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J.B. Hunt Transport Services, Inc. Reports Revenues, Net Earnings and Earnings Per Share for Both the Fourth Quarter and Year Ended December 31, 2019

January 17, 2020 7:00 AM

LOWELL, Ark.--(BUSINESS WIRE)-- J.B. Hunt Transport Services, Inc. (NASDAQ: JBHT) announced fourth quarter 2019 net earnings of $144.7 million, or diluted earnings per share of $1.35 vs. fourth quarter 2018 net earnings of $88.7 million, or $0.81 per diluted share. Fourth quarter 2018 net earnings included pretax charges of $134.0 million for contingent liabilities related to the arbitration with BNSF Railway Company.

Total operating revenue for the current quarter was $2.45 billion, compared with $2.32 billion for the fourth quarter 2018. A 2% increase in load volume in Intermodal (JBI), partially offset with a lower revenue per load, contributed to a less than 1% increase in segment revenue. Dedicated Contract Services (DCS) segment revenue increased by 20%, primarily from the February 2019 acquisition and the addition of new customer accounts. Integrated Capacity Solutions (ICS) segment revenue increased by 9% primarily from a 3% increase in load growth and a favorable change in customer freight mix. Truck (JBT) segment revenue decreased 20% primarily from lower loaded miles and lower rates per loaded mile. Current quarter total operating revenue, excluding fuel surcharges, increased approximately 7% vs. the comparable quarter 2018.

Total freight transactions in the Marketplace for J.B. Hunt 360° increased to $289 million compared to $174 million in the prior year quarter. ICS revenue on the platform increased to $225 million with an approximate 60% increase in average monthly active carrier users vs. the year ago period. JBI and JBT executed approximately $47 million and $17 million, respectively, of their third-party dray and independent contractor costs through the platform during the quarter.

Operating income for the current quarter totaled $205.1 million vs. $122.7 million for the fourth quarter 2018. Operating income in fourth quarter 2018 included $134.0 million in charges for contingent liabilities related to the arbitration with BNSF Railway Company. Excluding these charges, operating income decreased 20% from fourth quarter 2018. The benefit from increased revenues was offset with cost increases in rail purchase transportation rates; higher building rental expense in the Final Mile Services network; lower gross margins in ICS; increased technology spend on new applications, primarily in ICS, and legacy system upgrades affecting all segments; increased driver wages; increased driver and independent contractor recruiting costs and higher salary and wage expenses for non-driving personnel.

Interest expense increased from fourth quarter 2018 primarily from increased debt levels at higher interest rates. The fourth quarter effective tax rates for 2019 and 2018 were 24.8% and 20.5%, respectively. The annual effective tax rates for 2019 and 2018 were 24.2% and 23.6%, respectively.

Segment Information:

Intermodal (JBI)

JBI total volumes increased 2% over the same period in 2018. Eastern network loads decreased by 8% and transcontinental loads grew by 8% compared to the fourth quarter 2018. Revenue increased less than one percent, reflecting the 2% increase in volume offset by a 1% decrease in revenue per load, the combination of freight mix, customer rate increases, and fuel surcharges. Revenue per load excluding fuel surcharges was flat compared to a year ago.

Operating income increased 304% from the prior year. In fourth quarter 2018, JBI recorded $134.0 million in charges for contingent liabilities related to the arbitration. Excluding these charges, operating income decreased by $35.3 million or approximately 21% from the comparable quarter 2018. Benefits from increased volumes were offset by higher rail purchase transportation rates, increased box repositioning costs due to a lack of balance in the intermodal network, increased costs to recover from rail service interruptions including a derailment in Southern California and increased costs to attract and retain drivers. The current period ended with approximately 96,700 units of trailing capacity and approximately 5,560 power units in the dray fleet.

Dedicated Contract Services (DCS)

DCS revenue increased 20% during the current quarter over the same period 2018. Productivity (revenue per truck per week) increased approximately 9% vs. 2018. Productivity excluding fuel surcharge revenue increased approximately 11% from a year ago primarily from the February 2019 acquisition, 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 $59 million (primarily from the February 2019 acquisition) compared to fourth quarter 2018. A net additional 972 revenue producing trucks, 153 net additions sequentially from third quarter 2019, were in the fleet by the end of the quarter. Approximately 58% of these additions represent private fleet conversions and 15% represent FMS versus traditional dedicated capacity fleets. Customer retention rates remain above 98%.

