J. B. Hunt Transport Services, Inc. Reports Record Revenues, Record Net Earnings And Record Earnings Per Share For Both The Fourth Quarter And Year Ended December 31, 2013

J.B. Hunt Transport Services, Inc., (NASDAQ:JBHT) announced record fourth quarter 2013 net earnings of $92 million, or diluted earnings per share of 77 cents vs. fourth quarter 2012 net earnings of $84 million, or 70 cents per diluted share.

Total operating revenue for the current quarter was $1.47 billion, compared with $1.34 billion for the fourth quarter 2012. Load growth of 13% in Intermodal (JBI) helped drive an 11% increase in segment revenue. Dedicated Contract Services (DCS) segment revenue increased by 17%, primarily from the addition of new customer accounts. Integrated Capacity Solutions (ICS) segment revenue increased by 13%, mostly from a higher load count and an increase in revenue per load. Truck (JBT) segment revenue decreased 19%, primarily from an 11% reduction in fleet size compared to a year ago. Current quarter total operating revenue, excluding fuel surcharges, increased 13% vs. the comparable quarter 2012.

Operating income for the current quarter increased to $153.5 million vs. $143.3 million for the fourth quarter 2012. The increase primarily reflects higher revenue on greater load volumes and improved network balance in JBI. These improvements were partially offset by increased costs paid to hire and retain drivers; higher workers’ compensation and accident costs; increased costs to third party carriers, fewer gains on equipment sales and lower truck utilization.

Net earnings rose 9% to $92 million in the current quarter from $84 million in 2012, primarily due to the growth in revenue and a lower cost of borrowing. Compared with the same period 2012, net interest expense in the current quarter was down approximately $500,000 on a higher average debt balance due to a reduction in our average interest rate. The annual and fourth quarter effective tax rates in 2013 were 38.15% and 38.23%. The annual and fourth quarter effective tax rates in 2012 were 38.5% and 39.16%, respectively.

Segment Information:

Intermodal (JBI)
  • Fourth quarter 2013 Segment Revenue: $915 million; up 11%
  • Fourth quarter 2013 Operating Income: $121.5 million; up 17%

JBI revenue for the period grew 11% on a 13% increase in volume over the fourth quarter 2013. Eastern network loads increased 17% and transcontinental loads increased 11% compared to the same quarter 2012. Revenue per load decreased 1.3% from the same period a year ago due to the combination of traffic mix, customer rate increases and changes in fuel surcharge revenue; however, excluding fuel surcharge revenue, revenue per load increased 1.0% from fourth quarter 2012.

Operating income for the quarter grew 17%. Improved network balance yielded positive results in container utilization and a lower percentage of empty reposition moves. Cost increases in rail and dray purchased transportation, driver recruiting and retention costs and insurance and claims costs partially offset the improvements in productivity. The current period ended with approximately 66,000 units of trailing capacity and approximately 4,100 power units in the dray fleet.

Dedicated Contract Services (DCS)
  • Fourth quarter 2013 Segment Revenue: $331 million; up 17%
  • Fourth quarter 2013 Operating Income: $29.5 million; up 0.5%

DCS revenue increased 17% during the current quarter vs. 2012. The increase in revenue primarily resulted from 1,154 net additional revenue producing trucks, mostly due to converting customers’ private fleets. Productivity (revenue per truck per week) was virtually flat compared with the fourth quarter 2012 due to the higher percentage of customer provided equipment and customer paid fuel in the DCS book of business.

Operating income was up 0.5% compared to the same quarter 2012. Increases in operating income from a higher truck count due to new customer accounts was partially offset by increases in driver wages, employee recruiting costs, workers’ compensation costs, accident costs and lower gains on sales of revenue equipment compared to fourth quarter 2012.

Integrated Capacity Solutions (ICS)

  • Fourth Quarter 2013 Segment Revenue: $145 million; up 13%
  • Fourth Quarter 2013 Operating Income: $3.5 million; down 24%

ICS revenue increased 13% in the current quarter vs. the fourth quarter 2012 mostly due to a 5% increase in load volume and a 7% increase in revenue per load. Revenue grew faster than volume primarily due to a change in freight mix driven by customer demand. Truckload brokerage volume increased for the quarter, but was partially offset by a decrease in less-than-truckload brokered loads compared to the same quarter in 2012. Both contractual and transactional business realized volume increases, however transactional business grew at a faster pace. Contractual business comprised approximately 65% of the total load volume in the current quarter vs. 67% a year ago.

