News - 2015

• Third Quarter 2015 Revenue: $1.59 billion; down 1%
• Third Quarter 2015 Operating Income: $194 million; up 13%
• Third Quarter 2015 EPS: 99 cents vs. 87 cents

LOWELL, Ark.--(BUSINESS WIRE)-- J.B. Hunt Transport Services, Inc., (NASDAQ:JBHT) announced third quarter 2015 net earnings of $115.1 million, or diluted earnings per share of 99 cents vs. third quarter 2014 net earnings of $102.4 million, or 87 cents per diluted share.

Total operating revenue for the current quarter was $1.59 billion, compared with $1.60 billion for the third quarter 2014. Customer rate increases, load growth of 3% in Intermodal (JBI), a 6% increase in revenue producing trucks and improved asset productivity, excluding fuel surcharges, in Dedicated Contract Services (DCS)™, a 9% increase in load volume in Integrated Capacity Solutions (ICS) and 14% increase in truck count in our Truck (JBT) business segment could not offset the decrease in fuel surcharge revenue and tepid customer demand resulting in a decrease in consolidated revenue compared to prior year. Current quarter total operating revenue, excluding fuel surcharges, increased 8% vs. the comparable quarter 2014.

Operating income for the current quarter totaled $194 million vs. $172 million for the third quarter 2014. The increase in operating income from load growth, higher productivity and customer rate increases was partially offset by lower box turns from slower train speeds in some regions, increases in rail purchase transportation rates, increases in driver wages and recruiting costs and higher equipment ownership costs compared to third quarter 2014.

Interest expense in the current quarter increased from a year ago due to higher debt levels primarily from the timing of the issuance of new senior notes to refinance maturing senior notes. The effective income tax rate for both the current quarter and third quarter 2014 was 38.10%. We expect our 2015 annual tax rate to be approximately 38.10%.

Segment Information:

Intermodal (JBI)

• Third Quarter 2015 Segment Revenue: $949 million; down 2%
• Third Quarter 2015 Operating Income: $126.1 million; up 1%

Overall volumes increased 3% over the same period in 2014. The Eastern network load growth slowed to 1% and Transcontinental loads grew 4% over the third quarter 2014 as eastern network loads were challenged with recovering rail service while west coast import volumes began to improve. Revenue decreased 2% reflecting the 3% volume growth and an approximate 4.4% decrease in revenue per load, which is the combination of changes in customer rate, freight mix and fuel surcharges. Revenue per load excluding fuel surcharges increased approximately 5% compared to third quarter 2014.

Operating income increased 1% over prior year. Benefits from customer rate increases, reduced reliance on third party dray carriers and lower dray fleet maintenance costs were partially offset by increases in rail purchased transportation rates, equipment ownership costs including lower box utilization and increased costs to attract and retain drivers. The current period ended with approximately 77,900 units of trailing capacity and 5,040 power units assigned to the dray fleet.

Dedicated Contract Services (DCS)

• Third Quarter 2015 Segment Revenue: $370 million; up 3%
• Third Quarter 2015 Operating Income: $45.1 million; up 32%

DCS revenue increased 3% during the current quarter over the same period in 2014. Productivity (revenue per truck per week) decreased by approximately 4% vs. 2014 primarily from lower fuel surcharge revenue. Productivity excluding fuel surcharge revenue increased approximately 1.8% from a year ago primarily from customer rate increases and increased customer demand for capacity. A year-over-year net addition of 413 revenue producing trucks, 195 net additions compared to second quarter 2015, were in the fleet by the end of the quarter. Approximately 56% of these additions represent private fleet conversions versus traditional dedicated capacity services and primarily reflect new contract implementations in this and prior periods. Customer retention rates remain above 96% as value driven services continue to support necessary rate increases.

Operating income increased by 32% from a year ago. Revenue from new accounts, higher productivity excluding fuel surcharge revenue, less reliance on third party carrier capacity and lower equipment maintenance costs were partially offset with higher driver wages, higher driver recruiting costs and higher equipment ownership costs compared to the same period in 2014.

Integrated Capacity Solutions (ICS)

• Third Quarter 2015 Segment Revenue: $173 million; down 7%
• Third Quarter 2015 Operating Income: $ 11.5 million; up 36%

ICS revenue decreased 7% in the current quarter vs. the third quarter 2014. Load volume increased 9% while revenue per load decreased 14% due to lower fuel prices and freight mix changes driven by customer demand including less transactional or “spot” business. Contractual volumes increased 13% to approximately 66% of total load volume and 61% of total revenue in the current quarter compared to 65% and 58%, respectively, in third quarter 2014.

Operating income increased 36% over the same period 2014 primarily due to improved gross profit margin. Gross profit margin increased to 15.9% in the current quarter vs. 13.3% in the prior year. The increase in operating income was partially offset by increased personnel costs as the total branch count grew to 33 compared to 28 at the end of third quarter last year. ICS’s carrier base increased 17% and the employee count increased 13% vs. third quarter 2014.

Truck (JBT)

• Third Quarter 2015 Segment Revenue: $ 98 million; up 2%
• Third Quarter 2015 Operating Income: $ 11.2 million; up 159%

JBT revenue for the current quarter increased 2% from the same period in 2014. Revenue excluding fuel surcharge increased 10%, primarily from increased truck count and core rate increases of approximately 4.5%, but was partially offset by lower asset utilization. At the end of the period, JBT operated 2,100 tractors compared to 1,843 a year ago.

Operating income increased by 159% compared to third quarter 2014. Favorable changes in core rates, increased fleet count, lower equipment maintenance costs, lower safety and insurance costs and improved fuel economy were partially offset by increased driver and independent contractor costs per mile, increased driver hiring costs, and lower asset utilization compared to third quarter 2014.

Cash Flow and Capitalization:

At September 30, 2015, we had a total of $993 million outstanding on various debt instruments compared to $837 million at September 30, 2014 and $934 million at December 31, 2014.

Our net capital expenditures for the nine months ended September 30, 2015 approximated $431 million compared to $479 million for the same period 2014. At September 30, 2015, we had cash and cash equivalents of approximately $5.5 million.

We purchased approximately 2.2 million shares of our common stock during the quarter for $177.9 million. At September 30, 2015 we had approximately $1 million remaining under our share repurchase authorization. Shares outstanding at September 30, 2015 approximated 114.6 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.