Operating income increased by 34% from a year ago. The benefits from additional trucks under contract, higher productivity and more predictable and consistent start-up costs were partially offset by increased costs expanding the FMS network, increased driver wages and increased driver recruiting costs and an incremental $1.0 million in noncash amortization expense attributable to the February 2019 acquisition compared to the same period a year ago.

Integrated Capacity Solutions (ICS)

ICS revenue increased 9% in the current quarter vs. the fourth quarter 2018. Volume increased 3% and revenue per load increased 5.5%, mostly due to customer mix changes, compared to the prior year. Contractual volumes represent approximately 73% of the total load volume and 65% of the total revenue in the current quarter compared to 71% and 53%, respectively, in fourth quarter 2018. Of the total reported ICS revenue, approximately $225 million was executed through the Marketplace for J.B. Hunt 360 compared to $174 million in fourth quarter 2018.

Operating income decreased $28.0 million compared to the same period in 2018 primarily from a lower gross profit margin, a 150% increase in expenditures to expand capacity and functionality of the Marketplace for J.B. Hunt 360, higher personnel costs, and increased digital marketing and advertising costs. Gross profit margin decreased to 10.6% in the current period from 16.9% last year primarily from a competitive pricing environment in the contractual business and a softer overall spot market. ICS carrier base increased 15% and the employee count increased 6% from a year ago.

Truck (JBT)

JBT revenue decreased 20% from the same period in 2018. Revenue excluding fuel surcharges also decreased approximately 21% primarily from an 11% decrease in rates per loaded mile and a 9% decrease in load count compared to a year ago. Comparable contractual customer rates were flat compared to the same period 2018. At the end of the period, JBT operated 1,831 tractors compared to 2,112 a year ago.

Operating income decreased 57% from fourth quarter 2018. A decrease in spot market loads moved, an increase in empty miles and an overall lower load count compared to fourth quarter 2018 all contributed to lower operating income.

Cash Flow and Capitalization:

At December 31, 2019, we had total debt outstanding of $1.30 billion on various debt instruments compared to $1.15 billion at December 31, 2018, and $1.29 billion at September 30, 2019.

Our net capital expenditures for 2019 approximated $688 million vs. $885 million in 2018. At December 31, 2019, we had cash and cash equivalents of $35 million.

In the fourth quarter 2019, we purchased approximately 441,000 shares of our common stock for approximately $50 million. At December 31, 2019, we had approximately $95 million remaining under our share repurchase authorization. Actual shares outstanding at December 31, 2019, approximated 106.2 million.

Conference Call Information:

The company will hold a conference call today at 9:00 a.m.–10:00 a.m. CST to discuss the quarterly earnings. To receive a dial-in number and personal access code, participants must register here. A replay of the call will be posted on its website later today.

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, 2018. 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 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

2019

2018

% Of % Of
Amount Revenue Amount Revenue
Operating revenues, excluding fuel surcharge revenues

$

2,168,497

$

2,033,674

Fuel surcharge revenues

281,826

284,168

Total operating revenues

2,450,323

100.0%

2,317,842

100.0%

Operating expenses

Rents and purchased transportation

1,246,130

50.9%

1,271,097

54.8%

Salaries, wages and employee benefits

561,507

22.9%

515,271

22.2%

Depreciation and amortization

128,418

5.2%

114,086

4.9%

Fuel and fuel taxes

118,269

4.8%

117,613

5.1%

Operating supplies and expenses

83,633

3.4%

77,178

3.3%

General and administrative expenses, net of asset dispositions

51,277

2.1%

51,191

2.3%

Insurance and claims

32,289

1.3%

26,941

1.2%

Operating taxes and licenses

14,345

0.6%

14,055

0.6%

Communication and utilities

9,381

0.4%

7,670

0.3%

Total operating expenses

2,245,249

91.6%

2,195,102

94.7%

Operating income

205,074

8.4%

122,740

5.3%

Net interest expense

12,776

0.6%

11,235

0.5%

Earnings before income taxes

192,298

7.8%

111,505

4.8%

Income taxes

47,622

1.9%

22,824

1.0%

Net earnings

$

144,676

5.9%

$

88,681

3.8%

Average diluted shares outstanding

107,529

109,940

Diluted earnings per share

$

1.35

$

0.81

J.B. HUNT TRANSPORT SERVICES, INC.
Condensed Consolidated Statements of Earnings
(in thousands, except per share data)
(unaudited)
Twelve Months Ended December 31

