J.B. Hunt Transport Services, Inc., (NASDAQ:JBHT) announced fourth quarter 2017 net earnings of $385.3 million, or diluted earnings per share of $3.48 vs. fourth quarter 2016 net earnings of $117.6 million, or $1.05 per diluted share. Fourth quarter 2017 net earnings included pre-announced pretax charges of $20.3 million for a reserve on a cash advance for the purchase of new trailing equipment from a manufacturer that will not meet delivery and $18.6 million for an increase in reserves for certain insurance and claims. Additionally, quarter results include a $309.2 million decrease in income taxes from our reasonable estimate of the change in future tax rates on deferred tax balances at December 31, 2017, as a result of the Tax Cuts and Jobs Act enacted in the quarter. Fourth quarter 2016 net earnings included a pretax benefit of $15.2 million for a change in the company’s paid time off policy.
Total operating revenue for the current quarter was $1.99 billion, compared with $1.72 billion for the fourth quarter 2016. Load growth of 5% and an increase in revenue per load in Intermodal (JBI) yielded a 10% increase in segment revenue. Dedicated Contract Services (DCS) segment revenue increased by 20%, primarily from the addition of new customer accounts and improved asset utilization. Integrated Capacity Solutions (ICS) segment revenue increased by 40% primarily from a 19% increase in revenue per load and a 17% increase in load growth. Truck (JBT) segment revenue increased 1% primarily from customer rate per mile increases offset by a decrease in load count. Current quarter total operating revenue, excluding fuel surcharges, increased 13% vs. the comparable quarter 2016.
Operating income for the current quarter decreased to $145.8 million vs. $194.4 million for the fourth quarter 2016. The preannounced pretax charges of $38.9 million in fourth quarter 2017 and the $15.2 pretax benefit in fourth quarter 2016 were allocated to the business segments as described below. After consideration of these specific charges, the benefit from increased revenues was partly offset with cost increases to attract and retain drivers and independent contractors, higher insurance and claims costs, inefficiencies from rail network congestion and maintenance schedules, higher salary and wage expenses and lower asset utilization due to the time trucks remain unseated.
Net earnings increased to $385.3 million in the current quarter from $117.6 million in 2016, primarily due to the $309.2 million benefit from estimating the effect of the change in future tax rates on deferred tax balances at December 31, 2017. The fourth quarter effective tax rates for 2017 and 2016 were (175.65)% and 37.63%, respectively. The annual effective tax rates for 2017 and 2016 were (15.29)% and 37.90%, respectively.
Segment Information:
Intermodal (JBI)
- Fourth quarter 2017 Segment Revenue: $1.1 billion; up 10%
- Fourth quarter 2017 Operating Income: $93.3 million; down 25%
JBI total volumes grew 5% over the same period in 2016. Eastern network loads grew at 7% and transcontinental loads increased 4% compared to the fourth quarter 2016. Revenue increased 10%, reflecting volume growth of 5% and a 5% increase in revenue per load which is the combination of freight mix, customer rate increases and fuel surcharges. Revenue per load excluding fuel surcharges increased approximately 2% compared to a year ago.
Operating income decreased 25% from the prior year. Benefits from increased volume and revenue per load were offset by increased costs to attract and retain drivers, higher third-party dray costs, increased insurance and claims costs and inefficiencies in the rail networks due to congestion and track and yard maintenance. JBI recorded $28.7 million of the preannounced charges during the fourth quarter 2017. In fourth quarter 2016, JBI recorded approximately $5.7 million from the change in paid time off policy. The current period ended with approximately 89,000 units of trailing capacity and approximately 5,500 power units in the dray fleet.
