Business Wire | Jul 19, 2021 04:05PM EDT

J.B. Hunt Transport Services, Inc. Reports Earnings for the Second Quarter 2021

Jul. 19, 2021

LOWELL, Ark.--(BUSINESS WIRE)--Jul. 19, 2021--J.B. Hunt Transport Services, Inc., (NASDAQ: JBHT) announced second quarter 2021 net earnings of $172.2 million, or diluted earnings per share of $1.61 vs. second quarter 2020 net earnings of $121.7 million, or $1.14 per diluted share.

Total operating revenue for the current quarter was $2.91 billion, compared with $2.15 billion for the second quarter 2020, an increase of 36%. All segments contributed at least double-digit revenue growth vs. the prior year period. Integrated Capacity Solutions (ICS) and Truck (JBT) grew revenue 100% and 70% year-over-year, respectively, as both segments were able to source and secure capacity for customers in the Marketplace for J.B. Hunt 360(r) in the capacity constrained freight market during the quarter. Intermodal (JBI) revenue grew 21%, driven by a 6% increase in volume and a 15% increase in revenue per load. Final Mile Services(r) (FMS) revenue increased 52%, as stops increased 59% year-over-year. Dedicated Contract Services(r) (DCS(r)) revenue grew 17% as fleet productivity improved 11% combined with a 5% increase in average revenue producing trucks versus the prior year period. Current quarter total operating revenue, excluding fuel surcharge revenue, increased 31% vs. the comparable quarter 2020.

Total freight transactions in the Marketplace for J.B. Hunt 360 increased to $500 million in the second quarter 2021 compared to $281 million in the prior year quarter. ICS revenue on the platform increased 73% to $396 million versus a year ago. JBI and JBT executed approximately $33 million and $71 million, respectively, of their third-party dray, independent contractor and power-only capacity costs through the platform during the quarter.

Operating income for the current quarter totaled $241.5 million versus $175.2 million for the second quarter 2020. Operating income increased from second quarter 2020 primarily from customer rate and cost recovery efforts, higher volumes, further scaling into our technology investments, higher productivity of our assets and people across our DCS, FMS and ICS segments, and a benefit of $3.2 million related to the net settlement of claims in FMS. These items were partially offset by increases in driver wage and recruiting costs, rail and truck purchase transportation expense, non-driver personnel salary, wages and incentive compensation, higher group medical expense, elevated implementation costs for new, long term DCS contracts, and a lack of network fluidity from both rail and customer activity in JBI.

Net interest expense in the current quarter decreased from second quarter 2020 due to lower interest rates compared to the same period last year. The effective income tax rate in the quarter was 25.0% and in line with the prior year quarter. We now expect our 2021 annual tax rate to be between 23.5% and 24.5%.

Segment Information:

Intermodal (JBI)

* Second Quarter 2021 Segment Revenue: $1.29 billion; up 21% * Second Quarter 2021 Operating Income: $134.6 million; up 26%

JBI load volumes increased 6% over the same period in 2020. Eastern network volumes increased 9% and transcontinental volumes increased 3% from second quarter 2020. Demand for intermodal service remains robust, however, significant restrictions across the rail network were implemented throughout the quarter by rail service providers reflecting challenges within their network related to car imbalances and chassis and labor shortages. In addition, customer detention of trailing equipment was at an all-time high during the quarter further pressuring the availability of capacity and our volumes during the quarter. Despite these volume-related challenges, revenue increased 21% year-over-year, reflecting the 6% increase in volumes and a 15% increase in gross revenue per load. Excluding fuel surcharge revenue, revenue per load increased 9% year-over-year.

Operating income increased 26% from the prior year period primarily driven by the increase in volume, complemented with higher rate and cost recovery efforts. These benefits were partially offset by higher rail and third-party dray purchased transportation expense, higher costs to attract and retain drivers, and higher equipment cost. The current period ended with approximately 99,400 units of trailing capacity and 5,820 power units in the dray fleet.

