  $ 558,282       100 %   $ 477,976       100 %

 

(1)    Includes corporate support activity

 

 

 

 

Operating Statistics by Segment

(unaudited)

 

   

Three Months Ended September 30

 
   

2018

   

2017

 
                 

Intermodal

               
                 

Loads

    519,974       516,260  

Average length of haul

    1,636       1,685  

Revenue per load

  $ 2,343     $ 2,030  

Average tractors during the period *

    5,582       5,461  
                 

Tractors (end of period)

               

Company-owned

    4,969       4,768  

Independent contractor

    631       773  

Total tractors

    5,600       5,541  
                 

Net change in trailing equipment during the period

    2,577       1,724  

Trailing equipment (end of period)

    93,152       87,305  

Average effective trailing equipment usage

    89,456       85,910  
                 
                 

Dedicated

               
                 

Loads

    753,814       655,881  

Average length of haul

    174       177  

Revenue per truck per week**

  $ 4,504     $ 4,196  

Average trucks during the period***

    9,331       8,105  
                 

Trucks (end of period)

               

Company-owned

    9,182       7,792  

Independent contractor

    56       55  

Customer-owned (Dedicated operated)

    419       549  

Total trucks

    9,657       8,396  
                 

Trailing equipment (end of period)

    26,116       24,524  

Average effective trailing equipment usage

    26,600       24,914  
                 
                 

Integrated Capacity Solutions

               
                 

Loads

    334,321       236,796  

Revenue per load

  $ 1,034     $ 1,138  

Gross profit margin

    15.5 %     12.8 %

Employee count (end of period)

    1,137       899  

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

    69,000       54,900  
                 
                 

Truck

               
                 

Loads

    89,491       90,520  

Average length of haul

    417       437  

Loaded miles (000)

    37,348       39,516  

Total miles (000)

    44,850       47,292  

Average nonpaid empty miles per load

    83.7       86.0  

Revenue per tractor per week**

  $ 4,366     $ 3,524  

Average tractors during the period *

    1,904       2,055  
                 

Tractors (end of period)

               

Company-owned

    1,136       1,340  

Independent contractor

    836       700  

Total tractors

    1,972       2,040  
                 

Trailers (end of period)

    6,818       7,538  

Average effective trailing equipment usage

    6,462       7,099  

 

* Includes company-owned and independent contractor tractors

** Using weighted workdays

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

 

 

 

 

Operating Statistics by Segment

(unaudited)

 

   

Nine Months Ended September 30

 
   

2018

   

2017

 
                 

Intermodal

               
                 

Loads

    1,536,079       1,484,138  

Average length of haul

    1,644       1,680  

Revenue per load

  $ 2,248     $ 2,012  

Average tractors during the period *

    5,524       5,301  
                 

Tractors (end of period)

               

Company-owned

    4,969       4,768  

Independent contractor

    631       773  

Total tractors

    5,600       5,541  
                 

Net change in trailing equipment during the period

    4,542       2,711  

Trailing equipment (end of period)

    93,152       87,305  

Average effective trailing equipment usage

    87,724       81,451  
                 
                 

Dedicated

               
                 

Loads

    2,173,301       1,888,770  

Average length of haul

    178       178  

Revenue per truck per week**

  $ 4,471     $ 4,156  

Average trucks during the period***

    9,048       7,737  
                 

Trucks (end of period)

               

Company-owned

    9,182       7,792  

Independent contractor

    56       55  

Customer-owned (Dedicated operated)

    419       549  

Total trucks

    9,657       8,396  
                 

Trailing equipment (end of period)

    26,116       24,524  

Average effective trailing equipment usage

    26,736       24,126  
                 
                 

Integrated Capacity Solutions

               
                 

Loads

    917,120       714,923  

Revenue per load

  $ 1,079     $ 981  

Gross profit margin

    14.9 %     12.9 %

Employee count (end of period)

    1,137       899  

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

    69,000       54,900  
                 
                 

Truck

               
                 

Loads

    259,290       283,053  

Average length of haul

    434       435  

Loaded miles (000)

    112,494       123,080  

Total miles (000)

    134,163       147,227  

Average nonpaid empty miles per load

    83.6       86.1  

Revenue per tractor per week**

  $ 4,023     $ 3,484  

Average tractors during the period*

    1,950       2,103  
                 

Tractors (end of period)

               

Company-owned

    1,136       1,340  

Independent contractor

    836       700  

Total tractors

    1,972       2,040  
                 

Trailers (end of period)

    6,818       7,538  

Average effective trailing equipment usage

    6,506       7,165  

 

* 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)

 

   

September 30, 2018

   

December 31, 2017

 

ASSETS

               

Current assets:

               

Cash and cash equivalents

  $ 7,587     $ 14,612  

Accounts receivable

    1,095,638       920,767  

Prepaid expenses and other

    239,257       403,349  

Total current assets

    1,342,482       1,338,728  

Property and equipment

    5,064,126       4,670,464  

Less accumulated depreciation

    1,822,619       1,687,133  

Net property and equipment

    3,241,507       2,983,331  

Other assets

    137,682       143,290  
    $ 4,721,671     $ 4,465,349  
                 
                 

LIABILITIES & STOCKHOLDERS' EQUITY

               

Current liabilities:

               

Current debt

  $ 248,680     $ -  

Trade accounts payable

    569,453       598,594  

Claims accruals

    279,136       251,980  

Accrued payroll

    74,802       42,382  

Other accrued expenses

    40,589       28,888  

Total current liabilities

    1,212,660       921,844  
                 

Long-term debt

    820,864       1,085,649  

Other long-term liabilities

    89,141       76,661  

Deferred income taxes

    518,428       541,870  

Stockholders' equity

    2,080,578       1,839,325  
    $ 4,721,671     $ 4,465,349  

 

 

Supplemental Data

(unaudited)

 

   

September 30, 2018

   

December 31, 2017

 
                 

Actual shares outstanding at end of period (000)

    109,176       109,753  
                 

Book value per actual share outstanding at end of period

  $ 19.06     $ 16.76  

 

   

Nine Months Ended September 30

 
   

2018

   

2017

 
                 

Net cash provided by operating activities (000)

  $ 777,603     $ 628,549  
                 

Net capital expenditures (000)

  $ 584,977     $ 314,838