Dedicated Contract Services (DCS)
- Fourth quarter 2017 Segment Revenue: $477 million; up 20%
- Fourth quarter 2017 Operating Income: $34.9 million; down 39%
DCS revenue increased 20% during the current quarter over the same period 2016. Productivity (revenue per truck per week) increased approximately 4% vs. 2016. Productivity excluding fuel surcharge revenue increased approximately 2% from a year ago primarily from improved integration of assets between customer accounts and customer rate increases partially offset by lower productivity at new contracts implemented during the quarter. A year over year net additional 1,326 revenue producing trucks, 331 net additions compared to third quarter 2017, were in the fleet by the end of the quarter. Approximately 53% of these additions represent private fleet conversions versus traditional dedicated capacity fleets and primarily reflect new contract implementations in this and prior periods. Customer retention rates remain above 98%.
Operating income decreased by 39% from a year ago. The increase in revenue and improved asset utilization was offset with higher driver wages including the timing between wage increases and recovery through customer contracts, higher driver recruiting costs including the length of time to fill open positions, increased insurance and claims costs, higher equipment ownership costs and $1.9 million in intangible asset amortization compared to the same period in 2016. DCS recorded $7.6 million of the preannounced charges during the fourth quarter 2017 and recognized a $7.3 million benefit in the fourth quarter 2016 from the change in paid time off policy.
Integrated Capacity Solutions (ICS)
- Fourth Quarter 2017 Segment Revenue: $323 million; up 40%
- Fourth Quarter 2017 Operating Income: $11.3 million; up 86%
ICS revenue increased 40% in the current quarter vs. the fourth quarter 2016. Revenue per load increased 19% and volume increased 17% mostly due to increased spot market activity. While continuing to meet customer commitments, the increased spot market activity created a better balance between contractual and spot market revenues. Contractual volumes represent approximately 66% of the total load volume but only 46% of the total revenue in the current quarter compared to 75% and 62%, respectively, in fourth quarter 2016.
Operating income increased 86% over the same period in 2016. Gross profit margin increased to 14.1% in the current period from 12.9% last year primarily from the increased spot market activity which more than offset the margin compression realized in the contractual volumes. The increase in gross margin was partially offset with higher technology spending as JBHunt360 continues to be rolled out to more customers. ICS recorded $1.8 million of the preannounced charges in the fourth quarter 2017 and recognized a $1.0 million benefit in the fourth quarter 2016 for the change in paid time off policy. Total branches at the end of the period grew to 44 from 42 at the end of the same period in 2016. ICS’s carrier base increased 11% and the employee count increased 16% from a year ago.
Truck (JBT)
- Fourth quarter 2017 Segment Revenue: $ 97 million; up 1%
- Fourth quarter 2017 Operating Income: $ 6.4 million; down 5%
JBT revenue for the current quarter increased 1% from the same period in 2016. Revenue excluding fuel surcharges was flat compared to a year ago. Revenue per load increased 13% primarily from a 12% increase in rates per loaded mile on an equivalent length of haul compared to fourth quarter 2016 but was offset with an 10% decreased in load count. At the end of the period, JBT operated 2,032 tractors compared to 2,128 a year ago.
Operating income decreased 5% from fourth quarter 2016 levels. Favorable changes from higher revenue per load were offset by higher driver wages and independent contractor costs per mile, lower tractor utilization from an increase in unseated trucks and higher insurance and claims costs compared to fourth quarter 2016. JBT recorded approximately $0.7 million of the preannounced charges in the fourth quarter 2017 and recorded a $1.2 million benefit in the fourth quarter 2016 from the change in paid time off policy.
Cash Flow and Capitalization:
At December 31, 2017, we had total debt outstanding of $1.09 billion on various debt instruments compared to $986 million at December 31, 2016 and $1.08 billion at September 30, 2017.
Our net capital expenditures for 2017 approximated $511 million vs. $485 million in 2016. At December 31, 2017, we had cash and cash equivalents of $14.6 million.
In the fourth quarter 2017, we had no purchases of our common stock. At December 31, 2017, we had approximately $521 million remaining under our share repurchase authorizations. Actual shares outstanding at December 31, 2017 approximated 109.8 million.
