J.B. Hunt Transport Services, Inc. Reports Earnings For The Second Quarter 2013

J.B. Hunt Transport Services, Inc., (NASDAQ:JBHT) announced second quarter 2013 net earnings of $87.7 million, or diluted earnings per share of 73 cents vs. second quarter 2012 net earnings of $80.5 million, or 67 cents per diluted share.

Total operating revenue for the current quarter was $1.38 billion, compared with $1.26 billion for the second quarter 2012. Load growth of 12% in Intermodal (JBI) and 29% in Integrated Capacity Solutions (ICS), helped drive a 12% and 20% increase in segment revenue, respectively. Dedicated Contract Services (DCS) segment revenue increased by 13% as new, large private fleet conversions continue to be implemented, while Truck (JBT) segment revenue decreased by 20% primarily from a smaller fleet and lower utilization. Current quarter total operating revenue, excluding fuel surcharges, increased 11% vs. the comparable quarter 2012.

Operating income for the current quarter totaled $147 million vs. $137 million for the second quarter 2012. The increase in operating income was primarily due to load growth, partially offset by $2.5 million of implementation expenditures in DCS for two previously announced private fleet conversion contracts, a $2.4 million write-off of abandoned shared technology costs, a $1.5 million loss on the destruction of equipment involved in two train derailments, increases in equipment costs, fewer gains on revenue equipment sales and higher driver recruiting and wage costs.

Interest expense in the current quarter decreased due to slightly lower debt levels and lower interest rates from a year ago. The effective income tax rate for the quarter was 37.88% compared to 38.25% in 2012 primarily from the realization of a deferred tax benefit on the sale of property during the current period. We expect our 2013 annual tax rate to be approximately 38.15%.

Segment Information:

Intermodal (JBI)
  • Second Quarter 2013 Segment Revenue: $855 million; up 12%
  • Second Quarter 2013 Operating Income: $110.7 million; up 19%

Overall volumes increased 12% over the same period in 2012 in an environment of moderating fuel prices and less seasonally volatile freight demand. Eastern network growth was 14% and transcontinental growth was 11% over the second quarter 2012. Revenue grew 12% with the effect of traffic mix, customer rate increases and fuel surcharges keeping revenue per load virtually flat compared to a year ago.

Operating income increased 19% over prior year. Benefits from steady demand, overall load growth, lower insurance and claims costs and lower office personnel compensation costs were partially offset by $1.6 million of abandoned shared technology costs, a $1.5 million loss on the destruction of equipment in two train derailments and increases in outsourced drayage costs, rail purchase transportation costs and equipment costs. The current period ended with 61,911 units of trailing capacity and 3,952 power units available to the dray fleet.

Dedicated Contract Services (DCS)
  • Second Quarter 2013 Segment Revenue: $303 million; up 13%
  • Second Quarter 2013 Operating Income: $29.7 million; down 11%

DCS revenue increased 13% during the current quarter while revenue excluding fuel surcharges increased 16%. Productivity (revenue per truck per week) decreased by approximately 4% vs. 2012 due to a higher percentage of subleased customer equipment and customer paid fuel within the new accounts. New accounts provided a net additional 863 revenue producing trucks by the end of the quarter compared to prior year.

Operating income decreased by 11% from a year ago. The decrease primarily reflects $2.5 million of contract implementation costs expensed in the current quarter, $0.6 million of abandoned shared technology costs, lower gains on equipment sales, increased equipment costs and increased insurance and claims costs. The contract implementation costs primarily relate to two large private fleet conversions which are expected to be fully implemented in the third quarter 2013, with additional implementation costs estimated at $1.0 million.

Integrated Capacity Solutions (ICS)
  • Second Quarter 2013 Segment Revenue: $132 million; up 20%
  • Second Quarter 2013 Operating Income: $ 4.2 million; up 113%

ICS revenue increased 20% in the current quarter vs. the second quarter 2012, primarily due to a 29% increase in load volume. Volumes grew faster than revenue primarily from increased less-than-truckload business. Both transactional and contractual volumes continued to grow during the quarter. Contractual business was approximately 60% of total load volume in the current period and comparable to second quarter 2012.

