J.B. Hunt Transport Services, Inc. Reports Earnings for the Second Quarter 2013

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J.B. Hunt Transport Services, Inc. Reports Earnings for the Second Quarter 2013

  • Second Quarter 2013 Revenue:$1.38 billion; up 10%
  • Second Quarter 2013 Operating Income:$147 million; up 7%
  • Second Quarter 2013 EPS:73 cents vs. 67 cents

LOWELL, Ark.--(BUSINESS WIRE)-- J.B. Hunt Transport Services, Inc., (NAS: JBHT) announced second quarter 2013 net earnings of $87.7 million, or diluted earnings per share of 73 cents vs. second quarter 2012 net earnings of $80.5 million, or 67 cents per diluted share.

Total operating revenue for the current quarter was $1.38 billion, compared with $1.26 billion for the second quarter 2012. Load growth of 12% in Intermodal (JBI) and 29% in Integrated Capacity Solutions (ICS), helped drive a 12% and 20% increase in segment revenue, respectively. Dedicated Contract Services (DCS) segment revenue increased by 13% as new, large private fleet conversions continue to be implemented, while Truck (JBT) segment revenue decreased by 20% primarily from a smaller fleet and lower utilization. Current quarter total operating revenue, excluding fuel surcharges, increased 11% vs. the comparable quarter 2012.


Operating income for the current quarter totaled $147 million vs. $137 million for the second quarter 2012. The increase in operating income was primarily due to load growth, partially offset by $2.5 million of implementation expenditures in DCS for two previously announced private fleet conversion contracts, a $2.4 million write-off of abandoned shared technology costs, a $1.5 million loss on the destruction of equipment involved in two train derailments, increases in equipment costs, fewer gains on revenue equipment sales and higher driver recruiting and wage costs.

Interest expense in the current quarter decreased due to slightly lower debt levels and lower interest rates from a year ago. The effective income tax rate for the quarter was 37.88% compared to 38.25% in 2012 primarily from the realization of a deferred tax benefit on the sale of property during the current period. We expect our 2013 annual tax rate to be approximately 38.15%.

Segment Information:

Intermodal (JBI)

  • Second Quarter 2013 Segment Revenue:$855 million; up 12%
  • Second Quarter 2013 Operating Income:$110.7 million; up 19%

Overall volumes increased 12% over the same period in 2012 in an environment of moderating fuel prices and less seasonally volatile freight demand. Eastern network growth was 14% and transcontinental growth was 11% over the second quarter 2012. Revenue grew 12% with the effect of traffic mix, customer rate increases and fuel surcharges keeping revenue per load virtually flat compared to a year ago.

Operating income increased 19% over prior year. Benefits from steady demand, overall load growth, lower insurance and claims costs and lower office personnel compensation costs were partially offset by $1.6 million of abandoned shared technology costs, a $1.5 million loss on the destruction of equipment in two train derailments and increases in outsourced drayage costs, rail purchase transportation costs and equipment costs. The current period ended with 61,911 units of trailing capacity and 3,952 power units available to the dray fleet.

Dedicated Contract Services (DCS)

  • Second Quarter 2013 Segment Revenue:$303 million; up 13%
  • Second Quarter 2013 Operating Income:$29.7 million; down 11%

DCS revenue increased 13% during the current quarter while revenue excluding fuel surcharges increased 16%. Productivity (revenue per truck per week) decreased by approximately 4% vs. 2012 due to a higher percentage of subleased customer equipment and customer paid fuel within the new accounts. New accounts provided a net additional 863 revenue producing trucks by the end of the quarter compared to prior year.

Operating income decreased by 11% from a year ago. The decrease primarily reflects $2.5 million of contract implementation costs expensed in the current quarter, $0.6 million of abandoned shared technology costs, lower gains on equipment sales, increased equipment costs and increased insurance and claims costs. The contract implementation costs primarily relate to two large private fleet conversions which are expected to be fully implemented in the third quarter 2013, with additional implementation costs estimated at $1.0 million.

Integrated Capacity Solutions (ICS)

  • Second Quarter 2013 Segment Revenue:$132 million; up 20%
  • Second Quarter 2013 Operating Income:$ 4.2 million; up 113%

ICS revenue increased 20% in the current quarter vs. the second quarter 2012, primarily due to a 29% increase in load volume. Volumes grew faster than revenue primarily from increased less-than-truckload business. Both transactional and contractual volumes continued to grow during the quarter. Contractual business was approximately 60% of total load volume in the current period and comparable to second quarter 2012.

Operating income increased 113% over the same period 2012 primarily due to increased revenue and improvement in gross profit margin. Gross profit margin increased to 11.8% in the current quarter vs. 10.6% last year. A softer carrier environment contributed to the increase. Personnel costs from two new branch locations opened during the quarter, bringing the total branch count to 18, and $0.1 million of abandoned shared technology costs partially offset the benefit of the gross profit margin improvement. ICS's carrier base increased 10% and the employee count increased 8% vs. second quarter 2012.