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, 2016. 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 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 | ||||||||||
| 2017 | 2016 | |||||||||
| % Of | % Of | |||||||||
| Amount | Revenue | Amount | Revenue | |||||||
| Operating revenues, excluding fuel surcharge revenues | $ | 1,765,658 | $ | 1,558,638 | ||||||
| Fuel surcharge revenues | 224,502 | 162,424 | ||||||||
| Total operating revenues | 1,990,160 | 100.0% | 1,721,062 | 100.0% | ||||||
| Operating expenses | ||||||||||
| Rents and purchased transportation | 1,026,100 | 51.6% | 874,144 | 50.8% | ||||||
| Salaries, wages and employee benefits | 429,853 | 21.6% | 360,190 | 20.9% | ||||||
| Depreciation and amortization | 102,320 | 5.1% | 91,794 | 5.3% | ||||||
| Fuel and fuel taxes | 100,848 | 5.1% | 78,355 | 4.6% | ||||||
| Operating supplies and expenses | 67,154 | 3.4% | 60,001 | 3.5% | ||||||
| General and administrative expenses, net of asset dispositions | 51,279 | 2.6% | 25,483 | 1.4% | ||||||
| Insurance and claims | 46,649 | 2.3% | 20,026 | 1.2% | ||||||
| Operating taxes and licenses | 12,496 | 0.6% | 11,798 | 0.7% | ||||||
| Communication and utilities | 7,647 | 0.4% | 4,910 | 0.3% | ||||||
| Total operating expenses | 1,844,346 | 92.7% | 1,526,701 | 88.7% | ||||||
| Operating income | 145,814 | 7.3% | 194,361 | 11.3% | ||||||
| Net interest expense | 6,030 | 0.3% | 5,876 | 0.3% | ||||||
| Earnings before income taxes | 139,784 | 7.0% | 188,485 | 11.0% | ||||||
| Income taxes | (245,524) | (12.4%) | 70,929 | 4.2% | ||||||
| Net earnings | $ | 385,308 | 19.4% | $ | 117,556 | 6.8% | ||||
| Average diluted shares outstanding | 110,737 | 112,327 | ||||||||
| Diluted earnings per share | $ | 3.48 | $ | 1.05 | ||||||
| J.B. HUNT TRANSPORT SERVICES, INC. | ||||||||||
| Condensed Consolidated Statements of Earnings | ||||||||||
| (in thousands, except per share data) | ||||||||||
| (unaudited) | ||||||||||
| Twelve Months Ended December 31 | ||||||||||
| 2017 | 2016 | |||||||||
| % Of | % Of | |||||||||
| Amount | Revenue | Amount | Revenue | |||||||
| Operating revenues, excluding fuel surcharge revenues | $ | 6,435,858 | $ | 6,007,347 | ||||||
| Fuel surcharge revenues | 753,710 | 548,112 | ||||||||
| Total operating revenues | 7,189,568 | 100.0% | 6,555,459 | 100.0% | ||||||
| Operating expenses | ||||||||||
| Rents and purchased transportation | 3,650,806 | 50.8% | 3,255,692 | 49.7% | ||||||
| Salaries, wages and employee benefits | 1,608,378 | 22.4% | 1,469,187 | 22.4% | ||||||
| Depreciation and amortization | 383,518 | 5.3% | 361,510 | 5.5% | ||||||
| Fuel and fuel taxes | 347,573 | 4.8% | 283,437 | 4.3% | ||||||
| Operating supplies and expenses | 257,239 | 3.6% | 233,223 | 3.6% | ||||||
| General and administrative expenses, net of asset dispositions | 125,878 | 1.8% | 87,053 | 1.3% | ||||||
| Insurance and claims | 123,579 | 1.7% | 78,410 | 1.2% | ||||||
| Operating taxes and licenses | 44,825 | 0.6% | 45,954 | 0.7% | ||||||
