16 Octby Vitaliy Dadalyan

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  • Third Quarter 2020 Revenue: $2.47 billion; up 5%
  • Third Quarter 2020 Operating Income: $175.5 million; up 5%
  • Third Quarter 2020 EPS: $1.18 vs. $1.10

LOWELL, Ark.–(BUSINESS WIRE)–J.B. Hunt Transport Services, Inc., (NASDAQ: JBHT) announced third quarter 2020 net earnings of $125.5 million, or diluted earnings per share of $1.18 vs. third quarter 2019 net earnings of $118.4 million, or $1.10 cents per diluted share. Included in the third quarter 2019 results were pre-tax charges of $44.2 million or $0.30 per share related to arbitration, including legal and interest charges.

Total operating revenue for the current quarter was $2.47 billion, compared with $2.36 billion for the third quarter 2019. Revenue performance was primarily driven by a 25% increase in revenue per load in Integrated Capacity Solutions (ICS), a 34% increase in the number of stops in Final Mile Services (FMS), a 9% increase in loads in Dedicated (DCS), and a 14% increase in loads in Truck (JBT), partially offset by a 5% decrease in revenue per load in Intermodal (JBI) and 32% decline in fuel surcharge revenue. Current quarter total operating revenue, excluding fuel surcharges, increased 9% vs. the comparable quarter 2019.

The amount of ICS operating revenue executed through Marketplace for J.B. Hunt 360°® increased to $291 million from $205 million in third quarter 2019. JBI executed approximately $41 million of third-party dray cost, and JBT executed approximately $26 million of its independent contractor costs through the platform during this quarter.

Operating income for the current quarter totaled $175.5 million vs. $167.9 million for the third quarter 2019. Operating income in third quarter 2019 included $44.2 million in pre-tax charges related to the final award in the arbitration with BNSF Railway Company (BNSF). Excluding these charges, operating income decreased 17% from third quarter 2019 primarily from increased rail purchase transportation costs, lower gross margins in ICS, increases in driver wages and recruiting costs, increased third-party and company dray costs, and continued investments in technology spend on new applications and legacy operating systems.

Interest expense in the current quarter decreased primarily from lower interest rates compared to third quarter 2019. The effective income tax rate for the current quarter is 23.3% compared to 23.9% for third quarter 2019. We expect our 2020 annual tax rate to fall between 24.0% and 24.5%.

Segment Information:

Intermodal (JBI)

  • Third Quarter 2020 Segment Revenue: $1.21 billion; down 2%
  • Third Quarter 2020 Operating Income: $108.4 million; up 22%

Overall intermodal volumes increased 2% vs. the same period in 2019. Eastern network loads grew 3%, while Transcon loads grew 2% compared to the third quarter 2019. Volumes in the quarter were heavily constrained by rail congestion and service issues stemming from a large and sudden increase in demand and intermittent labor challenges in both the rail and truck networks. Revenue declined by 2%, reflecting a 5% decline in revenue per load, partially offset by the 2% load growth; which is the combination of mix, customer rates, and fuel surcharges. Excluding fuel, revenue per load was flat year over year.

Operating income increased by 22% year over year, however the prior comparable period included $44.2 million in charges related to the final award in the BNSF arbitration. Excluding those charges, operating income was down 18% year over year. The decline in operating income is attributable to higher rail purchased transportation costs, including costs to reposition empty containers, lower overall revenue per load, and higher dray costs stemming from dislocations in rail capacity and a tight labor and truck capacity environment. The current period ended with approximately 97,400 units of trailing capacity and 5,647 power units in the dray fleet.

Dedicated Contract Services (DCS)

  • Third Quarter 2020 Segment Revenue: $553 million; up 1%
  • Third Quarter 2020 Operating Income: $80.4 million; up 5%

DCS revenue increased 1% during the current quarter over the same period in 2019. Productivity, defined as revenue per truck per week, was flat vs. 2019. Productivity excluding fuel surcharge revenue increased 2% vs. 2019. A net additional 63 revenue producing trucks were in the fleet by the end of the quarter compared to the prior year. Customer retention rates remain above 97%.

Operating income increased 5% over the prior year quarter. Benefits from increased productivity of assets, reduced driver turnover, fewer start-up costs, and lower travel and entertainment expenses, were partially offset by higher driver and account manager wages and benefits.

