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J.B. Hunt Transport Services, Inc. Reports U.S. GAAP Revenues, Net Earnings and Earnings Per Share for the Second Quarter 2022

07/19/2022
  • Second Quarter 2022 Revenue: $3.84 billion; up 32%
  • Second Quarter 2022 Operating Income: $353.1 million; up 46%
  • Second Quarter 2022 EPS: $2.42 vs. $1.61; up 50%

J.B. Hunt Transport Services, Inc. (NASDAQ: JBHT) announced second quarter 2022 U.S. GAAP (United States Generally Accepted Accounting Principles) net earnings of $255.3 million, or diluted earnings per share of $2.42 versus second quarter 2021 net earnings of $172.2 million, or $1.61 per diluted share.

Total operating revenue for the current quarter was $3.84 billion, compared with $2.91 billion for the second quarter 2021, an increase of 32%. All segments contributed to the year-over-year growth in consolidated revenue. Intermodal (JBI) revenue grew 42% driven by an 8% increase in volume and a 32% increase in revenue per load. Dedicated Contract Services® (DCS®) revenue grew 39% as a result of a 21% increase in average revenue producing trucks and a 14% improvement in fleet productivity versus the prior-year period. Despite a softer spot-rate environment, our asset-light Truckload (JBT) segment and our non-asset Integrated Capacity Solutions™ (ICS) segment grew revenue 46% and 3% year-over-year, respectively, as the blending of our drop-trailer and live network service offering eliminates waste and drives efficiencies for our customers by leveraging the capabilities of our J.B. Hunt 360°® platform. Final Mile Services® (FMS) revenue increased 21%, primarily driven by our recent acquisition. Current quarter total operating revenue, excluding fuel surcharge revenue, increased 21% versus the comparable quarter 2021.

Total freight transactions in the Marketplace for J.B. Hunt 360 increased 11% to $556 million in the second quarter 2022 compared to $500 million in the prior-year quarter. JBT and JBI executed approximately $113 million and $51 million of their third-party dray, independent contractor and power-only capacity costs through the platform during the quarter, an increase of 60% and 54% year-over-year respectively. ICS revenue on the platform decreased 1% to $392 million versus the year ago period.

Operating income for the current quarter totaled $353.1 million versus $241.5 million for the second quarter 2021. Operating income increased from second quarter 2021 primarily due to higher volumes, customer rate, cost-recovery efforts, and further scaling into our people and technology investments. These items were partially offset by increases in: professional driver and non-driver wages and benefits, rail and truck purchased transportation expense, costs associated with inefficiencies in container utilization in JBI, hiring and recruiting expense, and implementation costs for newly awarded business in both DCS and FMS segments. The company also incurred a net $18.4 million pre-tax expense consisting of an increase in casualty claim expenses, offset by a workers’ compensation insurance benefit.

Net interest expense for the current quarter increased from second quarter 2021 due to higher interest rates compared to the same period last year.

The effective income tax rate in the current quarter was 25.0% and in line with the second quarter 2021. We now expect our 2022 annual tax rate to be between 23.5% and 24.5%.

Segment Information:

Intermodal (JBI)

  • Second Quarter 2022 Segment Revenue: $1.83 billion; up 42%
  • Second Quarter 2022 Operating Income: $202.5 million; up 50%

Intermodal volumes increased 8% over the same period in 2021. Eastern network loads increased 13%, while transcontinental loads increased 5%. Demand for intermodal capacity remained strong throughout the quarter, however rail velocity and customer behavior negatively impacted network efficiencies and container utilization, and ultimately, our ability to execute even greater volume in the quarter. Despite the network inefficiencies, segment gross revenue increased 42% from the prior-year period, reflecting the 8% increase in volume and a 32% increase in gross revenue per load, resulting from changes in the mix of freight, customer rates, and fuel surcharge revenues. Revenue per load excluding fuel surcharge revenue was up 20% year-over-year.

Operating income increased 50% in the second quarter from an increase in volume, combined with customer rate and cost-recovery efforts. These items were partially offset by increases in rail and third-party dray purchased transportation costs, professional driver and non-driver wages and benefits, professional driver recruiting expense, and costs stemming from inefficiencies in the rail and port networks, as well as customer detention of equipment. The JBI segment incurred approximately $7.7 million of the net pre-tax insurance-related expense in the quarter. During the period, we successfully onboarded 1,325 new pieces of trailing equipment. We ended the quarter with approximately 110,600 containers and 6,620 power units in the dray fleet.