| Communication and utilities | 23,983 | 0.3% | 19,973 | 0.3% | ||||||
| Total operating expenses | 6,565,779 | 91.3% | 5,834,439 | 89.0% | ||||||
| Operating income | 623,789 | 8.7% | 721,020 | 11.0% | ||||||
| Net interest expense | 28,550 | 0.4% | 25,223 | 0.4% | ||||||
| Earnings before income taxes | 595,239 | 8.3% | 695,797 | 10.6% | ||||||
| Income taxes | (91,024) | (1.2%) | 263,707 | 4.0% | ||||||
| Net earnings | $ | 686,263 | 9.5% | $ | 432,090 | 6.6% | ||||
| Average diluted shares outstanding | 111,049 | 113,361 | ||||||||
| Diluted earnings per share | $ | 6.18 | $ | 3.81 | ||||||
| Financial Information By Segment | ||||||||||
| (in thousands) | ||||||||||
| (unaudited) | ||||||||||
| Three Months Ended December 31 | ||||||||||
| 2017 | 2016 | |||||||||
| % Of | % Of | |||||||||
| Amount | Total | Amount | Total | |||||||
Revenue | ||||||||||
| Intermodal | $ | 1,097,671 | 55% | $ | 997,967 | 58% | ||||
| Dedicated | 476,660 | 24% | 398,325 | 23% | ||||||
| Integrated Capacity Solutions | 323,241 | 16% | 231,594 | 13% | ||||||
| Truck | 97,466 | 5% | 96,296 | 6% | ||||||
| Subtotal | 1,995,038 | 100% | 1,724,182 | 100% | ||||||
| Intersegment eliminations | (4,878) | (0%) | (3,120) | (0%) | ||||||
| Consolidated revenue | $ | 1,990,160 | 100% | $ | 1,721,062 | 100% | ||||
Operating income | ||||||||||
| Intermodal | $ | 93,271 | 64% | $ | 124,143 | 64% | ||||
| Dedicated | 34,918 | 24% | 57,539 | 30% | ||||||
| Integrated Capacity Solutions | 11,277 | 8% | 6,074 | 3% | ||||||
| Truck | 6,380 | 4% | 6,750 | 3% | ||||||
| Other (1) | (32) | (0%) | (145) | (0%) | ||||||
| Operating income | $ | 145,814 | 100% | $ | 194,361 | 100% | ||||
| Twelve Months Ended December 31 | ||||||||||
| 2017 | 2016 | |||||||||
| % Of | % Of | |||||||||
| Amount | Total | Amount | Total | |||||||
Revenue | ||||||||||
| Intermodal | $ | 4,084,418 | 57% | $ | 3,796,251 | 58% | ||||
| Dedicated | 1,718,559 | 24% | 1,533,186 | 23% | ||||||
| Integrated Capacity Solutions | 1,024,576 | 14% | 851,550 | 13% | ||||||
| Truck | 378,361 | 5% | 387,764 | 6% | ||||||
| Subtotal | 7,205,914 | 100% | 6,568,751 | 100% | ||||||
| Intersegment eliminations | (16,346) | (0%) | (13,292) | (0%) | ||||||
| Consolidated revenue | $ | 7,189,568 | 100% | $ | 6,555,459 | 100% | ||||
Operating income | ||||||||||
| Intermodal | $ | 407,376 | 65% | $ | 449,768 | 62% | ||||
| Dedicated | 171,113 | 27% | 205,240 | 29% | ||||||
| Integrated Capacity Solutions | 22,797 | 4% | 36,260 | 5% | ||||||
| Truck | 22,597 | 4% | 29,862 | 4% | ||||||
| Other (1) | (94) | (0%) | (110) | (0%) | ||||||
| Operating income | $ | 623,789 | 100% | $ | 721,020 | 100% | ||||
(1) Includes corporate support activity | ||||||||||
| Operating Statistics by Segment | |||||||
| (unaudited) | |||||||
| Three Months Ended December 31 | |||||||
| 2017 | 2016 | ||||||
Intermodal | |||||||
| Loads | 515,669 | 491,570 | |||||
| Average length of haul | 1,684 | 1,685 | |||||
| Revenue per load | $ | 2,129 | $ | 2,030 | |||
| Average tractors during the period * | 5,547 | 5,274 | |||||