Dedicated Contract Services (DCS)

* Second Quarter 2021 Segment Revenue: $621 million; up 17% * Second Quarter 2021 Operating Income: $79.0 million; down 5%

DCS revenue increased 17% during the current quarter over the same period in 2020. Productivity, defined as revenue per truck per week, increased approximately 11% vs. 2020. Productivity excluding fuel surcharge revenue increased 7% from a year ago primarily from higher utilization of assets, contracted indexed-based price escalators, and less idled equipment in the quarter. A net additional 832 revenue producing trucks were in the fleet by the end of the quarter compared to the prior year, and a net additional 555 versus the end of the first quarter 2021. Customer retention rates remain above 98%.

Operating income decreased by 5% from the prior year quarter. Higher revenue and productivity were more than offset by increases in driver wage and recruiting costs, non-driver personnel salary, wages and incentive compensation, higher group medical expense, and elevated costs related to the implementation of new, long term contracts.

Integrated Capacity Solutions (ICS)

* Second Quarter 2021 Segment Revenue: $607 million; up 100% * Second Quarter 2021 Operating Income: $3.1 million; compared to $(13.1) million loss in 2Q'20

ICS revenue increased 100% during the current quarter vs. the second quarter 2020. Segment volumes increased 20% during the quarter with truckload volumes increasing 30% from the prior year period. Revenue per load increased 66%. In addition to changes in customer freight mix, revenue per load was favorably impacted by higher contractual and spot rates in our truckload business as compared to the second quarter 2020. Contractual volumes represented approximately 48% of the total load volume and 35% of the total revenue in the current quarter compared to 67% and 55%, respectively, in second quarter 2020. Of the total reported ICS revenue, approximately $396 million was executed through the Marketplace for J.B. Hunt 360 compared to $229 million in second quarter 2020.

Operating income increased to $3.1 million compared to an operating loss of $13.1 million in the second quarter 2020. Benefits from higher gross profit margin dollars and increased scale in the Marketplace for J.B. Hunt 360 platform were partially offset by higher personnel and technology costs as compared to the same period 2020. Gross profit margin percent decreased to 10.5% in the current period versus 11.8% in the same period last year primarily as a result of tighter industry capacity dynamics versus the prior year period. ICS carrier base increased 30% vs. second quarter 2020.

Final Mile Services (FMS)

* Second Quarter 2021 Segment Revenue: $212 million; up 52% * Second Quarter 2021 Operating Income: $10.7 million; compared to $(5.2) million loss in 2Q'20

FMS revenue increased 52% compared to the same period 2020. Stop count within FMS increased 59% during the current quarter vs. a year ago, primarily from the addition of multiple customer contracts implemented over the last year. Additionally, the prior year period included temporary suspension of operations at several of our customers' sites as a result of COVID-19. Productivity, defined as revenue per stop, decreased approximately 5% compared to the prior year period primarily from a shift in the mix of business between asset and asset-light operations.

Operating income increased to $10.7 million compared to an operating loss of $5.2 million in the second quarter 2020. The increase in operating income in the second quarter 2021 was primarily the result of higher volumes compared to the prior year period and a $3.2 million benefit from the net settlement of claims, partially offset by higher personnel expense related to salary, wages and incentive comp.

Truckload (JBT)

* Second Quarter 2021 Segment Revenue: $184 million; up 70% * Second Quarter 2021 Operating Income: $14.2 million; up 308%

JBT revenue increased 70% from the same period in 2020. Revenue excluding fuel surcharge revenue increased 66% primarily from a 58% increase in revenue per load excluding fuel surcharge revenue and a 5% increase in load count compared to a year ago. The increase in revenue per load excluding fuel surcharge revenue was driven by a 40% increase in revenue per loaded mile excluding fuel surcharge revenue and a 13% increase in average length of haul. Load count growth and the length of haul increase were primarily related to the continued expansion of J.B. Hunt 360box(tm) which leverages the J.B. Hunt 360 platform to access drop-trailer capacity for customers across our transportation network. Comparable contractual customer rates were up approximately 25% compared to the same period 2020. The current period ended with 8,958 trailers and 1,770 tractors, compared to 7,985 and 1,897 respectively.

