Business Wire | Jul 16, 2020 04:05PM EDT

J.B. Hunt Transport Services, Inc. Reports Earnings for the Second Quarter 2020

Jul. 16, 2020

LOWELL, Ark.--(BUSINESS WIRE)--Jul. 16, 2020--J.B. Hunt Transport Services, Inc., (NASDAQ: JBHT) announced second quarter 2020 net earnings of $121.7 million, or diluted earnings per share of $1.14 vs. second quarter 2019 net earnings of $133.6 million, or $1.23 per diluted share.

Total operating revenue for the current quarter was $2.15 billion, compared with $2.26 billion for the second quarter 2019, a decrease of 5%. Current quarter total operating revenue, excluding fuel surcharge revenue, decreased 0.5% vs. the comparable quarter 2019. Revenue performance, excluding fuel surcharge revenue, was primarily driven by a 2% volume decline in Intermodal (JBI), 11% volume decline in Integrated Capacity Solutions (ICS), and 5% fewer stops in Final Miles Services (FMS), partially offset by a 17% increase in loads in Truckload (JBT), compared to the prior year period.

The amount of ICS operating revenue executed through the marketplace for J.B. Hunt 360(r) increased to $229 million from $222 million in second quarter 2019. In addition, JBI executed approximately $24 million of third-party dray cost and JBT executed approximately $28 million of its independent contractor costs through the platform during second quarter 2020.

Operating income for the current quarter totaled $175.2 million versus $193.1 million for the second quarter 2019. The prior year quarter included a $20.0 million pre-tax charge in settlement of a FMS claim. Lower revenue and higher purchased transportation costs, continued investment in technology across all segments, and employee and operating supplies costs related to COVID-19, were partially offset by benefits of lower driver turnover, decreased insurance and claims costs and significantly reduced travel and entertainment costs compared to the prior year. Additionally, operating income was lower due to approximately $4.6 million of additional charges for uncollectible customer accounts.

Interest expense in the current quarter decreased due to lower average debt levels and lower interest rates compared to the same period last year. The effective income tax rate for the quarter was 25% consistent with second quarter 2019.

Segment Information:

Intermodal (JBI)

* Second Quarter 2020 Segment Revenue: $1.07 billion; down 7% * Second Quarter 2020 Operating Income: $107.0 million; down 14%

JBI load volumes declined 2% over the same period in 2019. Transcontinental loads increased approximately 3% and Eastern network volumes declined 7% from second quarter 2019. As previously released, COVID-19 related volume disruptions began to materialize in March and deteriorated further in April, followed by a steady rebound in demand for the remainder of the quarter. Revenue decreased 7% reflecting the 2% volume decline and an approximate 6% decline in revenue per load, which is the combination of customer rate changes, fuel surcharges, and freight mix. Revenue per load excluding fuel surcharge revenue was flat from second quarter 2019.

Operating income decreased by 14% from the prior year. Lower volumes, higher rail purchased transportation costs, and inefficiencies in the network related to less predictable demand patterns, were partially offset by lower driver turnover related costs and a decrease in insurance and claims costs. The current period ended with approximately 96,500 units of trailing capacity and 5,340 power units assigned to the dray fleet.

Dedicated Contract Services (DCS)

* Second Quarter 2020 Segment Revenue: $533 million; down 1% * Second Quarter 2020 Operating Income: $83.1 million; up 9%

DCS revenue decreased 1% during the current quarter over the same period in 2019. Productivity, defined as revenue per truck per week, decreased approximately 3% vs. 2019. Productivity excluding fuel surcharge revenue was flat compared to a year ago. A net additional 130 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 9% over the prior year quarter. Benefits from lower driver turnover, travel and entertainment, and safety related costs were partially offset by higher bad debt costs for uncollectible customer accounts.

Integrated Capacity Solutions (ICS)

* Second Quarter 2020 Segment Revenue: $304 million; down 9% * Second Quarter 2020 Operating Loss: $(13.1) million; compared to $(0.6) million in 2Q'19

ICS revenue decreased 9% compared to the second quarter 2019. Volumes decreased 11% but revenue per load increased approximately 2% primarily due to customer freight mix. Contractual volumes represented approximately 71% of the total load volume and 63% of the total revenue in the current quarter compared to 68% and 55%, respectively, in second quarter 2019. Of the total reported ICS revenue, approximately $229 million was executed through the marketplace for J.B. Hunt 360 compared to $222 million in second quarter 2019.