| Tractors (end of period) | |||||||
| Company-owned | 4,776 | 4,581 | |||||
| Independent contractor | 764 | 695 | |||||
| Total tractors | 5,540 | 5,276 | |||||
| Net change in trailing equipment during the period | 1,305 | 1,773 | |||||
| Trailing equipment (end of period) | 88,610 | 84,594 | |||||
| Average effective trailing equipment usage | 87,522 | 81,654 | |||||
Dedicated | |||||||
| Loads | 686,475 | 606,900 | |||||
| Average length of haul | 178 | 181 | |||||
| Revenue per truck per week** | $ | 4,426 | $ | 4,247 | |||
| Average trucks during the period*** | 8,571 | 7,390 | |||||
| Trucks (end of period) | |||||||
| Company-owned | 8,124 | 6,976 | |||||
| Independent contractor | 59 | 15 | |||||
| Customer-owned (Dedicated operated) | 544 | 410 | |||||
| Total trucks | 8,727 | 7,401 | |||||
| Trailing equipment (end of period) | 25,811 | 22,688 | |||||
| Average effective trailing equipment usage | 25,823 | 23,334 | |||||
Integrated Capacity Solutions | |||||||
| Loads | 277,911 | 237,845 | |||||
| Revenue per load | $ | 1,163 | $ | 974 | |||
| Gross profit margin | 14.1% | 12.9% | |||||
| Employee count (end of period) | 954 | 824 | |||||
| Approximate number of third-party carriers (end of period) | 56,700 | 50,900 | |||||
Truck | |||||||
| Loads | 87,538 | 96,906 | |||||
| Average length of haul | 432 | 439 | |||||
| Loaded miles (000) | 37,852 | 42,476 | |||||
| Total miles (000) | 45,206 | 50,472 | |||||
| Average nonpaid empty miles per load | 84.0 | 82.6 | |||||
| Revenue per tractor per week** | $ | 3,782 | $ | 3,540 | |||
| Average tractors during the period * | 2,085 | 2,158 | |||||
| Tractors (end of period) | |||||||
| Company-owned | 1,291 | 1,376 | |||||
| Independent contractor | 741 | 752 | |||||
| Total tractors | 2,032 | 2,128 | |||||
| Trailers (end of period) | 7,120 | 7,642 | |||||
| Average effective trailing equipment usage | 6,771 | 7,287 | |||||
| * 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 | |||||||
| 2017 | 2016 | ||||||
Intermodal | |||||||
| Loads | 1,999,807 | 1,916,303 | |||||
| Average length of haul | 1,681 | 1,657 | |||||
| Revenue per load | $ | 2,042 | $ | 1,981 | |||
| Average tractors during the period * | 5,362 | 5,222 | |||||
| Tractors (end of period) | |||||||
| Company-owned | 4,776 | 4,581 | |||||
| Independent contractor | 764 | 695 | |||||
| Total tractors | 5,540 | 5,276 | |||||
| Net change in trailing equipment during the period | 4,016 | 5,637 | |||||
| Trailing equipment (end of period) | 88,610 | 84,594 | |||||
| Average effective trailing equipment usage | 82,969 | 77,179 | |||||
Dedicated | |||||||
| Loads | 2,575,245 | 2,401,332 | |||||
| Average length of haul | 178 | 177 | |||||
| Revenue per truck per week** | $ | 4,226 | $ | 4,077 | |||
| Average trucks during the period*** | 7,946 | 7,307 | |||||
| Trucks (end of period) | |||||||
| Company-owned | 8,124 | 6,976 | |||||
| Independent contractor | 59 | 15 | |||||
| Customer-owned (Dedicated operated) | 544 | 410 | |||||