Operating income increased to $14.2 million compared to $3.5 million in the second quarter 2020. Benefits from increased load counts and revenue per load were partially offset by increases in purchased transportation expense and higher salary and wage expenses for non-driving personnel related to the continued expansion of 360box and increased usage of non-asset power.

Cash Flow and Capitalization:

At June 30, 2021, we had approximately $1.3 billion outstanding on various debt instruments which is comparable to levels at June 30, 2020 and at December 31, 2020.

Our net capital expenditures for the six months ended June 30, 2021 approximated $261 million compared to $265 million for the same period 2020. At June 30, 2021, we had cash and cash equivalents of approximately $571 million.

In the second quarter 2021, we purchased approximately 484,000 shares of common stock for approximately $81 million. At June 30, 2021, we had approximately $416 million remaining under our share repurchase authorization. Actual shares outstanding at June 30, 2021 approximated 105.2 million.

Conference Call Information:

The company will hold a conference call today at 4:00-5:00 p.m. CDT to discuss the quarterly earnings. To participate in the call, dial 1-833-360-0810 (domestic) or 470-495-0976 (international) 15 minutes prior to the start of the call and provide the following conference ID: 9793029. A replay of the call will be posted on the investor relations section of our website here later this evening.

Forward-Looking Statements:

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, 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 the investor relations section of our website, www.jbhunt.com.

About J.B. Hunt

J.B. Hunt Transport Services, Inc., an S&P 500 company, provides innovative supply chain solutions for a variety of customers throughout North America. Utilizing an integrated, multimodal approach, the company applies technology driven methods to create the best solution for each customer, adding efficiency, flexibility, and value to their operations. J.B. Hunt services include intermodal, dedicated, refrigerated, truckload, less-than-truckload, flatbed, single source, final mile, and more. J.B. Hunt Transport Services, Inc. stock trades on NASDAQ under the ticker symbol JBHT and is a component of the Dow Jones Transportation Average. J.B. Hunt Transport, Inc. is a wholly owned subsidiary of JBHT. For more information, visit 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

2021 2020

% Of % Of Amount Revenue Amount Revenue Operating revenues,excluding fuel surcharge $ 2,606,981 $ 1,986,130revenuesFuel surcharge revenues 301,389 159,443

Total operating revenues 2,908,370 100.0 % 2,145,573 100.0 %

Operating expensesRents and purchased 1,538,232 52.9 % 1,034,297 48.2 %transportationSalaries, wages and 665,471 22.9 % 554,136 25.8 %employee benefitsDepreciation and 139,371 4.8 % 130,298 6.1 %amortizationFuel and fuel taxes 126,841 4.4 % 75,459 3.5 %

Operating supplies and 91,019 3.1 % 79,134 3.7 %expensesGeneral and administrative 47,505 1.6 % 44,599 2.1 %expenses, net of assetdispositionsInsurance and claims 35,508 1.2 % 30,899 1.4 %

Operating taxes and 14,209 0.5 % 13,567 0.6 %licensesCommunication and utilities 8,668 0.3 % 8,001 0.4 %

Total operating expenses 2,666,824 91.7 % 1,970,390 91.8 %

Operating income 241,546 8.3 % 175,183 8.2 %

Net interest expense 12,059 0.4 % 12,818 0.6 %

Earnings before income 229,487 7.9 % 162,365 7.6 %taxesIncome taxes 57,325 2.0 % 40,667 1.9 %

Net earnings $ 172,162 5.9 % $ 121,698 5.7 %

Average diluted shares 106,816 106,580 outstandingDiluted earnings per share $ 1.61 $ 1.14

J.B. HUNT TRANSPORT SERVICES, INC.Condensed Consolidated Statements of Earnings(in thousands, except per share data)(unaudited) Six Months Ended June 30 2021 2020

% Of % Of Amount Revenue Amount Revenue Operating revenues, 4,995,015 4,031,824 excluding fuel surcharge $ $revenuesFuel surcharge revenues 531,504 394,574

Total operating revenues 5,526,519 100.0 % 4,426,398 100.0 %

Operating expensesRents and purchased 2,890,533 52.3 % 2,170,449 49.0 %transportationSalaries, wages and 1,285,502 23.3 % 1,128,386 25.5 %employee benefitsDepreciation and 276,916 5.0 % 260,393 5.9 %amortizationFuel and fuel taxes 239,881 4.4 % 176,582 4.0 %