Dedicated Contract Services (DCS)

  • Second Quarter 2022 Segment Revenue: $863 million; up 39%
  • Second Quarter 2022 Operating Income: $89.2 million; up 13%

DCS revenue increased 39% during the current quarter over the same period 2021. Productivity (revenue per truck per week) increased approximately 14% versus the prior period. Productivity excluding fuel surcharge revenue increased 5% from a year ago driven by increases in contracted indexed-based price escalators, partially offset by lower productivity of equipment on start-up accounts. A net additional 2,122 revenue producing trucks were in the fleet by the end of the quarter compared to the prior-year period, and a net additional 456 versus the end of the first quarter 2022. Customer retention rates remain above 98%.

Operating income increased 13% from the prior-year quarter. Benefits from higher revenue were mostly offset by increases in professional driver and non-driver wages and benefits, higher driver-recruiting costs, other costs related to the implementation of new, long-term contractual business, and higher bad debt and group medical expense. The DCS segment incurred approximately $1.6 million of the net pre-tax insurance-related expense in the quarter.

Integrated Capacity Solutions (ICS)

  • Second Quarter 2022 Segment Revenue: $623 million; up 3%
  • Second Quarter 2022 Operating Income: $23.6 million; up 658%

ICS revenue increased 3% in the current quarter over the same period 2021. Overall segment volumes decreased 3% versus the prior-year period, which was consistent with truckload volume performance. Revenue per load increased 5% compared to the second quarter 2021 due to higher contractual rates in our truckload business as well as changes in customer freight mix, partially offset by lower revenue per load in our transactional or spot business. Contractual volumes represented approximately 54% of the total load volume and 48% of the total revenue in the current quarter compared to 48% and 35%, respectively, in second quarter 2021. Of the total reported ICS revenue, approximately $392 million was executed through the Marketplace for J.B. Hunt 360 compared to $396 million in second quarter 2021.

Operating income increased 658% to $23.6 million compared to $3.1 million in the second quarter 2021. Benefits from higher revenue and gross profit margin were partially offset by higher personnel cost, increased insurance and claims expense and higher technology costs as compared to the same period 2021. The ICS segment incurred approximately $6.7 million of the net pre-tax insurance-related expense in the quarter. Gross profit margins increased to 16.2% in the current period versus 10.5% in the prior period. ICS carrier base increased 33% year over year.

Truckload (JBT)

  • Second Quarter 2022 Segment Revenue: $269 million; up 46%
  • Second Quarter 2022 Operating Income: $25.0 million; up 76%

JBT revenue increased 46% as compared to the same period in the previous year. Revenue excluding fuel surcharge revenue increased 37% primarily due to increased load volume and higher revenue per load excluding fuel surcharge revenue. Volume for JBT was up 14% year-over-year as total trailer count increased by approximately 3,800 units, or 46% versus the prior-year period. Trailer turns in the quarter were down 18% from the prior period due to the onboarding of new trailers and freight mix. Revenue per load excluding fuel surcharge revenue was up 20% on a 1% increase in length of haul. Both mix and same-store rate increases contributed to the increase in revenue quality.

JBT operating income increased 76% to $25.0 million versus $14.2 million in the second quarter 2021. JBT continues to leverage the J.B. Hunt 360 platform to grow power capacity and capability for the J.B. Hunt 360box® service offering. Benefits from higher volume and revenue quality led to an improvement in contribution margins across the segment. These benefits were partially offset by higher purchased transportation expense, trailer parts and maintenance costs, personnel costs, insurance and claims expense and continued technology investments to build out 360box. The JBT segment incurred approximately $2.0 million of the net pre-tax insurance-related expense in the quarter.

Final Mile Services (FMS)

  • Second Quarter 2022 Segment Revenue: $257 million; up 21%
  • Second Quarter 2022 Operating Income: $12.8 million; up 20%

FMS revenue increased 21% compared to the same period 2021 driven by the previously announced acquisition of Zenith Freight Lines, LLC (Zenith) that closed at the end of February, in addition to multiple customer contracts implemented over the last year. Revenue growth in the quarter was partially offset by internal efforts to improve revenue quality of the business. FMS revenue increased 8% over the prior-year period excluding the Zenith acquisition, which contributed approximately $28 million to segment revenue in the quarter.