Operating income decreased by $12.5 million from the second quarter 2019 from lower gross profit margins, increased costs to expand capacity and functionality of the marketplace for J.B. Hunt 360 and higher personnel costs. Gross profit margins decreased to 11.8% in the current period versus 13.4% in the same period last year primarily from a competitive pricing environment, weaker spot market activity, and tightening supply dynamics at various points throughout the quarter. ICS carrier base increased 12% vs. second quarter 2019.

Final Miles Services (FMS)

* Second Quarter 2020 Segment Revenue: $140 million; down 2% * Second Quarter 2020 Operating Loss: $(5.2) million; compared to $(15.8) million in 2Q'19

FMS revenue decreased 2% compared to the same period 2019. Stop count within FMS decreased 5% during the current quarter vs. a year ago, primarily from the temporary suspension of operations at several of our customers' sites as a result of COVID-19. Productivity, defined as revenue per stop, increased approximately 2% compared to the prior year period primarily from a shift in the mix of services as different customers within our FMS network were affected by COVID-19 to varying degrees throughout the quarter.

Operating losses decreased from a year ago by approximately $10.5 million primarily from the absence of the $20 million pre-tax claim settlement incurred in 2019. Operating losses in the second quarter 2020 were primarily the result of lost revenue related to the temporary suspension of operations at several of our customers' sites and higher costs related to operating supplies as a result of COVID-19.

Truckload (JBT)

* Second Quarter 2020 Segment Revenue: $108.3 million; up 9% * Second Quarter 2020 Operating Income: $3.5 million; down 61%

JBT revenue increased 9% from the same period in 2019. Revenue excluding fuel surcharge revenue increased 13% primarily from a 17% increase in load count partially offset by a 4% decrease in revenue per load excluding fuel surcharge revenue compared to a year ago. Revenue per loaded mile excluding fuel surcharge revenue decreased approximately 7% year-over-year while comparable contractual customer rates were down approximately 5% compared to the same period 2019. At the end of the period, JBT operated 1,897 tractors and 7,985 trailers compared to 1,879 and 6,829 one year ago, respectively.

Operating income decreased 61% compared to the same quarter 2019. Benefits from the increased load count were offset by increases in purchased transportation expense, higher insurance and claims costs, increased investment in technology and the continued rollout of 360box.

Cash Flow and Capitalization:

At June 30, 2020, we had approximately $1.3 billion outstanding on various debt instruments compared to $1.4 billion at June 30, 2019 and $1.3 billion at December 31, 2019.

Our net capital expenditures for the six months ended June 30, 2020 approximated $265 million compared to $475 million for the same period 2019. At June 30, 2020, we had cash and cash equivalents of approximately $275 million.

We had no purchases of our stock during the second quarter 2020. At June 30, 2020, we had approximately $520 million remaining under our share repurchase authorization. Actual shares outstanding at June 30, 2020 approximated 105.5 million.

Conference Call Information:

The Company will hold a conference call today at 4:00-5:00 pm 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: 6252006. A replay of the call will be posted on its website here later this evening.

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 March 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 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 30

2020 2019

% Of % Of

Amount Revenue Amount Revenue

Operating revenues, excluding fuel $ 1,986,130 $ 1,996,266surcharge revenuesFuel surcharge revenues 159,443 265,381

Total operating revenues 2,145,573 100.0% 2,261,647 100.0%

Operating expensesRents and purchased transportation 1,034,297 48.2% 1,086,416 48.0%

Salaries, wages and employee 554,136 25.8% 535,147 23.7%benefitsDepreciation and amortization 130,298 6.1% 123,995 5.5%

Fuel and fuel taxes 75,459 3.5% 118,037 5.2%

Operating supplies and expenses 79,134 3.7% 84,264 3.7%

General and administrative 44,599 2.1% 46,539 2.1%expenses, net of asset dispositionsInsurance and claims 30,899 1.4% 52,013 2.3%

Operating taxes and licenses 13,567 0.6% 13,565 0.6%

Communication and utilities 8,001 0.4% 8,578 0.4%

Total operating expenses 1,970,390 91.8% 2,068,554 91.5%

Operating income 175,183 8.2% 193,093 8.5%

Net interest expense 12,818 0.6% 14,763 0.6%

Earnings before income taxes 162,365 7.6% 178,330 7.9%

Income taxes 40,667 1.9% 44,697 2.0%

Net earnings $ 121,698 5.7% $ 133,633 5.9%

Average diluted shares outstanding 106,580 108,373

Diluted earnings per share $ 1.14 $ 1.23

J.B. HUNT TRANSPORT SERVICES, INC.