Integrated Capacity Solutions (ICS)

  • Third Quarter 2020 Segment Revenue: $431 million; up 28%
  • Third Quarter 2020 Operating Loss: $(18.3) million; compared to $(5.6) million in 3Q’19

ICS revenue increased 28% in the current quarter vs. the third quarter 2019. Volumes increased 2% and revenue per load increased 25% due to customer freight mix changes and higher contractual and spot rates compared to the third quarter 2019. Contractual volumes represented approximately 58% of the total load volume and 38% of the total revenue in the current quarter compared to 68% and 52%, respectively, in third quarter 2019. Of the total reported ICS revenue, approximately $291 million was executed through the Marketplace for J.B. Hunt 360 compared to $205 million in third quarter 2019.

Operating income decreased by $12.7 million from the third quarter 2019 primarily from lower gross profit margins. Gross profit margins decreased to 7.6% in the current period vs. 12.7% in the same period last year primarily from a competitive contractual pricing environment and tight supply dynamics that occurred throughout the quarter. ICS carrier base increased 14% vs. third quarter 2019.

Final Miles Services (FMS)

  • Third Quarter 2020 Segment Revenue: $182 million; up 22%Third Quarter 2020 Operating Income: $2.1 million; up 13%

FMS revenue increased 22% compared to the same period 2019. Stop count within FMS increased 34% during the current quarter vs. a year ago, primarily from the December 2019 acquisition and the addition of multiple customer contracts implemented throughout 2020. Productivity, defined as revenue per stop, decreased approximately 9% compared to the prior year period primarily from the shift in mix between the asset and asset-light nature of the additional contracts that were implemented.

Operating income increased 13% over the prior year quarter driven primarily by increases in revenue from both the December 2019 acquisition and the addition of multiple customer contracts throughout 2020. Continued reductions in travel and entertainment compared to a year ago also benefited the current quarter that were partially offset by increased investment in service quality performance controls.

Truck (JBT)

  • Third Quarter 2020 Segment Revenue: $109 million; up 16%
  • Third Quarter 2020 Operating Income: $2.9 million; down 55%

JBT revenue increased 16% from the same period in 2019. Revenue excluding fuel surcharge revenue increased 19%, primarily from a 14% increase in load count and a 5% increase in revenue per load excluding fuel surcharge revenue compared to a year ago. Revenue per loaded mile excluding fuel surcharge revenue increased approximately 4% year-over-year while comparable contractual customer rates were down approximately 1% compared to the same period 2019. At the end of the period, JBT operated 1,713 tractors and 8,245 trailers compared to 1,896 and 6,826 one year ago, respectively.

Operating income decreased 55% compared to the same quarter 2019. Benefits from increased load counts were offset by increases in purchased transportation expense. In addition, higher personnel cost and increased investment in technology, both from the continued transition and expansion of 360box, contributed to the operating income decrease.

Cash Flow and Capitalization:

At September 30, 2020, we had a total of $1.30 billion outstanding on various debt instruments which is comparable to total debt levels at September 30, 2019 and December 31, 2019.

Our net capital expenditures for the nine months ended September 30, 2020, approximated $449 million compared to $587 million for the same period 2019. At September 30, 2020, we had cash and cash equivalents of approximately $319 million.

We had no purchases of our stock during the third quarter 2020. At September 30, 2020, we had approximately $520 million remaining under our share repurchase authorization. Actual shares outstanding at September 30, 2020, approximated 105.7 million.

Conference Call Information:

The Company will hold a conference call today at 9:00–10:00 am CT to discuss the quarterly earnings. To participate in the call, dial 1-833-397-0851 (domestic) or 516-575-8759 (international) 15 minutes prior to the start of the call and provide the following conference ID: 3368517. A replay of the call will be posted on our website here 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, 2019 and Quarterly Report filed on Form 10-Q for the period ended June 30, 2020. 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 website, www.jbhunt.com.

 
Condensed Consolidated Statements of Earnings
(in thousands, except per share data)
(unaudited)
 
Three Months Ended September 30

2020

2019

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

2,296,053

$

2,102,494

Fuel surcharge revenues

176,470

261,166

Total operating revenues

2,472,523

100.0%

2,363,660

100.0%

 
Operating expenses
Rents and purchased transportation

1,297,333

52.5%

1,196,377

50.6%

Salaries, wages and employee benefits

594,162

24.0%

554,872

23.5%

Depreciation and amortization

132,392

5.4%

126,803

5.3%

Fuel and fuel taxes

87,350

3.5%

114,764

4.8%

Operating supplies and expenses

86,103

3.5%

87,044

3.7%

General and administrative expenses, net of asset dispositions

41,894

1.6%

49,077

2.1%

Insurance and claims

35,412

1.4%

43,956

1.9%

Operating taxes and licenses

13,696

0.6%

14,266

0.6%

Communication and utilities

8,678

0.4%

8,639

0.4%

Total operating expenses

2,297,020

92.9%

2,195,798

92.9%

Operating income

175,503

7.1%

167,862

7.1%

Net interest expense

11,895

0.5%

12,357

0.5%

Earnings before income taxes

163,608

6.6%

155,505

6.6%

Income taxes

38,112

1.5%

37,095

1.6%

Net earnings $

125,496

5.1%

$

118,410

5.0%

Average diluted shares outstanding

106,798

107,692

Diluted earnings per share $

1.18

$

1.10

J.B. HUNT TRANSPORT SERVICES, INC.