Operating income increased 20% from second quarter 2021 which included the prior-year benefit of $3.2 million from a net settlement of claims. The increase in operating income was primarily driven by an improvement in revenue quality partially offset by increases in professional driver and non-driver wages and benefits, insurance and claims expense, higher technology costs, driver-recruiting expense and implementation costs for newly awarded business. The FMS segment incurred approximately $0.4 million of the net pre-tax insurance-related expense in the quarter.

Cash Flow and Capitalization:

At June 30, 2022, we had approximately $1.3 billion outstanding on various debt instruments which is comparable to levels at June 30, 2021 and at December 31, 2021.

Our net capital expenditures for the six months ended June 30, 2022 approximated $598 million compared to $261 million for the same period 2021. At June 30, 2022, we had cash and cash equivalents of approximately $124 million.

In the second quarter 2022, we purchased approximately 979,000 shares of common stock for approximately $164 million. At June 30, 2022, we had approximately $112 million remaining under our share repurchase authorization. Actual shares outstanding at June 30, 2022 approximated 103.8 million.

Conference Call Information:

The Company will hold a conference call today from 4:00–5:00 pm CDT to discuss the quarterly earnings. Investors will have the opportunity to listen to the conference call live over the internet by going to investor.jbhunt.com. Please log on 15 minutes early to register, download and install any necessary audio software. For those who cannot listen to the live broadcast, an online replay of the earnings call webcast will be available a few hours after the completion of the call.

Forward-Looking Statements:

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, 2021. 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 to interested parties on our website, www.jbhunt.com.

About J.B. Hunt

J.B. Hunt Transport Services, Inc., an S&P 500 company, provides innovative supply chain solutions for a variety of customers throughout North America. Utilizing an integrated, multimodal approach, the company applies technology driven methods to create the best solution for each customer, adding efficiency, flexibility, and value to their operations. J.B. Hunt services include intermodal, dedicated, refrigerated, truckload, less-than-truckload, flatbed, single source, final mile, and more. J.B. Hunt Transport Services, Inc. stock trades on NASDAQ under the ticker symbol JBHT and is a component of the Dow Jones Transportation Average. J.B. Hunt Transport, Inc. is a wholly owned subsidiary of JBHT. For more information, visit 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

2022

 

2021

 

% Of

 

 

% Of

Amount

 

Revenue

Amount

 

Revenue

 
Operating revenues, excluding fuel surcharge revenues $

3,159,759

$

2,606,981

Fuel surcharge revenues

677,773

301,389

Total operating revenues

3,837,532

100.0

%

2,908,370

100.0

%

 
Operating expenses
Rents and purchased transportation

1,920,823

50.1

%

1,538,232

52.9

%

Salaries, wages and employee benefits

841,825

21.9

%

665,471

22.9

%

Fuel and fuel taxes

265,636

6.9

%

126,841

4.4

%

Depreciation and amortization

157,571

4.1

%

139,371

4.8

%

Operating supplies and expenses

126,383

3.3

%

91,019

3.1

%

Insurance and claims

87,258

2.3

%

35,508

1.2

%

General and administrative expenses, net of asset dispositions

59,764

1.6

%

47,505

1.6

%

Operating taxes and licenses

16,323

0.4

%

14,209

0.5

%

Communication and utilities

8,866

0.2

%

8,668

0.3

%

Total operating expenses

3,484,449

90.8

%

2,666,824

91.7

%

Operating income

353,083

9.2

%

241,546

8.3

%

Net interest expense

12,842

0.3

%

12,059

0.4

%

Earnings before income taxes

340,241

8.9

%

229,487

7.9

%

Income taxes

84,900

2.2

%

57,325

2.0

%

Net earnings $

255,341

6.7

%

$

172,162

5.9

%

Average diluted shares outstanding

105,387

106,816

Diluted earnings per share $

2.42

$

1.61

 
J.B. HUNT TRANSPORT SERVICES, INC.
Condensed Consolidated Statements of Earnings
(in thousands, except per share data)
(unaudited)
 

Six Months Ended June 30

2022

 

2021

 

 

 

% Of

 

 

 

 

% Of

Amount

 

Revenue

 

Amount

 