Operating income decreased 24% over the same period in 2012. Gross profit margin decreased to 12.0% in the current period from 14.1% last year. Positive results from increased load growth at higher revenue per load were offset with gross margin pressure. Third party carrier rates rose faster than contractual customer rates. Additionally, in keeping with our growth strategy, we continue to expand the branch network resulting in increased personnel costs. Total branches at the end of the period grew to 24 from 15 at the end of the same period in 2012. ICS’s carrier base increased 7% and the employee count increased 11% from a year ago.

Truck (JBT)
  • Fourth quarter 2013 Segment Revenue: $91 million; down 19%
  • Fourth quarter 2013 Operating Loss: $ (1.0) million; compared to Operating Income of $5.2 million in 2012

JBT revenue for the current quarter decreased 19% from the same period in 2012 due to an 11% reduction in fleet size, lower utilization per truck and lower rates per mile. Rates per mile, excluding fuel surcharges, decreased 2.7% on a 4.6% shorter average length of haul. Rates per mile in the prior year included spot rates largely affected by Hurricane Sandy relief efforts. Rates from consistent shippers decreased 1.0% from a year ago. At the end of the period, JBT’s tractor count was 1,857 compared to 2,093 in the fourth quarter 2012, primarily from a reduction in independent contractor capacity.

JBT incurred an operating loss of $1.0 million in the current quarter compared to operating income of $5.2 million in the same quarter of 2012. Favorable effects from reducing idle trailing equipment, fewer empty miles per load and reductions in office headcount were more than offset by a lower truck count, lower tractor utilization, increased driver and independent contractor pay, and higher maintenance cost per tractor compared to the same period 2012.

The previously announced personnel and leadership changes are expected to address and improve tractor utilization, maintenance and customer service issues that have impacted the profitability of JBT. We expect to demonstrate operational improvements throughout 2014, but significant financial improvements will become more apparent in 2015.

Cash Flow and Capitalization:

At December 31, 2013, we had total debt outstanding of $708 million on various debt instruments compared to $685 million at December 31, 2012 and $687 million at September 30, 2013.

Our net capital expenditures for 2013 approximated $443 million vs. $370 million in 2012. The increase in capital expenditures was primarily due to purchasing additional containers and chassis for JBI and additional and replacement tractors across all business units. At December 31, 2013, we had cash and cash equivalents of $5.8 million.

In the fourth quarter 2013, we used $50 million to purchase approximately 675,000 shares of our common stock. At December 31, 2013, we had approximately $338 million remaining under our share repurchase authorizations.

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 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 December 31
2013 2012
% Of % Of
Amount     Revenue Amount     Revenue
 
Operating revenues, excluding fuel surcharge revenues $ 1,202,168 $ 1,067,194
Fuel surcharge revenues 272,108 270,942
Total operating revenues 1,474,276 100.0 % 1,338,136 100.0 %
 
Operating expenses
Rents and purchased transportation 742,824 50.4 % 666,745 49.8 %
Salaries, wages and employee benefits 302,448 20.5 % 270,706 20.2 %
Fuel and fuel taxes 114,939 7.8 % 117,542 8.8 %
Depreciation and amortization 66,077 4.5 % 59,046 4.4 %
Operating supplies and expenses 52,782 3.6 % 44,978 3.4 %
Insurance and claims 16,400 1.1 % 16,447 1.2 %

General and administrative expenses, net of asset dispositions
11,884 0.8 % 7,513 0.6 %
Operating taxes and licenses 8,585 0.6 % 7,545 0.6 %
Communication and utilities 4,804 0.3 % 4,279 0.3 %
Total operating expenses 1,320,743 89.6 % 1,194,801 89.3 %
Operating income 153,533 10.4 % 143,335 10.7 %
Net interest expense 4,820 0.3 % 5,296 0.4 %
Earnings before income taxes 148,713 10.1 % 138,039 10.3 %
Income taxes 56,849 3.9 % 54,062 4.0 %
Net earnings $ 91,864 6.2 % $ 83,977 6.3 %
Average diluted shares outstanding 118,960 120,019
Diluted earnings per share $ 0.77 $ 0.70
 
 
J.B. HUNT TRANSPORT SERVICES, INC.
Condensed Consolidated Statements of Earnings
(in thousands, except per share data)
(unaudited)
 
    Twelve Months Ended December 31
2013   2012
    % Of     % Of
Amount     Revenue Amount     Revenue
 

Operating revenues, excluding fuel surcharge revenues
$ 4,527,238 $ 4,058,165
Fuel surcharge revenues 1,057,333 996,815
Total operating revenues 5,584,571 100.0 % 5,054,980 100.0 %
 