Condensed Consolidated Statements of Earnings

(in thousands, except per share data)

(unaudited)



Six Months Ended June 30

2020 2019

% Of % Of

Amount Revenue Amount Revenue

Operating revenues, excluding $ 4,031,824 $ 3,851,608fuel surcharge revenuesFuel surcharge revenues 394,574 499,666

Total operating revenues 4,426,398 100.0% 4,351,274 100.0%

Operating expenses Rents and purchased 2,170,449 49.0% 2,086,305 47.9%transportationSalaries, wages and employee 1,128,386 25.5% 1,051,472 24.2%benefitsDepreciation and amortization 260,393 5.9% 243,924 5.6%

Fuel and fuel taxes 176,582 4.0% 230,162 5.3%

Operating supplies and expenses 164,732 3.7% 162,436 3.7%

General and administrative 89,761 2.0% 91,578 2.1%expenses, net of asset dispositionsInsurance and claims 63,260 1.4% 81,007 1.9%

Operating taxes and licenses 26,879 0.6% 26,725 0.6%

Communication and utilities 16,032 0.4% 16,777 0.4%

Total operating expenses 4,096,474 92.5% 3,990,386 91.7%

Operating income 329,924 7.5% 360,888 8.3%

Net interest expense 24,854 0.6% 27,796 0.6%

Earnings before income taxes 305,070 6.9% 333,092 7.7%

Income taxes 78,538 1.8% 79,858 1.9%

Net earnings $ 226,532 5.1% $ 253,234 5.8%

Average diluted shares 106,765 109,015outstandingDiluted earnings per share $ 2.12 $ 2.32

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

2020 2019

% Of % Of

Amount Total Amount Total

Revenue Intermodal $ 1,065,106 50% $ 1,149,723 51%

Dedicated 533,158 25% 536,995 24%

Integrated Capacity Solutions 304,267 14% 334,267 15%

Final Mile Services 139,550 6% 142,876 6%

Truck 108,298 5% 99,627 4%

Subtotal 2,150,379 100% 2,263,488 100%

Intersegment eliminations (4,806) (0%) (1,841) (0%)

Consolidated revenue $ 2,145,573 100% $ 2,261,647 100%

Operating income Intermodal $ 106,965 61% $ 124,357 64%

Dedicated 83,102 47% 76,240 39%

Integrated Capacity Solutions (13,072) (7%) (570) (0%)

Final Mile Services (5,249) (3%) (15,751) (8%)

Truck 3,480 2% 8,889 5%

Other (1) (43) (0%) (72) (0%)

Operating income $ 175,183 100% $ 193,093 100%

Six Months Ended June 30 2020 2019

% Of % Of

Amount Total Amount Total

Revenue Intermodal $ 2,214,825 50% $ 2,237,822 51%

Dedicated 1,074,904 24% 1,028,434 23%

Integrated Capacity Solutions 639,761 14% 635,078 15%

Final Mile Services 293,179 7% 253,349 6%

Truck 213,223 5% 201,479 5%

Subtotal 4,435,892 100% 4,356,162 100%

Intersegment eliminations (9,494) (0%) (4,888) (0%)

Consolidated revenue $ 4,426,398 100% $ 4,351,274 100%

Operating income Intermodal $ 209,240 64% $ 227,674 63%

Dedicated 155,992 47% 126,321 35%

Integrated Capacity Solutions (31,970) (10%) 6,395 2%

Final Mile Services (8,549) (3%) (15,587) (4%)

Truck 5,259 2% 16,128 4%

Other (1) (48) (0%) (43) (0%)