Revenue

 
Operating revenues, excluding fuel surcharge revenues $

6,201,976

$

4,995,015

Fuel surcharge revenues

1,124,144

531,504

Total operating revenues

7,326,120

100.0

%

5,526,519

100.0

%

 
Operating expenses
Rents and purchased transportation

3,758,163

51.3

%

2,890,533

52.3

%

Salaries, wages and employee benefits

1,605,416

21.9

%

1,285,502

23.3

%

Fuel and fuel taxes

455,102

6.2

%

239,881

4.4

%

Depreciation and amortization

306,334

4.2

%

276,916

5.0

%

Operating supplies and expenses

233,322

3.2

%

172,717

3.1

%

Insurance and claims

133,389

1.8

%

73,538

1.3

%

General and administrative expenses, net of asset dispositions

97,209

1.4

%

92,396

1.7

%

Operating taxes and licenses

32,073

0.4

%

28,024

0.5

%

Communication and utilities

17,735

0.2

%

17,814

0.3

%

Total operating expenses

6,638,743

90.6

%

5,077,321

91.9

%

Operating income

687,377

9.4

%

449,198

8.1

%

Net interest expense

25,429

0.4

%

24,084

0.4

%

Earnings before income taxes

661,948

9.0

%

425,114

7.7

%

Income taxes

163,282

2.2

%

106,346

1.9

%

Net earnings $

498,666

6.8

%

$

318,768

5.8

%

Average diluted shares outstanding

105,729

106,816

Diluted earnings per share $

4.72

$

2.98

 
Financial Information By Segment
(in thousands)
(unaudited)
 
 

Three Months Ended June 30

2022

 

2021

 

 

 

% Of

 

 

 

 

% Of

Amount

 

Total

 

Amount

 

Total

 
Revenue
 
Intermodal $

1,832,778

48%

$

1,289,400

44%

Dedicated

863,038

22%

621,179

22%

Integrated Capacity Solutions

623,233

16%

607,614

21%

Truckload

268,796

7%

183,634

6%

Final Mile Services

257,364

7%

212,265

7%

Subtotal

3,845,209

100%

2,914,092

100%

Intersegment eliminations

(7,677)

(0%)

(5,722)

(0%)

Consolidated revenue $

3,837,532

100%

$

2,908,370

100%

 
 
Operating income
 
Intermodal $

202,529

57%

$

134,641

56%

Dedicated

89,197

25%

79,010

33%

Integrated Capacity Solutions

23,623

7%

3,118

1%

Truckload

24,968

7%

14,195

6%

Final Mile Services

12,848

4%

10,691

4%

Other (1)

(82)

(0%)

(109)

(0%)

Operating income $

353,083

100%

$

241,546

100%

 
 
 
 
 

Six Months Ended June 30

2022

 

2021

 

 

 

% Of

 

 

 

 

% Of

Amount

 

Total

 

Amount

 

Total

Revenue
 
Intermodal $

3,436,164

47%

$

2,466,532

45%

Dedicated

1,604,344

22%

1,201,137

22%

Integrated Capacity Solutions

1,298,624

18%

1,132,561

20%

Truckload

533,139

7%

333,165

6%

Final Mile Services

475,818

6%

414,148

7%

Subtotal

7,348,089

100%

5,547,543

100%

Intersegment eliminations

(21,969)

(0%)

(21,024)

(0%)

Consolidated revenue $

7,326,120

100%

$

5,526,519

100%

 
 
Operating income
 
Intermodal $

403,500

59%

$

242,108

54%

Dedicated

166,301

24%

153,349

34%

Integrated Capacity Solutions

48,587

7%

10,387

2%

Truckload

56,458

8%

24,369

6%

Final Mile Services

12,668

2%

19,189

4%

Other (1)

(137)

(0%)

(204)

(0%)

Operating income $

687,377

100%

$

449,198

100%

 
 
(1) Includes corporate support activity
Operating Statistics by Segment
(unaudited)
 

Three Months Ended June 30

2022

 

2021

 
Intermodal

 

 

 

 

 

 

Loads

 

539,024

 

 

 

499,682

 

Average length of haul

 

1,658

 

 

 

1,678

 

Revenue per load

$

3,400

 

 

$

2,580

 

Average tractors during the period *

 

6,562

 

 

 

5,782

 

Tractors (end of period) *

 

6,620

 

 

 

5,823

 

Trailing equipment (end of period)

 

110,654

 

 

 

99,377

 

Average effective trailing equipment usage

 

108,860

 

 

 

98,210

 

 

 

 

 

 

 

Dedicated

 

 

 

 

 

 

Loads

 

1,121,054

 

 

 

996,650

 

Average length of haul

 

164

 

 

 

161

 

Revenue per truck per week**

$

5,380

 

 

$

4,707

 

Average trucks during the period***

 

12,412

 

 

 

10,224

 

Trucks (end of period) ***

 

12,628

 

 

 

10,506

 

Trailing equipment (end of period)

 

27,108

 

