News - 2015

• Second Quarter 2015 Revenue:$1.54 billion; down 0.5%
• Second Quarter 2015 Operating Income:$174 million; up 9%
• Second Quarter 2015 EPS:88 cents vs. 79 cents

LOWELL, Ark.--(BUSINESS WIRE)-- J.B. Hunt Transport Services, Inc., (NASDAQ:JBHT) announced second quarter 2015 net earnings of $103.4 million, or diluted earnings per share of 88 cents vs. second quarter 2014 net earnings of $93.4 million, or 79 cents per diluted share.

Total operating revenue for the current quarter was $1.54 billion, compared with $1.55 billion for the second quarter 2014. Customer rate increases across all business units, load growth of 2% in Intermodal (JBI), a 6% increase in revenue producing trucks in Dedicated Contract Services (DCS) and load growth of 12% in Integrated Capacity Solutions (ICS) could not offset the decrease in fuel surcharge revenue, sluggish consumer freight demand and lower equipment utilization in our Truck (JBT) business segment resulting in flat consolidated revenue compared to prior year. Current quarter total operating revenue, excluding fuel surcharges, increased 7% vs. the comparable quarter 2014.

Operating income for the current quarter totaled $174 million vs. $159 million for the second quarter 2014. The increase in operating income was primarily from customer rate increases, less reliance on outsourced JBI drayage and DCS capacity coverage, load growth, freight mix changes and improved equipment fuel economy. The operating income increase was partially offset by an approximate $14.1 million charge for corporate wide streamlining and technology redevelopment costs, the benefits of which are expected to be realized over the next two fiscal years, lower box turns from slower train velocities, higher driver recruiting and retention costs, higher workers’ compensation costs and increased toll costs compared to second quarter 2014.

Interest expense in the current quarter decreased due to lower overall debt levels from the same period last year. The second quarter 2014 reflected the accelerated payment of $100 million of 6.08 % fixed rate senior notes that would have matured in July 2014. The effective income tax rate for the quarter was 38.10% for both second quarter 2015 and 2014. The 2015 annual tax rate is expected to be approximately 38.10%.

The Company also posted revised full year 2015 Financial Expectations on its website under the Investors tab at www.jbhunt.com.

Segment Information:

Intermodal (JBI)

• Second Quarter 2015 Segment Revenue:$905 million; down 3%
• Second Quarter 2015 Operating Income:$118.6 million; up 5%

Overall volumes increased 2% over the same period in 2014. Eastern network realized load growth of 3% and Transcontinental loads grew 1% over the second quarter 2014. The lingering effects of disruptive shipping patterns due to the west coast port issues, slow rail service recovery and a softer consumer driven freight demand all contributed to slower load volume growth. Revenue decreased 3% reflecting the 2% volume growth and an approximate 4.5% decrease in revenue per load, which is the combination of changes in customer rate, freight mix and fuel surcharges. Revenue per load excluding fuel surcharge increased approximately 4% over second quarter 2014.

Operating income increased 5% over prior year. Benefits from rate increases, reduced reliance on outsourced dray carriers, lower insurance and cargo claim costs and lower fleet maintenance costs were partially offset by approximately $6.4 million in corporate wide streamlining and technology redevelopment costs, increases in rail purchased transportation rates and slower rail service recovery that negatively impacted the network fluidity and decreased box turns. The current period ended with approximately 76,300 units of trailing capacity and 4,900 power units in the dray fleet.

Dedicated Contract Services (DCS)

• Second Quarter 2015 Segment Revenue:$367 million; up 5%
• Second Quarter 2015 Operating Income:$40.6 million; up 34%

DCS revenue increased 5% during the current quarter over the same period in 2014. Productivity (revenue per truck per week) decreased by approximately 1% vs. 2014 primarily from lower fuel surcharge revenue. Productivity excluding fuel surcharge increased 5% from a year ago primarily from customer rate increases and increased customer demand. A net additional 413 revenue producing trucks, approximately 58% representing private fleet conversions versus traditional dedicated capacity services, were in the fleet by the end of the quarter compared to prior year primarily from new contract implementations in the current and prior periods. Customer retention rates remain above 96% as value driven services continue to support necessary rate increases.

Operating income increased by 34% from a year ago. Revenues from new accounts, higher productivity excluding fuel surcharge, less reliance on third party carrier capacity and lower equipment maintenance costs were partially offset with approximately $2.6 million in corporate wide streamlining and technology redevelopment costs and higher driver wages and recruiting costs.

Integrated Capacity Solutions (ICS)

■ Second Quarter 2015 Segment Revenue:$174 million; up 0.6%

■ Second Quarter 2015 Operating Income:$4.9 million; down 21%

ICS revenue was flat compared to the second quarter 2014. Volumes increased 12% while revenue per load decreased 10%, primarily from lower fuel prices and less transactional customer demand versus second quarter 2014. Contractual volumes increased 32% to approximately 70% of total load volume and 62% of total revenue compared to 60% and 52%, respectively, in second quarter 2014.

Operating income decreased 21% over the same period 2014. Gross profit margin increased to 15.2% in the current quarter vs. 12.7% last year. Improvements in gross profit margin were offset by approximately $4.4 million in corporate wide streamlining and technology redevelopment costs and higher personnel costs as the total branch count increased to 31 from 26 compared to second quarter 2014. The carrier base increased 17% and the employee count increased 18% vs. second quarter 2014.

Truck (JBT)

• Second Quarter 2015 Segment Revenue:$98 million; down 3.5%
• Second Quarter 2015 Operating Income:$9.7 million; up 3%

JBT revenue for the current quarter was down 3.5% compared to the same period in 2014. Revenue excluding fuel surcharges increased 2%, primarily from increased truck count and core rate increases of approximately 6.5% partially offset by less spot activity and lower utilization per tractor. At the end of the period, JBT operated 2,073 tractors compared to 1,860 a year ago.

Operating income increased 3% compared to the same quarter 2014. Favorable changes in core rates, increased truck count, lower equipment maintenance costs and improved fuel economy were partially offset by increased driver and independent contractor costs per mile, increased driver hiring costs, approximately $2.6 million of lower equipment gains and approximately $700,000 in corporate wide streamlining and technology redevelopment costs compared to second quarter 2014.

Cash Flow and Capitalization:

At June 30, 2015, we had a total of $893 million outstanding on various debt instruments compared to $874 million at June 30, 2014 and $934 million at December 31, 2014.

Our net capital expenditures for the six months ended June 30, 2015 approximated $319 million compared to $353 million for the same period 2014. At June 30, 2015, we had cash and cash equivalents of $5.6 million.

We purchased approximately 331,000 shares of our common stock during the quarter for $28 million. At June 30, 2015 we had approximately $179 million remaining under our share repurchase authorization. Actual shares outstanding at June 30, 2015 approximated 116.3 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, 2014. 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.