- 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
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
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 Time 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 here 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 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
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
View source
version on businesswire.com: https://www.businesswire.com/news/home/20181015005896/en/
J.B. Hunt Transport Services, Inc.David G. Mee,
479-820-8363Executive Vice President, Finance/Administration and
Chief Financial Officer
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