 

 

27,354

 

 

 

 

 

 

 

Integrated Capacity Solutions

 

 

 

 

 

 

Loads

 

321,685

 

 

 

330,127

 

Revenue per load

$

1,937

 

 

$

1,841

 

Gross profit margin

 

16.2

%

 

 

10.5

%

Employee count (end of period)

 

1,044

 

 

 

966

 

Approximate number of third-party carriers (end of period)

 

154,770

 

 

 

116,600

 

Marketplace for J.B. Hunt 360 revenue (millions)

$

392.1

 

 

$

396.1

 

 
 
Truckload
 
Loads

123,592

108,538

Average trailers during the period

12,135

8,662

Revenue per load $

2,175

$

1,692

Average length of haul

490

485

 

 

Tractors (end of period)

 

 

Company-owned

726

752

Independent contractor

1,897

1,018

Total tractors

2,623

1,770

 

 

Trailers (end of period)

12,770

8,958

 

 

 

 

Final Mile Services

 

 

 

 

Stops

1,441,796

1,732,962

Average trucks during the period***

1,873

1,488

 
 
* Includes company-owned and independent contractor tractors
** Using weighted workdays
*** Includes company-owned, independent contractor, and customer-owned trucks
Operating Statistics by Segment
(unaudited)
 

Six Months Ended June 30

2022

 

2021

 
Intermodal
 
Loads

1,049,760

977,967

Average length of haul

1,665

1,683

Revenue per load $

3,273

$

2,522

Average tractors during the period *

6,412

5,750

Tractors (end of period) *

6,620

5,823

Trailing equipment (end of period)

110,654

99,377

Average effective trailing equipment usage

107,372

96,406

 
 
Dedicated
 
Loads

2,162,896

1,938,870

Average length of haul

164

161

Revenue per truck per week** $

5,120

$

4,643

Average trucks during the period***

12,179

10,093

Trucks (end of period) ***

12,628

10,506

Trailing equipment (end of period)

27,108

27,354

 
 
Integrated Capacity Solutions
 
Loads

650,397

622,492

Revenue per load $

1,997

$

1,819

Gross profit margin

14.5%

11.4%

Employee count (end of period)

1,044

966

Approximate number of third-party carriers (end of period)

154,770

116,600

Marketplace for J.B. Hunt 360 revenue (millions) $

822.4

$

755.0

 
 
Truckload
 
Loads

244,119

211,600

Average trailers during the period

11,796

8,616

Revenue per load $

2,184

$

1,575

Average length of haul

491

465

 
Tractors (end of period)
Company-owned

726

752

Independent contractor

1,897

1,018

Total tractors

2,623

1,770

 
Trailers (end of period)

12,770

8,958

 
 
Final Mile Services
 
Stops

2,786,625

3,408,987

Average trucks during the period***

1,761

1,501

 
 
* 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)
 

June 30, 2022

December 31, 2021

ASSETS
Current assets:
Cash and cash equivalents $

123,841

$

355,549

Accounts Receivable, net

1,776,773

1,506,619

Prepaid expenses and other

381,304

451,201

Total current assets

2,281,918

2,313,369

Property and equipment

7,294,079

6,680,316

Less accumulated depreciation

2,846,384

2,612,661

Net property and equipment

4,447,695

4,067,655

Other assets, net

522,949

413,324

$

7,252,562

$

6,794,348

 
 
LIABILITIES & STOCKHOLDERS' EQUITY
Current liabilities:
Current debt $

349,955

$

355,972

Trade accounts payable

886,617

772,736

Claims accruals

324,758

307,210

Accrued payroll

185,829

190,950

Other accrued expenses

122,906

102,732

Total current liabilities

1,870,065

1,729,600

 
Long-term debt

945,999

945,257

Other long-term liabilities

301,003

256,233

Deferred income taxes

810,631

745,442

Stockholders' equity

3,324,864

3,117,816

$

7,252,562

$

6,794,348

 
Supplemental Data
(unaudited)
 

June 30, 2022

December 31, 2021

 
Actual shares outstanding at end of period (000)

103,813

105,094

 
Book value per actual share outstanding at end of period $

32.03

$

29.67

 
 
 

Six Months Ended June 30

2022

 

2021

 
Net cash provided by operating activities (000) $

784,527

$

668,748

 
Net capital expenditures (000) $

598,094

$

260,711

 

Brad Delco
Senior Vice President – Finance
(479) 820-2723

Source: J.B. Hunt Transport Services, Inc.

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