Condensed Consolidated Statements of Earnings
(in thousands, except per share data)
(unaudited)
 
Nine Months Ended September 30

2020

2019

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

6,327,876

$

5,954,102

Fuel surcharge revenues

571,045

760,832

Total operating revenues

6,898,921

100.0%

6,714,934

100.0%

 
Operating expenses
Rents and purchased transportation

3,467,782

50.3%

3,282,682

48.9%

Salaries, wages and employee benefits

1,722,548

25.0%

1,606,344

23.9%

Depreciation and amortization

392,786

5.7%

370,728

5.5%

Fuel and fuel taxes

263,932

3.8%

344,926

5.1%

Operating supplies and expenses

250,835

3.6%

249,480

3.7%

General and administrative expenses, net of asset dispositions

131,654

1.9%

140,654

2.2%

Insurance and claims

98,672

1.4%

124,963

1.8%

Operating taxes and licenses

40,575

0.6%

40,991

0.6%

Communication and utilities

24,710

0.4%

25,416

0.4%

Total operating expenses

6,393,494

92.7%

6,186,184

92.1%

Operating income

505,427

7.3%

528,750

7.9%

Net interest expense

36,749

0.5%

40,153

0.6%

Earnings before income taxes

468,678

6.8%

488,597

7.3%

Income taxes

116,650

1.7%

116,953

1.8%

Net earnings $

352,028

5.1%

$

371,644

5.5%

Average diluted shares outstanding

106,776

108,569

Diluted earnings per share $

3.30

$

3.42

 
Financial Information By Segment
(in thousands)
(unaudited)
 
 
Three Months Ended September 30

2020

2019

% Of % Of
Amount Total Amount Total
 
Revenue
Intermodal $

1,211,183

49%

$

1,239,671

52%

Dedicated

552,948

22%

547,101

23%

Integrated Capacity Solutions

431,144

18%

336,721

14%

Final Mile Services

182,091

7%

148,987

7%

Truck

109,113

5%

94,182

4%

Subtotal

2,486,479

101%

2,366,662

100%

Intersegment eliminations

(13,956

)

(1%)

(3,002

)

(0%)

Consolidated revenue $

2,472,523

100%

$

2,363,660

100%

 
 
Operating income
Intermodal $

108,412

62%

$

88,708

53%

Dedicated

80,431

46%

76,425

46%

Integrated Capacity Solutions

(18,304

)

(11%)

(5,639

)

(4%)

Final Mile Services

2,090

1%

1,855

1%

Truck

2,948

2%

6,597

4%

Other (1)

(74

)

(0%)

(84

)

(0%)

Operating income $

175,503

100%

$

167,862

100%

 
 
Nine Months Ended September 30

2020

2019

% Of % Of
Amount Total Amount Total
Revenue
 
Intermodal $

3,426,008

50%

$

3,477,493

52%

Dedicated

1,627,852

24%

1,575,535

23%

Integrated Capacity Solutions

1,070,905

15%

971,799

15%

Final Mile Services

475,270

7%

402,336

6%

Truck

322,336

4%

295,661

4%

Subtotal

6,922,371

100%

6,722,824

100%

Intersegment eliminations

(23,450

)

(0%)

(7,890

)

(0%)

Consolidated revenue $

6,898,921

100%

$

6,714,934

100%

 
 
Operating income
 
Intermodal $

317,652

63%

$

316,382

60%

Dedicated

236,423

47%

202,747

38%

Integrated Capacity Solutions

(50,274

)

(10%)

755

0%

Final Mile Services

(6,459

)

(1%)

(13,733

)

(2%)

Truck

8,207

1%

22,725

4%

Other (1)

(122

)

(0%)

(126

)

(0%)

Operating income $

505,427

100%

$

528,750

100%

 
 
(1) Includes corporate support activity
 
Operating Statistics by Segment
(unaudited)
Three Months Ended September 30

2020

2019

Intermodal
Loads

529,709

517,409

Average length of haul

1,695

1,697

Revenue per load $

2,287

$

2,396

Average tractors during the period *

5,546

5,642

Tractors (end of period) *

5,647

5,643

Trailing equipment (end of period)