Operating income increased 113% over the same period 2012 primarily due to increased revenue and improvement in gross profit margin. Gross profit margin increased to 11.8% in the current quarter vs. 10.6% last year. A softer carrier environment contributed to the increase. Personnel costs from two new branch locations opened during the quarter, bringing the total branch count to 18, and $0.1 million of abandoned shared technology costs partially offset the benefit of the gross profit margin improvement. ICS’s carrier base increased 10% and the employee count increased 8% vs. second quarter 2012.

Truck (JBT)
  • Second Quarter 2013 Segment Revenue: $101 million; down 20%
  • Second Quarter 2013 Operating Income: $ 3.0 million; down 67%

JBT revenue for the current quarter decreased 20% from the same period in 2012 primarily from a 16% reduction in fleet size and lower utilization per truck. Revenue, excluding fuel surcharges, decreased 19%. Rate per mile, excluding fuel surcharges, increased 2.1% on a 10% shorter length of haul. However, rates from consistent shippers decreased 0.6% compared to the same quarter a year ago in order to retain business that fell within profitable network lanes. At the end of the period, JBT operated 2,018 tractors compared to 2,396 a year ago.

Operating income decreased by 67% compared to 2012. Favorable changes in freight mix and insurance and claims costs were offset by lower utilization, increased driver wages per mile, higher independent contractor costs, higher empty miles and $0.1 million in abandoned shared technology costs compared to second quarter 2012.

Cash Flow and Capitalization:

At June 30, 2013, we had a total of $674 million outstanding on various debt instruments compared to $679 million at June 30, 2012 and $685 million at December 31, 2012.

Our net capital expenditures for the six months ended June 30, 2013 approximated $212 million compared to $171 million for the same period 2012. At June 30, 2013, we had cash and cash equivalents of $5.9 million.

We purchased approximately 900,000 shares of our common stock during the quarter for approximately $65 million. At June 30, 2013, we had approximately $388 million remaining under our share repurchase authorization. Actual shares outstanding at June 30, 2013 approximated 117.1 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, 2012. We assume no obligation to update any forward-looking statement to the extent we become aware 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 June 30
2013   2012
    % Of     % Of
Amount     Revenue Amount     Revenue
 
Operating revenues, excluding fuel surcharge revenues $ 1,120,164 $ 1,005,519
Fuel surcharge revenues 262,694 249,611
Total operating revenues 1,382,858 100.0 % 1,255,130 100.0 %
 
Operating expenses
Rents and purchased transportation 693,795 50.2 % 616,723 49.2 %
Salaries, wages and employee benefits 282,252 20.4 % 255,864 20.4 %
Fuel and fuel taxes 110,280 8.0 % 113,085 9.0 %
Depreciation and amortization 62,283 4.5 % 56,227 4.5 %
Operating supplies and expenses 49,626 3.6 % 45,540 3.6 %
Insurance and claims 12,111 0.9 % 12,595 1.0 %
General and administrative expenses, net of asset dispositions 12,425 0.8 % 6,356 0.5 %
Operating taxes and licenses 8,042 0.6 % 7,323 0.6 %
Communication and utilities 4,637 0.3 % 4,202 0.3 %
Total operating expenses 1,235,451 89.3 % 1,117,915 89.1 %
Operating income 147,407 10.7 % 137,215 10.9 %
Net interest expense 6,230 0.5 % 6,929 0.5 %
Earnings before income taxes 141,177 10.2 % 130,286 10.4 %
Income taxes 53,480 3.9 % 49,835 4.0 %
Net earnings $ 87,697 6.3 % $ 80,451 6.4 %
Average diluted shares outstanding 119,472 120,027
Diluted earnings per share $ 0.73 $ 0.67
 

J.B. HUNT TRANSPORT SERVICES, INC.
Condensed Consolidated Statements of Earnings
(in thousands, except per share data)
(unaudited)
 
  Six Months Ended June 30
2013   2012
    % Of     % Of
Amount     Revenue Amount     Revenue
 
Operating revenues, excluding fuel surcharge revenues $ 2,159,104 $ 1,944,202
Fuel surcharge revenues 515,340 476,850
Total operating revenues 2,674,444 100.0 % 2,421,052 100.0 %
 