Operating income $ 329,924 100% $ 360,888 100%

(1) Includes corporate support activity

Operating Statistics by Segment(unaudited) Three Months Ended June 30

2020 2019

Intermodal Loads 473,486 480,938

Average length of haul 1,676 1,660

Revenue per load $ 2,249 $ 2,391

Average tractors during the period * 5,420 5,652

Tractors (end of period) * 5,343 5,637

Trailing equipment (end of period) 96,512 96,659

Dedicated Loads 907,221 850,196

Average length of haul 160 168

Revenue per truck per week** $ 4,250 $ 4,398

Average trucks during the period*** 9,718 9,454

Trucks (end of period) *** 9,674 9,544

Trailing equipment (end of period) 27,497 26,762

Integrated Capacity Solutions Loads 274,399 306,817

Revenue per load $ 1,109 $ 1,089

Gross profit margin 11.8% 13.4%

Employee count (end of period) 1,117 1,198

Approximate number of third-party carriers (end 89,900 80,000of period)Marketplace for J.B. Hunt 360*:Approximate carrier tractor count (end of 717,700 600,600period)Revenue (millions) $ 228.9 $ 222.4

Final Mile Services Stops 1,093,182 1,146,125

Average trucks during the period*** 1,333 1,256

Truck Loads 103,314 87,994

Loaded miles (000) 44,555 36,744

Nonpaid empty mile percentage 19.1% 18.6%

Revenue per tractor per week** $ 3,686 $ 3,940

Average tractors during the period * 1,979 1,973

Tractors (end of period)Company-owned 800 946

Independent contractor 1,097 933

Total tractors 1,897 1,879

Trailers (end of period) 7,985 6,829

* Includes company-owned and independent contractor tractors** Using weighted workdays*** Includes company-owned, independent contractor, and customer-owned trucks

Operating Statistics by Segment(unaudited) Six Months Ended June 30

2020 2019

Intermodal Loads 964,776 940,862

Average length of haul 1,677 1,656

Revenue per load $ 2,296 $ 2,378

Average tractors during the period * 5,453 5,656

Tractors (end of period) * 5,343 5,637

Trailing equipment (end of period) 96,512 96,659

Dedicated Loads 1,786,230 1,615,584

Average length of haul 161 170

Revenue per truck per week** $ 4,288 $ 4,321

Average trucks during the period*** 9,721 9,294

Trucks (end of period) *** 9,674 9,544

Trailing equipment (end of period) 27,497 26,762

Integrated Capacity Solutions Loads 570,146 595,750

Revenue per load $ 1,122 $ 1,066

Gross profit margin 10.7% 14.9%

Employee count (end of period) 1,117 1,198

Approximate number of third-party carriers (end of 89,900 80,000period)Marketplace for J.B. Hunt 360*:Approximate carrier tractor count (end of period) 717,700 600,600

Revenue (millions) $ 463.8 $ 408.9

Final Mile Services Stops 2,317,624 1,933,099

Average trucks during the period*** 1,318 1,228

Truck Loads 200,792 172,922

Loaded miles (000) 85,119 73,712

Nonpaid empty mile percentage 18.7% 18.9%

Revenue per tractor per week** $ 3,842 $ 3,913

Average tractors during the period* 1,897 2,024

Tractors (end of period)Company-owned 800 946

Independent contractor 1,097 933

Total tractors 1,897 1,879

Trailers (end of period) 7,985 6,829

* 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) June 30, December 31, 2020 2019ASSETSCurrent assets:Cash and cash equivalents $ 274,654 $ 35,000

Accounts Receivable, net 950,636 1,011,829

Prepaid expenses and other 319,407 434,470

Total current assets 1,544,697 1,481,299

Property and equipment 5,730,544 5,640,806

Less accumulated depreciation 2,104,148 2,019,940

Net property and equipment 3,626,396 3,620,866

Other assets, net 382,539 368,689

$ 5,553,632 $ 5,470,854

LIABILITIES & STOCKHOLDERS' EQUITYCurrent liabilities:Trade accounts payable $ 513,517 $ 602,601

Claims accruals 269,825 279,590

Accrued payroll 98,692 68,220

Other accrued expenses 88,648 85,355

Total current liabilities 970,682 1,035,766

Long-term debt 1,307,019 1,295,740

Other long-term liabilities 185,390 173,241

Deferred income taxes 699,698 699,078

Stockholders' equity 2,390,843 2,267,029

$ 5,553,632 $ 5,470,854

Supplemental Data(unaudited) June 30, December 31, 2020 2019 Actual shares outstanding at end of period 105,507 106,213(000) Book value per actual share outstanding at $ 22.66 $ 21.34end of period Six Months Ended June 30

2020 2019

Net cash provided by operating activities $ 639,950 $ 606,661(000) Net capital expenditures (000) $ 264,614 $ 475,331

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