Operating supplies and 172,717 3.1 % 164,732 3.7 %expensesGeneral and administrative 92,396 1.7 % 89,761 2.0 %expenses, net of assetdispositionsInsurance and claims 73,538 1.3 % 63,260 1.4 %

Operating taxes and 28,024 0.5 % 26,879 0.6 %licensesCommunication and utilities 17,814 0.3 % 16,032 0.4 %

Total operating expenses 5,077,321 91.9 % 4,096,474 92.5 %

Operating income 449,198 8.1 % 329,924 7.5 %

Net interest expense 24,084 0.4 % 24,854 0.6 %

Earnings before income 425,114 7.7 % 305,070 6.9 %taxesIncome taxes 106,346 1.9 % 78,538 1.8 %

Net earnings $ 318,768 5.8 % $ 226,532 5.1 %

Average diluted shares 106,816 106,765 outstandingDiluted earnings per share $ 2.98 $ 2.12

Financial Information By Segment(in thousands)(unaudited) Three Months Ended June 2021 2020

% Of % Of Amount Total Amount Total Revenue Intermodal $ 1,289,400 44 % $ 1,065,106 50 %

Dedicated 621,179 22 % 533,158 25 %

Integrated Capacity 607,614 21 % 304,267 14 %SolutionsFinal Mile Services 212,265 7 % 139,550 6 %

Truck 183,634 6 % 108,298 5 %

Subtotal 2,914,092 100 % 2,150,379 100 %

Intersegment eliminations (5,722 ) (0 %) (4,806 ) (0 %)

Consolidated revenue $ 2,908,370 100 % $ 2,145,573 100 %

Operating income Intermodal $ 134,641 56 % $ 106,965 61 %

Dedicated 79,010 33 % 83,102 47 %

Integrated Capacity 3,118 1 % (13,072 ) (7 %)SolutionsFinal Mile Services 10,691 4 % (5,249 ) (3 %)

Truck 14,195 6 % 3,480 2 %

Other (1) (109 ) (0 %) (43 ) (0 %)

Operating income $ 241,546 100 % $ 175,183 100 %

Six Months Ended June 30 2021 2020

% Of % Of Amount Total Amount TotalRevenue Intermodal $ 2,466,532 45 % $ 2,214,825 50 %

Dedicated 1,201,137 22 % 1,074,904 24 %

Integrated Capacity 1,132,561 20 % 639,761 14 %SolutionsFinal Mile Services 414,148 7 % 293,179 7 %

Truck 333,165 6 % 213,223 5 %

Subtotal 5,547,543 100 % 4,435,892 100 %

Intersegment eliminations (21,024 ) (0 %) (9,494 ) (0 %)

Consolidated revenue $ 5,526,519 100 % $ 4,426,398 100 %

Operating income Intermodal $ 242,108 54 % $ 209,240 64 %

Dedicated 153,349 34 % 155,992 47 %

Integrated Capacity 10,387 2 % (31,970 ) (10 %)SolutionsFinal Mile Services 19,189 4 % (8,549 ) (3 %)

Truck 24,369 6 % 5,259 2 %

Other (1) (204 ) (0 %) (48 ) (0 %)

Operating income $ 449,198 100 % $ 329,924 100 %

(1) Includes corporatesupport activityOperating Statistics by Segment(unaudited)Three Months Ended June2021

