News - 2016

• Fourth quarter 2015 Revenue:$1.62 billion; up 1%
• Fourth quarter 2015 Operating Income:$192.9 million; up 5%
• Fourth quarter 2015 EPS:$1.01 vs. 93 cents; up 9%

• Full Year 2015 Revenue:$6.2 billion; flat
• Full Year 2015 Operating Income:$715.7 million; up 13%
• Full Year 2015 EPS:$3.66 vs. $3.16; up 16%

LOWELL, Ark.--(BUSINESS WIRE)-- J.B. Hunt Transport Services, Inc., (NASDAQ:JBHT) announced fourth quarter 2015 net earnings of $116.7 million, or diluted earnings per share of $1.01 vs. fourth quarter 2014 net earnings of $110.3 million, or 93 cents per diluted share.

Total operating revenue for the current quarter was $1.62 billion, compared with $1.61 billion for the fourth quarter 2014. Load growth of 6% in Intermodal (JBI) was the primary reason for a 1% increase in segment revenue. Dedicated Contract Services (DCS) segment revenue increased by 2%, primarily from the addition of new customer accounts and rate increases implemented in the current and earlier periods. Truck (JBT) segment revenue increased 3% primarily from customer rate increases and an increase in fleet size compared to a year ago. Integrated Capacity Solutions (ICS) segment revenue decreased by 4%, mostly from less spot market activity and lower revenue per load. Current quarter total operating revenue, excluding fuel surcharges, increased 9% vs. the comparable quarter 2014.

Operating income for the current quarter increased to $192.9 million vs. $182.9 million for the fourth quarter 2014. The increase primarily reflects higher revenue in JBI, DCS and JBT business segments, improved fuel economy and lower maintenance costs on newer equipment, less reliance on third party carriers in JBI and DCS, expanding gross margins in ICS and lower safety and insurance costs in JBT. These benefits were partially offset by increased rail purchase transportation costs, increased wages paid to drivers, increased costs of recruiting drivers and independent contractors and higher costs of equipment ownership.

Net earnings rose 6% to $116.7 million in the current quarter from $110.3 million in 2014, due to increased operating income and lower net interest expense. Compared with the same period 2014, net interest expense in the current quarter decreased approximately 23% primarily from lower interest accruals on accrued income tax liabilities. The fourth quarter effective tax rates for 2015 and 2014 were 38.10% and 37.79%, respectively. The annual effective tax rates for 2015 and 2014 were 38.10% and 38.01%, respectively.

Segment Information:

Intermodal (JBI)

• Fourth quarter 2015 Segment Revenue:$967 million; up 1%
• Fourth quarter 2015 Operating Income:$127.7 million; down 1%

JBI total volumes grew 6% over the same period in 2014. Eastern network loads increased 8% and transcontinental loads increased 5% compared to the fourth quarter 2014. Revenue increased 1%, reflecting volume growth of 6% and a 5% decrease 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 5% compared to a year ago.

Operating income decreased 1% from the prior year. Benefits from customer rate increases, a smaller percentage of outsourced dray usage and lower fleet maintenance costs could not offset increases in rail purchased transportation costs, equipment ownership costs and driver recruiting and retention costs. The current period ended with approximately 78,900 units of trailing capacity and approximately 5,080 power units in the dray fleet.

Dedicated Contract Services (DCS)

• Fourth quarter 2015 Segment Revenue:$369 million; up 2%
• Fourth quarter 2015 Operating Income:$42.0 million; up 13%

DCS revenue increased 2% during the current quarter over the same period 2014. Productivity (revenue per truck per week) decreased approximately 3% vs. 2014 primarily from lower fuel surcharge revenue. Productivity excluding fuel surcharge revenue increased approximately 2.5% from a year ago primarily from customer rate increases. A year over year net additional 328 revenue producing trucks, 41 net additions compared to third quarter 2015, were in the fleet by the end of the quarter. Approximately 61% 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 96% as value driven services continue to support necessary rate increases.

Operating income increased by 13% from a year ago. Revenue from new customer accounts, higher truck 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)

• Fourth Quarter 2015 Segment Revenue:$190 million; down 4%
• Fourth Quarter 2015 Operating Income: $12.8 million; up 40%

ICS revenue decreased 4% in the current quarter vs. the fourth quarter 2014 mostly due to a 31% decrease in revenue per load due to lower fuel prices and freight mix changes driven by customer demand. Load volume increased 38% compared to fourth quarter 2014. Contractual volumes increased 54% to approximately 73% of the total load volume and 62% of the total revenue in the current quarter compared to 66% and 57%, respectively, in fourth quarter 2014.

Operating income increased 40% over the same period in 2014 primarily due to improved gross profit margin. Gross profit margin increased to 16% in the current period from 13.7% last year. The operating income increase was partially offset by increased personnel costs to expand our branch network. Total branches at the end of the period grew to 34 from 29 at the end of the same period in 2014. ICS’s carrier base increased 17% and the employee count increased 15% from a year ago.

Truck (JBT)

• Fourth quarter 2015 Segment Revenue:$ 99 million; up 3%
• Fourth quarter 2015 Operating Income:$ 10.4 million; up 29%

JBT revenue for the current quarter increased 3% from the same period in 2014. Revenue excluding fuel surcharges increased 12% primarily from increased truck count and core customer rate increases of approximately 3.7% compared to fourth quarter 2014. At the end of the period, JBT operated 2,149 tractors compared to 1,886 a year ago.

Operating income increased 29% from fourth quarter 2014 levels. Favorable changes from an increased truck count, customer rate increases, lower equipment maintenance costs, lower safety and insurance costs and improved fuel economy were partially offset by increased driver wages, increased independent contractor costs per mile, higher driver recruiting and hiring costs, lower asset utilization and an increase in empty miles compared to fourth quarter 2014.

Cash Flow and Capitalization:

At December 31, 2015, we had total debt outstanding of $1.0 billion on various debt instruments compared to $934 million at December 31, 2014 and $993 million at September 30, 2015.

Our net capital expenditures for 2015 approximated $556 million vs. $660 million in 2014. At December 31, 2015, we had cash and cash equivalents of $5.6 million.

In the fourth quarter 2015, we purchased 672,500 shares of our common stock for approximately $50 million. At December 31, 2015, we had approximately $451 million remaining under our share repurchase authorization. Actual shares outstanding at December 31, 2015 approximated 114 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.