Operating expenses
Rents and purchased transportation 1,338,328 50.0 % 1,172,841 48.4 %
Salaries, wages and employee benefits 545,976 20.4 % 505,909 20.9 %
Fuel and fuel taxes 226,840 8.5 % 233,638 9.7 %
Depreciation and amortization 123,013 4.6 % 112,347 4.6 %
Operating supplies and expenses 94,540 3.5 % 85,351 3.5 %
Insurance and claims 24,881 0.9 % 23,640 1.0 %
General and administrative expenses, net of asset dispositions 23,409 0.9 % 10,350 0.4 %
Operating taxes and licenses 15,555 0.6 % 14,465 0.6 %
Communication and utilities 9,456 0.4 % 8,699 0.4 %
Total operating expenses 2,401,998 89.8 % 2,167,240 89.5 %
Operating income 272,446 10.2 % 253,812 10.5 %
Net interest expense 12,485 0.5 % 13,916 0.6 %
Earnings before income taxes 259,961 9.7 % 239,896 9.9 %
Income taxes 98,916 3.7 % 91,760 3.8 %
Net earnings $ 161,045 6.0 % $ 148,136 6.1 %
Average diluted shares outstanding 119,647 119,888
Diluted earnings per share $ 1.35 $ 1.24
 
 
Financial Information By Segment
(in thousands)
(unaudited)
 
 
  Three Months Ended June 30
2013   2012
    % Of     % Of
Amount     Total Amount     Total
 

Revenue
 
Intermodal $ 854,732 62 % $ 762,043 61 %
Dedicated 302,624 22 % 267,310 21 %
Integrated Capacity Solutions 131,825 10 % 109,494 9 %
Truck 101,167   7 % 126,180   10 %
Subtotal 1,390,348 101 % 1,265,027 101 %
Intersegment eliminations (7,490 ) (1 %) (9,897 ) (1 %)
Consolidated revenue $ 1,382,858   100 % $ 1,255,130   100 %
 
 

Operating income
 
Intermodal $ 110,679 75 % $ 93,368 68 %
Dedicated 29,705 20 % 33,198 24 %
Integrated Capacity Solutions 4,161 3 % 1,956 1 %
Truck 2,956 2 % 8,840 7 %
Other (1) (94 ) (0 %) (147 ) (0 %)
Operating income $ 147,407   100 % $ 137,215   100 %
 
 
 
 
 
Six Months Ended June 30
2013 2012
% Of % Of
Amount     Total Amount     Total

Revenue
 
Intermodal $ 1,650,994 62 % $ 1,456,159 60 %
Dedicated 581,707 22 % 523,162 22 %
Integrated Capacity Solutions 254,146 9 % 206,546 9 %
Truck 203,012   8 % 254,337   10 %
Subtotal 2,689,859 101 % 2,440,204 101 %
Intersegment eliminations (15,415 ) (1 %) (19,152 ) (1 %)
Consolidated revenue $ 2,674,444   100 % $ 2,421,052   100 %
 
 

Operating income
 
Intermodal $ 207,473 76 % $ 172,798 68 %
Dedicated 51,651 19 % 61,347 24 %
Integrated Capacity Solutions 9,335 3 % 6,020 2 %
Truck 4,051 2 % 13,724 6 %
Other (1) (64 ) (0 %) (77 ) (0 %)
Operating income $ 272,446   100 % $ 253,812   100 %
 
 
(1) Includes corporate support activity
 
Operating Statistics by Segment
(unaudited)
 
  Three Months Ended June 30
2013     2012
 

Intermodal
 
Loads 398,596 354,790
Average length of haul 1,688 1,687
Revenue per load $ 2,144 $ 2,148
Average tractors during the period * 3,881 3,379
 
Tractors (end of period)
Company-owned 3,387 3,057
Independent contractor 565   384  
Total tractors 3,952 3,441
 
Net change in trailing equipment during the period 1,606 1,175
Trailing equipment (end of period) 61,911 56,012
Average effective trailing equipment usage 60,148 54,049
 
 

Dedicated
 
Loads 446,841 367,840
Average length of haul 197 203
Revenue per truck per week** $ 4,068 $ 4,222
Average trucks during the period*** 5,767 4,900
 
Trucks (end of period)
Company-owned 5,336 4,632
Independent contractor 12 17
Customer-owned (Dedicated operated) 586   422  
Total trucks 5,934 5,071
 
Trailing equipment (end of period) 17,998 12,990
Average effective trailing equipment usage 19,253 13,856
 
 

Integrated Capacity Solutions
 
Loads 95,740 74,112
Revenue per load $ 1,377 $ 1,477
Gross profit margin 11.8 % 10.6 %
Employee count (end of period) 440 406
Approximate number of third-party carriers (end of period) 33,400 30,500
 