Truck (JBT)

  • Second Quarter 2013 Segment Revenue:$101 million; down 20%
  • Second Quarter 2013 Operating Income:$ 3.0 million; down67%

JBT revenue for the current quarter decreased 20% from the same period in 2012 primarily from a 16% reduction in fleet size and lower utilization per truck. Revenue, excluding fuel surcharges, decreased 19%. Rate per mile, excluding fuel surcharges, increased 2.1% on a 10% shorter length of haul. However, rates from consistent shippers decreased 0.6% compared to the same quarter a year ago in order to retain business that fell within profitable network lanes. At the end of the period, JBT operated 2,018 tractors compared to 2,396 a year ago.

Operating income decreased by 67% compared to 2012. Favorable changes in freight mix and insurance and claims costs were offset by lower utilization, increased driver wages per mile, higher independent contractor costs, higher empty miles and $0.1 million in abandoned shared technology costs compared to second quarter 2012.

Cash Flow and Capitalization:

At June 30, 2013, we had a total of $674 million outstanding on various debt instruments compared to $679 million at June 30, 2012 and $685 million at December 31, 2012.

Our net capital expenditures for the six months ended June 30, 2013 approximated $212 million compared to $171 million for the same period 2012. At June 30, 2013, we had cash and cash equivalents of $5.9 million.

We purchased approximately 900,000 shares of our common stock during the quarter for approximately $65 million. At June 30, 2013, we had approximately $388 million remaining under our share repurchase authorization. Actual shares outstanding at June 30, 2013 approximated 117.1 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, 2012. We assume no obligation to update any forward-looking statement to the extent we become aware 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 June 30
2013 2012
  % Of  % Of
Amount  RevenueAmount  Revenue
 
Operating revenues, excluding fuel surcharge revenues$1,120,164$1,005,519
Fuel surcharge revenues262,694249,611
Total operating revenues1,382,858100.0%1,255,130100.0%
 
Operating expenses
Rents and purchased transportation693,79550.2%616,72349.2%
Salaries, wages and employee benefits282,25220.4%255,86420.4%
Fuel and fuel taxes110,2808.0%113,0859.0%
Depreciation and amortization62,2834.5%56,2274.5%
Operating supplies and expenses49,6263.6%45,5403.6%
Insurance and claims12,1110.9%12,5951.0%
General and administrative expenses, net of asset dispositions12,4250.8%6,3560.5%
Operating taxes and licenses8,0420.6%7,3230.6%
Communication and utilities4,6370.3%4,2020.3%
Total operating expenses1,235,45189.3%1,117,91589.1%
Operating income147,40710.7%137,21510.9%
Net interest expense6,2300.5%6,9290.5%
Earnings before income taxes141,17710.2%130,28610.4%
Income taxes53,4803.9%49,8354.0%
Net earnings$87,6976.3%$80,4516.4%
Average diluted shares outstanding119,472120,027
Diluted earnings per share$0.73$0.67
 

J.B. HUNT TRANSPORT SERVICES, INC.

Condensed Consolidated Statements of Earnings
(in thousands, except per share data)
(unaudited)
 
 Six Months Ended June 30
2013 2012
  % Of  % Of
Amount  RevenueAmount  Revenue
 
Operating revenues, excluding fuel surcharge revenues$2,159,104$1,944,202
Fuel surcharge revenues515,340476,850
Total operating revenues2,674,444100.0%2,421,052100.0%
 
Operating expenses
Rents and purchased transportation1,338,32850.0%1,172,84148.4%
Salaries, wages and employee benefits545,97620.4%505,90920.9%
Fuel and fuel taxes226,8408.5%233,6389.7%
Depreciation and amortization123,0134.6%112,3474.6%
Operating supplies and expenses94,5403.5%85,3513.5%
Insurance and claims24,8810.9%23,6401.0%
General and administrative expenses, net of asset dispositions23,4090.9%10,3500.4%
Operating taxes and licenses15,5550.6%14,4650.6%
Communication and utilities9,4560.4%8,6990.4%
Total operating expenses2,401,99889.8%2,167,24089.5%
Operating income272,44610.2%253,81210.5%
Net interest expense12,4850.5%13,9160.6%
Earnings before income taxes259,9619.7%239,8969.9%
Income taxes98,9163.7%91,7603.8%
Net earnings$161,0456.0%$148,1366.1%
Average diluted shares outstanding119,647119,888
Diluted earnings per share$1.35$1.24
 
 
Financial Information By Segment
(in thousands)
(unaudited)
 
 
 Three Months Ended June 30
2013 2012
  % Of  % Of
Amount  TotalAmount  Total
 

Revenue

 
Intermodal$854,73262%$762,04361%
Dedicated302,62422%267,31021%
Integrated Capacity Solutions131,82510%109,4949%
Truck101,167 7%126,180 10%
Subtotal1,390,348101%1,265,027101%
Intersegment eliminations(7,490)(1%)(9,897)(1%)
Consolidated revenue$1,382,858 100%$1,255,130 100%
 
 

Operating income

 
Intermodal$110,67975%$93,36868%
Dedicated29,70520%33,19824%
Integrated Capacity Solutions4,1613%1,9561%
Truck2,9562%8,8407%
Other (1)(94)(0%)(147)(0%)
Operating income$147,407 100%$137,215 100%
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