Operating expenses
Rents and purchased transportation 2,805,568 50.2 % 2,485,635 49.2 %
Salaries, wages and employee benefits 1,138,213 20.4 % 1,037,526 20.5 %
Fuel and fuel taxes 455,926 8.2 % 465,874 9.2 %
Depreciation and amortization 253,380 4.5 % 229,166 4.5 %
Operating supplies and expenses 202,700 3.6 % 178,610 3.5 %
Insurance and claims 55,158 1.0 % 53,832 1.1 %
General and administrative expenses, net of asset dispositions 45,469 0.8 % 27,231 0.6 %
Operating taxes and licenses 32,307 0.7 % 29,461 0.6 %
Communication and utilities 19,142 0.3 % 17,445 0.3 %
Total operating expenses 5,007,863 89.7 % 4,524,780 89.5 %
Operating income 576,708 10.3 % 530,200 10.5 %
Net interest expense 23,140 0.4 % 25,559 0.5 %
Earnings before income taxes 553,568 9.9 % 504,641 10.0 %
Income taxes 211,186 3.8 % 194,287 3.9 %
Net earnings $ 342,382 6.1 % $ 310,354 6.1 %
Average diluted shares outstanding 119,404 120,022
Diluted earnings per share $ 2.87 $ 2.59
 
Financial Information By Segment
(in thousands)
(unaudited)
 
 
    Three Months Ended December 31
2013   2012
    % Of     % Of
Amount     Total Amount     Total
 

Revenue
 
Intermodal $ 915,071 62 % $ 821,208 61 %
Dedicated 330,684 23 % 283,722 21 %
Integrated Capacity Solutions 145,293 10 % 128,517 10 %
Truck 91,213   6 % 112,722   9 %
Subtotal 1,482,261 101 % 1,346,169 101 %
Intersegment eliminations (7,985 ) (1 %) (8,033 ) (1 %)
Consolidated revenue $ 1,474,276   100 % $ 1,338,136   100 %
 
 

Operating income
 
Intermodal $ 121,523 79 % $ 104,223 73 %
Dedicated 29,532 19 % 29,396 20 %
Integrated Capacity Solutions 3,518 3 % 4,614 3 %
Truck (1,041 ) (1 %) 5,150 4 %
Other (1) 1   0 % (48 ) (0 %)
Operating income $ 153,533   100 % $ 143,335   100 %
 
 
 
Twelve Months Ended December 31
2013 2012
% Of % Of
Amount     Total Amount     Total

Revenue
 
Intermodal $ 3,456,164 62 % $ 3,071,127 61 %
Dedicated 1,231,342 22 % 1,079,508 21 %
Integrated Capacity Solutions 536,844 10 % 456,331 9 %
Truck 391,086   7 % 483,757   10 %
Subtotal 5,615,436 101 % 5,090,723 101 %
Intersegment eliminations (30,865 ) (1 %) (35,743 ) (1 %)
Consolidated revenue $ 5,584,571   100 % $ 5,054,980   100 %
 
 

Operating income
 
Intermodal $ 447,030 77 % $ 374,965 71 %
Dedicated 110,438 19 % 116,335 22 %
Integrated Capacity Solutions 15,693 3 % 16,130 3 %
Truck 3,658 1 % 22,880 4 %
Other (1) (111 ) (0 %) (110 ) (0 %)
Operating income $ 576,708   100 % $ 530,200   100 %
 
 
(1) Includes corporate support activity
 
 
Operating Statistics by Segment

(unaudited)
 
    Three Months Ended December 31
2013    

2012
 

Intermodal
 
Loads 415,601 368,022
Average length of haul 1,703 1,720
Revenue per load $ 2,202 $ 2,231
Average tractors during the period * 4,084 3,582
 
Tractors (end of period)
Company-owned 3,448 3,124
Independent contractor 646   472  
Total tractors 4,094 3,596
 
Net change in trailing equipment during the period 2,059 1,049
Trailing equipment (end of period) 65,979 58,962
Average effective trailing equipment usage 63,914 56,473
 
 

Dedicated
 
Loads 504,738 407,801
Average length of haul 179 196
Revenue per truck per week** $ 4,198 $ 4,220
Average trucks during the period*** 6,271 5,294
 
Trucks (end of period)
Company-owned 5,805 4,844
Independent contractor 10 15
Customer-owned (Dedicated operated) 592   394  
Total trucks 6,407 5,253
 
Trailing equipment (end of period) 19,062 13,448
Average effective trailing equipment usage 20,099 14,884
 