 

Truck
 
Loads 104,024 118,500
Average length of haul 408 455
Loaded miles (000) 42,158 53,551
Total miles (000) 49,593 62,447
Average nonpaid empty miles per load 72.0 76.3
Revenue per tractor per week** $ 3,861 $ 3,994
Average tractors during the period * 2,034 2,461
 
Tractors (end of period)
Company-owned 1,187 1,505
Independent contractor 831   891  
Total tractors 2,018 2,396
 
Trailers (end of period) 8,311 9,234
Average effective trailing equipment usage 7,235 8,081
 
 
* Includes company-owned and independent contractor tractors
** Using weighted workdays
*** Includes company-owned, independent contractor, and customer-owned trucks
 
Operating Statistics by Segment
(unaudited)
 
Six Months Ended June 30
2013     2012
 

Intermodal
 
Loads 766,362 678,932
Average length of haul 1,690 1,695
Revenue per load $ 2,154 $ 2,145
Average tractors during the period * 3,773 3,282
 
Tractors (end of period)
Company-owned 3,387 3,057
Independent contractor 565   384  
Total tractors 3,952 3,441
 
Net change in trailing equipment during the period 2,949 1,506
Trailing equipment (end of period) 61,911 56,012
Average effective trailing equipment usage 58,043 52,323
 
 

Dedicated
 
Loads 845,140 719,027
Average length of haul 198 205
Revenue per truck per week** $ 4,108 $ 4,146
Average trucks during the period*** 5,545 4,891
 
Trucks (end of period)
Company-owned 5,336 4,632
Independent contractor 12 17
Customer-owned (Dedicated operated) 586   422  
Total trucks 5,934 5,071
 
Trailing equipment (end of period) 17,998 12,990
Average effective trailing equipment usage 18,495 13,146
 
 

Integrated Capacity Solutions
 
Loads 195,663 142,250
Revenue per load $ 1,299 $ 1,452
Gross profit margin 12.4 % 12.4 %
Employee count (end of period) 440 406
Approximate number of third-party carriers (end of period) 33,400 30,500
 
 

Truck
 
Loads 201,910 235,404
Average length of haul 429 477
Loaded miles (000) 85,764 111,102
Total miles (000) 100,655 128,711
Average nonpaid empty miles per load 73.7 75.1
Revenue per tractor per week** $ 3,873 $ 3,905
Average tractors during the period* 2,059 2,538
 
Tractors (end of period)
Company-owned 1,187 1,505
Independent contractor 831   891  
Total tractors 2,018 2,396
 
Trailers (end of period) 8,311 9,234
Average effective trailing equipment usage 7,326 8,117
 
 
* 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)
 
      June 30, 2013       December 31, 2012
ASSETS      
Current assets:
Cash and cash equivalents $ 5,923 $ 5,589
Accounts Receivable 579,643 466,011
Prepaid expenses and other     65,996       82,932
Total current assets     651,562       554,532
Property and equipment 3,053,616 2,904,706
Less accumulated depreciation     1,077,390       1,019,232
Net property and equipment     1,976,226       1,885,474
Other assets     28,528       24,635
  $   2,656,316     $ 2,464,641
 
 
LIABILITIES & STOCKHOLDERS' EQUITY
Current liabilities:
Current debt $ 200,000 $ 100,000
Trade accounts payable 364,195 266,722
Claims accruals 56,608 47,442
Accrued payroll 61,267 70,647
Other accrued expenses 16,286 17,199
Deferred income taxes     750       750
Total current liabilities     699,106       502,760
 
Long-term debt 474,132 585,347
Other long-term liabilities 52,688 53,050
Deferred income taxes 528,151 531,624
Stockholders' equity     902,239       791,860
  $   2,656,316     $ 2,464,641
 
 
 
Supplemental Data
(unaudited)
               
      June 30, 2013       December 31, 2012
 
Actual shares outstanding at end of period (000)     117,067       117,529
 
Book value per actual share outstanding at end of period $   7.71     $ 6.74
 
 
               
Six Months Ended June 30
2013 2012
 
Net cash provided by operating activities (000) $   293,571     $ 260,579
 
Net capital expenditures (000) $   211,692     $ 170,880

Copyright Business Wire 2010