2019

2018

% Of % Of
Amount Revenue Amount Revenue
Operating revenues, excluding fuel surcharge revenues

$

8,122,600

$

7,557,648

Fuel surcharge revenues

1,042,658

1,057,226

Total operating revenues

9,165,258

100.0%

8,614,874

100.0%

Operating expenses
Rents and purchased transportation

4,528,812

49.4%

4,434,540

51.5%

Salaries, wages and employee benefits

2,167,851

23.7%

1,926,213

22.4%

Depreciation and amortization

499,145

5.4%

435,893

5.1%

Fuel and fuel taxes

463,195

5.1%

459,011

5.3%

Operating supplies and expenses

333,113

3.6%

303,529

3.5%

General and administrative expenses, net of asset dispositions

191,933

2.1%

163,270

1.8%

Insurance and claims

157,251

1.7%

129,406

1.5%

Operating taxes and licenses

55,336

0.6%

51,080

0.6%

Communication and utilities

34,797

0.4%

30,911

0.4%

Total operating expenses

8,431,433

92.0%

7,933,853

92.1%

Operating income

733,825

8.0%

681,021

7.9%

Net interest expense

52,930

0.6%

40,203

0.5%

Earnings before income taxes

680,895

7.4%

640,818

7.4%

Income taxes

164,575

1.8%

151,233

1.7%

Net earnings

$

516,320

5.6%

$

489,585

5.7%

Average diluted shares outstanding

108,599

110,428

Diluted earnings per share

$

4.75

$

4.43

Financial Information By Segment
(in thousands)
(unaudited)
Three Months Ended December 31

2019

2018

% Of % Of
Amount Total Amount Total
Revenue
Intermodal

$

1,267,142

52%

$

1,263,469

54%

Dedicated

716,940

29%

595,809

26%

Integrated Capacity Solutions

376,537

15%

345,400

15%

Truck

93,640

4%

117,707

5%

Subtotal

2,454,259

100%

2,322,385

100%

Intersegment eliminations

(3,936)

(0%)

(4,543)

(0%)

Consolidated revenue

$

2,450,323

100%

$

2,317,842

100%

Operating income
Intermodal

$

131,097

64%

$

32,445

27%

Dedicated

79,565

39%

59,416

48%

Integrated Capacity Solutions

(11,843)

(6%)

16,142

13%

Truck

6,321

3%

14,737

12%

Other (1)

(66)

0%

-

0%

Operating income

$

205,074

100%

$

122,740

100%

Twelve Months Ended December 31

2019

2018

% Of % Of
Amount Total Amount Total
Revenue
Intermodal

$

4,744,636

52%

$

4,716,649

55%

Dedicated

2,694,811

29%

2,163,155

25%

Integrated Capacity Solutions

1,348,336

15%

1,334,629

15%

Truck

389,301

4%

417,351

5%

Subtotal

9,177,084

100%

8,631,784

100%

Intersegment eliminations

(11,826)

(0%)

(16,910)

(0%)

Consolidated revenue

$

9,165,258

100%

$

8,614,874

100%

Operating income
Intermodal

$

447,479

61%

$

400,999

59%

Dedicated

268,579

37%

193,419

29%

Integrated Capacity Solutions

(11,088)

(2%)

50,167

7%

Truck

29,046

4%

36,568

5%

Other (1)

(191)

(0%)

(132)

(0%)

Operating income

$

733,825

100%

$

681,021

100%

(1) Includes corporate support activity
Operating Statistics by Segment
(unaudited)
Three Months Ended December 31

2019

2018

Intermodal
Loads

520,898

512,935

Average length of haul

1,707

1,660

Revenue per load

$

2,433

$

2,463

Average tractors during the period *

5,587

5,632

Tractors (end of period)
Company-owned

4,989

5,017

Independent contractor

570

633

Total tractors

5,559

5,650

Net change in trailing equipment during the period

54

1,750

Trailing equipment (end of period)

96,743

94,902

Average effective trailing equipment usage

92,571

91,785

Dedicated
Loads

945,907

808,043

Average length of haul

166

173

Revenue per truck per week**

$

5,128

$

4,715

Average trucks during the period***

11,019

9,914

Trucks (end of period)
Company-owned

10,542

9,652

Independent contractor

40

51

Customer-owned (Dedicated operated)

505

412

Total trucks

11,087

10,115

Trailing equipment (end of period)