| Total trucks | 8,727 | 7,401 | |||||
| Trailing equipment (end of period) | 25,811 | 22,688 | |||||
| Average effective trailing equipment usage | 24,550 | 22,827 | |||||
Integrated Capacity Solutions | |||||||
| Loads | 992,834 | 852,179 | |||||
| Revenue per load | $ | 1,032 | $ | 999 | |||
| Gross profit margin | 13.3% | 14.3% | |||||
| Employee count (end of period) | 954 | 824 | |||||
| Approximate number of third-party carriers (end of period) | 56,700 | 50,900 | |||||
Truck | |||||||
| Loads | 370,591 | 385,298 | |||||
| Average length of haul | 435 | 455 | |||||
| Loaded miles (000) | 160,932 | 175,038 | |||||
| Total miles (000) | 192,433 | 207,998 | |||||
| Average nonpaid empty miles per load | 85.1 | 85.6 | |||||
| Revenue per tractor per week** | $ | 3,556 | $ | 3,458 | |||
| Average tractors during the period* | 2,098 | 2,191 | |||||
| Tractors (end of period) | |||||||
| Company-owned | 1,291 | 1,376 | |||||
| Independent contractor | 741 | 752 | |||||
| Total tractors | 2,032 | 2,128 | |||||
| Trailers (end of period) | 7,120 | 7,642 | |||||
| Average effective trailing equipment usage | 7,066 | 6,956 | |||||
| * 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, 2017 | December 31, 2016 | ||||||
| ASSETS | |||||||
| Current assets: | |||||||
| Cash and cash equivalents | $ | 14,612 | $ | 6,377 | |||
| Accounts Receivable | 920,767 | 745,288 | |||||
| Prepaid expenses and other | 286,135 | 194,016 | |||||
| Total current assets | 1,221,514 | 945,681 | |||||
| Property and equipment | 4,670,464 | 4,258,915 | |||||
| Less accumulated depreciation | 1,687,133 | 1,440,124 | |||||
| Net property and equipment | 2,983,331 | 2,818,791 | |||||
| Other assets | 143,290 | 64,516 | |||||
| $ | 4,348,135 | $ | 3,828,988 | ||||
| LIABILITIES & STOCKHOLDERS' EQUITY | |||||||
| Current liabilities: | |||||||
| Trade accounts payable | $ | 598,594 | $ | 384,308 | |||
| Claims accruals | 134,766 | 109,745 | |||||
| Accrued payroll | 42,382 | 51,929 | |||||
| Other accrued expenses | 28,888 | 27,152 | |||||
| Total current liabilities | 804,630 | 573,134 | |||||
| Long-term debt | 1,085,649 | 986,278 | |||||
| Other long-term liabilities | 76,661 | 64,881 | |||||
| Deferred income taxes | 541,870 | 790,634 | |||||
| Stockholders' equity | 1,839,325 | 1,414,061 | |||||
| $ | 4,348,135 | $ | 3,828,988 | ||||
| Supplemental Data | |||||||
| (unaudited) | |||||||
| December 31, 2017 | December 31, 2016 | ||||||
| Actual shares outstanding at end of period (000) | 109,753 | 111,305 | |||||
| Book value per actual share outstanding at end of period | $ | 16.76 | $ | 12.70 | |||
| Twelve Months Ended December 31 | |||||||
| 2017 | 2016 | ||||||
| Net cash provided by operating activities (000) | $ | 834,913 | $ | 854,143 | |||
| Net capital expenditures (000) | $ | 510,515 | $ | 485,256 | |||
View source version on businesswire.com: http://www.businesswire.com/news/home/20180118005247/en/
Contacts:
David G. Mee, 479-820-8363
Executive
Vice President, Finance/Administration and Chief Financial Officer