2020

IntermodalLoads499,682

473,486

Average length of haul1,678

1,676

Revenue per load$2,580

$2,249

Average tractors during the period *5,782

5,420

Tractors (end of period) *5,823

5,343

Trailing equipment (end of period)99,377

96,512

Average effective trailing equipment usage98,210

84,909

DedicatedLoads996,650

907,221

Average length of haul161

160

Revenue per truck per week**$4,707

$4,250

Average trucks during the period***10,224

9,718

Trucks (end of period) ***10,506

9,674

Trailing equipment (end of period)27,354

27,497

Integrated Capacity SolutionsLoads330,127

274,399

Revenue per load$1,841

$1,109

Gross profit margin10.5%

11.8%

Employee count (end of period)966

1,117

Approximate number of third-party carriers (end of period)116,600

89,900

Marketplace for J.B. Hunt 360 revenue (millions)$396.1

$228.9

Final Mile ServicesStops1,732,962

1,093,182

Average trucks during the period***1,488

1,333

TruckLoads108,538

103,314

Loaded miles (000)52,840

44,555

Nonpaid empty mile percentage19.6%

19.1%

Revenue per tractor per week**$4,714

$3,686

Average tractors during the period *1,772

1,979

Tractors (end of period)Company-owned752

800

Independent contractor1,018

1,097

Total tractors1,770

1,897

Trailers (end of period)8,958

7,985

* Includes company-owned and independent contractor tractors** Using weighted workdays*** Includes company-owned, independent contractor, and customer-owned trucksOperating Statistics by Segment(unaudited)Six Months Ended June 302021

2020

IntermodalLoads977,967

964,776

Average length of haul1,683

1,677

Revenue per load$2,522

$2,296

Average tractors during the period *5,750

5,453

Tractors (end of period) *5,823

5,343

Trailing equipment (end of period)99,377

96,512

Average effective trailing equipment usage96,406

84,971

DedicatedLoads1,938,870

1,786,230

Average length of haul161

161

Revenue per truck per week**$4,643

$4,288

Average trucks during the period***10,093

9,721

Trucks (end of period) ***10,506

9,674

Trailing equipment (end of period)27,354

27,497

Integrated Capacity SolutionsLoads622,492

570,146

Revenue per load$1,819

$1,122

Gross profit margin11.4%

10.7%

Employee count (end of period)966

1,117

Approximate number of third-party carriers (end of period)116,600

89,900

Marketplace for J.B. Hunt 360 revenue (millions)$755.0

$463.8

Final Mile ServicesStops3,408,987

2,317,624

Average trucks during the period***1,501

1,318

TruckLoads211,600

200,792

Loaded miles (000)98,979

85,119

Nonpaid empty mile percentage19.0%

18.7%

Revenue per tractor per week**$4,505

$3,842

Average tractors during the period*1,753

1,897

Tractors (end of period)Company-owned752

800

Independent contractor1,018

1,097

Total tractors1,770

1,897

Trailers (end of period)8,958

7,985

* Includes company-owned and independent contractor tractors** Using weighted workdays*** Includes company-owned, independent contractor, and customer-owned trucksJ.B. HUNT TRANSPORT SERVICES, INC.Condensed Consolidated Balance Sheets(in thousands)(unaudited)June 30, 2021December 31, 2020ASSETSCurrent assets:Cash and cash equivalents$570,918

$313,302

Accounts Receivable, net1,293,924

1,124,403

Prepaid expenses and other344,457

404,412

Total current assets2,209,299

1,842,117

Property and equipment6,108,195

5,908,710

Less accumulated depreciation2,390,467

2,219,816

Net property and equipment3,717,728

3,688,894

Other assets, net396,367

397,337

$6,323,394

$5,928,348

LIABILITIES & STOCKHOLDERS' EQUITYCurrent liabilities:Trade accounts payable$674,856

$587,510

Claims accruals282,331

276,056

Accrued payroll174,718

130,943

Other accrued expenses96,450

90,294

Total current liabilities1,228,355

1,084,803

Long-term debt1,303,467

1,305,424

Other long-term liabilities263,576

245,961

Deferred income taxes728,968

692,022

Stockholders' equity2,799,028

2,600,138

$6,323,394

$5,928,348

Supplemental Data(unaudited)June 30, 2021December 31, 2020Actual shares outstanding at end of period (000)105,196

105,654

Book value per actual share outstanding at end of period$26.61

$24.61

Six Months Ended June 302021

2020

Net cash provided by operating activities (000)$668,748

$639,950

Net capital expenditures (000)$260,711

$264,614

View source version on businesswire.com: https://www.businesswire.com/news/home/20210719005751/en/

CONTACT: Brad Delco Vice President - Finance & Investor Relations (479) 820-2723