 

Integrated Capacity Solutions
 
Loads 99,444 94,315
Revenue per load $ 1,461 $ 1,363
Gross profit margin 12.0 % 14.1 %
Employee count (end of period) 503 453
Approximate number of third-party carriers (end of period) 34,600 32,300
 
 

Truck
 
Loads 89,663 104,694
Average length of haul 432 452
Loaded miles (000) 38,629 46,690
Total miles (000) 45,422 55,288
Average nonpaid empty miles per load 80.4 81.6
Revenue per tractor per week** $ 3,804 $ 3,968
Average tractors during the period * 1,921 2,258
 
Tractors (end of period)
Company-owned 1,200 1,192
Independent contractor 657   901  
Total tractors 1,857 2,093
 
Trailers (end of period) 6,828 8,954
Average effective trailing equipment usage 6,114 7,724
 
 
* Includes company-owned and independent contractor tractors
** Using weighted workdays
*** Includes company-owned, independent contractor, and customer-owned trucks
 
 

Operating Statistics by Segment

(unaudited)
       
Twelve Months Ended December 31
2013 2012
 

Intermodal
 
Loads 1,593,511 1,415,663
Average length of haul 1,694 1,702
Revenue per load $ 2,169 $ 2,169
Average tractors during the period * 3,916 3,417
 
Tractors (end of period)
Company-owned 3,448 3,124
Independent contractor 646   472  
Total tractors 4,094 3,596
 
Net change in trailing equipment during the period 7,017 4,456
Trailing equipment (end of period) 65,979 58,962
Average effective trailing equipment usage 60,612 54,302
 
 

Dedicated
 
Loads 1,835,872 1,522,740
Average length of haul 190 201
Revenue per truck per week** $ 4,109 $ 4,164
Average trucks during the period*** 5,865 5,057
 
Trucks (end of period)
Company-owned 5,805 4,844
Independent contractor 10 15
Customer-owned (Dedicated operated) 592   394  
Total trucks 6,407 5,253
 
Trailing equipment (end of period) 19,062 13,448
Average effective trailing equipment usage 19,229 13,932
 
 

Integrated Capacity Solutions
 
Loads 388,987 326,574
Revenue per load $ 1,380 $ 1,397
Gross profit margin 11.8 % 13.0 %
Employee count (end of period) 503 453
Approximate number of third-party carriers (end of period) 34,600 32,300
 
 

Truck
 
Loads 386,875 449,366
Average length of haul 431 467
Loaded miles (000) 165,543 207,677
Total miles (000) 194,046 242,311
Average nonpaid empty miles per load 75.4 77.1
Revenue per tractor per week** $ 3,828 $ 3,891
Average tractors during the period* 2,007 2,435
 
Tractors (end of period)
Company-owned 1,200 1,192
Independent contractor 657   901  
Total tractors 1,857 2,093
 
Trailers (end of period) 6,828 8,954
Average effective trailing equipment usage 6,877 7,985
 
 
* 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)
       
        December 31, 2013       December 31, 2012
ASSETS
Current assets:
Cash and cash equivalents $ 5,831 $ 5,589
Accounts Receivable 568,519 466,011
Prepaid expenses and other       105,853       82,932
Total current assets       680,203       554,532
Property and equipment 3,259,814 2,904,706
Less accumulated depreciation       1,147,610       1,019,232
Net property and equipment       2,112,204       1,885,474
Other assets       26,997       24,635
      $ 2,819,404     $ 2,464,641
 
 
LIABILITIES & STOCKHOLDERS' EQUITY
Current liabilities:
Current debt $ 250,000 $ 100,000
Trade accounts payable 305,465 266,722
Claims accruals 68,221 47,442
Accrued payroll 72,063 70,647
Other accrued expenses 14,062 17,199
Deferred income taxes       2,485       750
Total current liabilities       712,296       502,760
 
Long-term debt 458,417 585,347
Other long-term liabilities 58,274 53,050
Deferred income taxes 577,965 531,624
Stockholders' equity       1,012,452       791,860
      $ 2,819,404     $ 2,464,641
 
 
 
Supplemental Data
(unaudited)
                 
        December 31, 2013       December 31, 2012
 
Actual shares outstanding at end of period (000)       117,241       117,529
 
Book value per actual share outstanding at end of period     $ 8.64     $ 6.74
 
 
                 
Twelve Months Ended December 31
2013 2012
 
Net cash provided by operating activities (000)     $ 574,351     $ 548,044
 
Net capital expenditures (000)     $ 442,504     $ 369,679
 

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