97,439

96,689

Average effective trailing equipment usage

94,846

89,175

Dedicated
Loads

940,225

863,077

Average length of haul

157

168

Revenue per truck per week** $

4,372

$

4,384

Average trucks during the period***

9,697

9,572

Trucks (end of period) ***

9,723

9,660

Trailing equipment (end of period)

27,376

26,838

Integrated Capacity Solutions
Loads

326,563

320,183

Revenue per load $

1,320

$

1,052

Gross profit margin

7.6%

12.7%

Employee count (end of period)

1,037

1,193

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

94,200

82,600

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

777,000

667,000

Revenue (millions) $

291.2

$

205.4

Final Mile Services
Stops

1,604,694

1,199,801

Average trucks during the period***

1,448

1,265

Truck
Loads

98,505

86,647

Loaded miles (000)

40,599

35,411

Nonpaid empty mile percentage

19.2%

18.9%

Revenue per tractor per week** $

3,849

$

3,829

Average tractors during the period *

1,783

1,910

Tractors (end of period)
Company-owned

800

859

Independent contractor

913

1,037

Total tractors

1,713

1,896

Trailers (end of period)

8,245

6,826

 
 
* 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
 

2020

2019

 
Intermodal  
 
Loads  

1,494,485

1,458,271

Average length of haul  

1,683

1,670

Revenue per load   $

2,292

$

2,385

Average tractors during the period *  

5,484

5,651

Tractors (end of period) *  

5,647

5,643

Trailing equipment (end of period)  

97,439

96,689

Average effective trailing equipment usage  

88,262

84,924

 
 
Dedicated  
 
Loads  

2,726,455

2,478,661

Average length of haul  

160

169

Revenue per truck per week**   $

4,316

$

4,343

Average trucks during the period***  

9,713

9,387

Trucks (end of period) ***  

9,723

9,660

Trailing equipment (end of period)  

27,376

26,838

 
 
Integrated Capacity Solutions  
 
Loads  

896,709

915,932

Revenue per load   $

1,194

$

1,061

Gross profit margin  

9.4%

14.1%

Employee count (end of period)  

1,037

1,193

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

94,200

82,600

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

777,000

667,000

Revenue (millions)   $

755.1

$

614.3

 
 
Final Mile Services  
 
Stops  

3,922,318

3,132,900

Average trucks during the period***  

1,362

1,240

 
 
Truck  
 
Loads  

299,297

259,568

Loaded miles (000)  

125,718

109,122

Nonpaid empty mile percentage  

18.9%

18.9%

Revenue per tractor per week**   $

3,844

$

3,885

Average tractors during the period*  

1,859

1,986

 
Tractors (end of period)  
Company-owned  

800

859

Independent contractor  

913

1,037

Total tractors  

1,713

1,896

 
Trailers (end of period)  

8,245

6,826

 
 
* 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, 2020 December 31, 2019
ASSETS  
Current assets:  
Cash and cash equivalents   $

318,549

$

35,000

Accounts Receivable, net  

1,121,825

1,011,829

Prepaid expenses and other  

288,224

434,470

Total current assets  

1,728,598

1,481,299

Property and equipment  

5,842,114

5,640,806

Less accumulated depreciation  

2,159,710

2,019,940

Net property and equipment  

3,682,404

3,620,866

Other assets, net  

368,060

368,689

  $

5,779,062

$

5,470,854

   
   
LIABILITIES & STOCKHOLDERS’ EQUITY  
Current liabilities:  
Trade accounts payable   $

603,523

$

602,601

Claims accruals  

273,088

279,590

Accrued payroll  

145,110

68,220

Other accrued expenses  

73,702

85,355

Total current liabilities  

1,095,423

1,035,766

   
Long-term debt  

1,303,353

1,295,740

Other long-term liabilities  

181,561

173,241

Deferred income taxes  

711,301

699,078

Stockholders’ equity  

2,487,424

2,267,029

  $

5,779,062

$

5,470,854

   
Supplemental Data
(unaudited)
   
  September 30, 2020 December 31, 2019
   
Actual shares outstanding at end of period (000)  

105,679

106,213

   
Book value per actual share outstanding at end of period   $

23.54

$

21.34

   
   
   
  Nine Months Ended September 30
 

2020

2019

   
Net cash provided by operating activities (000)   $

910,994

$

937,595

   
Net capital expenditures (000)   $

448,721

$

586,607

   

Contacts

Brad Delco

615 J.B. Hunt Corporate Drive Vice President – Finance & Investor Relations

Lowell, Arkansas 72745 (479) 820-2723

This article published with permission from Business Wire

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