28,118

26,710

Average effective trailing equipment usage

28,300

27,014

Integrated Capacity Solutions
Loads

328,060

317,512

Revenue per load

$

1,148

$

1,088

Gross profit margin

10.6%

16.9%

Employee count (end of period)

1,213

1,142

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

84,400

73,100

Marketplace for J.B. Hunt 360°:
Approximate carrier tractor count (end of period)

682,000

529,000

Revenue (millions)

225.5

174.4

Truck
Loads

86,891

95,747

Average length of haul

396

405

Loaded miles (000)

34,388

38,828

Total miles (000)

42,544

47,555

Average nonpaid empty miles per load

94.1

91.3

Revenue per tractor per week**

$

4,017

$

4,513

Average tractors during the period *

1,875

2,108

Tractors (end of period)
Company-owned

845

1,139

Independent contractor

986

973

Total tractors

1,831

2,112

Trailers (end of period)

6,975

6,800

Average effective trailing equipment usage

6,444

6,532

* 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

2019

2018

Intermodal
Loads

1,979,169

2,049,014

Average length of haul

1,679

1,648

Revenue per load

$

2,397

$

2,302

Average tractors during the period *

5,635

5,551

Tractors (end of period)
Company-owned

4,989

5,017

Independent contractor

570

633

Total tractors

5,559

5,650

Net change in trailing equipment during the period

1,841

6,262

Trailing equipment (end of period)

96,743

94,902

Average effective trailing equipment usage

86,836

88,739

Dedicated
Loads

3,615,580

2,981,344

Average length of haul

169

177

Revenue per truck per week**

$

4,895

$

4,534

Average trucks during the period***

10,725

9,264

Trucks (end of period)
Company-owned

10,542

9,652

Independent contractor

40

51

Customer-owned (Dedicated operated)

505

412

Total trucks

11,087

10,115

Trailing equipment (end of period)

28,118

26,710

Average effective trailing equipment usage

28,147

26,806

Integrated Capacity Solutions
Loads

1,243,992

1,234,632

Revenue per load

$

1,084

$

1,081

Gross profit margin

13.1%

15.4%

Employee count (end of period)

1,213

1,142

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

84,400

73,100

Marketplace for J.B. Hunt 360°:
Approximate carrier tractor count (end of period)

682,000

529,000

Revenue (millions)

839.8

557.8

Truck
Loads

346,459

355,038

Average length of haul

415

427

Loaded miles (000)

143,511

151,322

Total miles (000)

177,035

181,718

Average nonpaid empty miles per load

96.9

85.5

Revenue per tractor per week**

$

3,917

$

4,148

Average tractors during the period*

1,958

1,990

Tractors (end of period)
Company-owned

845

1,139

Independent contractor

986

973

Total tractors

1,831

2,112

Trailers (end of period)

6,975

6,800

Average effective trailing equipment usage

6,497

6,513

* 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, 2019 December 31, 2018
ASSETS
Current assets:
Cash and cash equivalents

$

35,000

$

7,600

Accounts Receivable

1,011,829

1,051,698

Prepaid expenses and other

434,470

443,683

Total current assets

1,481,299

1,502,981

Property and equipment

5,640,806

5,329,243

Less accumulated depreciation

2,019,940

1,884,132

Net property and equipment

3,620,866

3,445,111

Other assets, net

368,689

143,555

$

5,470,854

$

5,091,647

LIABILITIES & STOCKHOLDERS' EQUITY
Current liabilities:
Current debt

$

-

$

250,706

Trade accounts payable

602,601

709,736

Claims accruals

279,590

275,139

Accrued payroll

68,220

80,922

Other accrued expenses

85,355

35,845

Total current liabilities

1,035,766

1,352,348

Long-term debt

1,295,740

898,398

Other long-term liabilities

173,241

96,056

Deferred income taxes

699,078

643,461

Stockholders' equity

2,267,029

2,101,384

$

5,470,854

$

5,091,647

Supplemental Data
(unaudited)
December 31, 2019 December 31, 2018
Actual shares outstanding at end of period (000)

106,213

108,711

Book value per actual share outstanding at end of period

$

21.34

$

19.33

Twelve Months Ended December 31

2019

2018

Net cash provided by operating activities (000)

$

1,098,347

$

1,087,841

Net capital expenditures (000)

$

688,197

$

885,485

David G. Mee

Executive Vice President,

Finance/Administration

and Chief Financial Officer

(479) 820-8363

Source: J.B. Hunt Transport Services, Inc.

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