Exhibit 99.1
J. B. Hunt Transport Services, Inc.
615 J.B. Hunt Corporate Drive
Lowell, Arkansas 72745
(NASDAQ: JBHT)
FOR IMMEDIATE RELEASE
J.B. HUNT TRANSPORT SERVICES, INC. REPORTS REVENUES AND EARNINGS
FOR THE FOURTH QUARTER AND YEAR ENDED DECEMBER 31, 2002
LOWELL, ARKANSAS, January 30, 2003 - J. B. Hunt Transport Services, Inc. (NASDAQ: JBHT) announced record annual net earnings of $51.8 million for 2002, or diluted earnings per share of $1.33, also a record number, compared with 2001 full-year earnings of $32.9 million, or 91 cents per diluted share. Total operating revenue for the year was $2.25 billion, compared with $2.10 billion in 2001. While the economy and level of freight activity were challenging during 2002, the Company is extremely pleased to report improved operating income and net earnings for the year. Operating income rose 40% from $72.2 million in 2001 to $101 million in 2002 on a 7% rise in revenues. Net earnings rose 57% to a record $51.8 million in 2002 from $32.9 million in 2001. Earnings per share jumped 46% in spite of a nearly 8% increase in average shares outstanding. A significant portion of the full year 2002 net earnings improvement was a result of the Company’s continued focus on improving revenue quality in the Truck segment. Higher revenue per loaded mile, an intense focus on freight selection and reduced empty miles were a result of the Truck segment’s yield management initiatives.
Fourth quarter 2002 net earnings were $14.7 million or 37 cents per diluted share, compared with 2001 fourth quarter earnings of $18.2 million, or 50 cents per diluted share. The fourth quarter earnings for 2002 were negatively influenced by a higher income tax rate, higher insurance and claims costs, and a loss incurred on a terminal facility that the Company has agreed to sell. As previously reported, the fourth quarter of 2001 benefited from a change in the method of estimating ultimate losses relating to liability and workers’ compensation claims. Total operating revenue for the fourth quarter of 2002 was $597.7 million, compared with $546.2 million in 2001. Reflecting current industry trends, insurance premium costs were higher in 2002 and accident costs, particularly in the fourth quarter, rose significantly. For the first nine months of 2002, the Company’s estimated effective income tax rate for the full-year 2002 had been estimated at 25%. Given the continued improvement in earnings, the tax rate was increased to 42% during the fourth quarter of 2002, to achieve an overall effective income tax rate of approximately 31% for the full year, compared to 23.5% for the full year of 2001. Also, during the fourth quarter of 2002, the Company agreed to sell a terminal facility that resulted in a loss of approximately 1 cent per share. The sale will result in lower future operating expenses, primarily in the Truck business segment.
During the fourth quarter, the Truck, Intermodal and Dedicated Contract Services (DCS) operating segments posted operating ratios of 96.3%, 91.1% and 97.9% respectively. Truck and DCS operating ratios reflect the additional costs incurred in insurance and claims, while Intermodal recorded a record operating performance.
As previously reported during 2002, the Company’s Intermodal segment completed a sizeable investment in converting the entire container fleet to stackable 53-foot units. The combination of this uniform fleet of the most efficient boxes available plus outstanding railroad service allowed the Company to record the best asset velocity in the segment’s history. Box turns, which measure the number of loads per month per container, rose nearly 4% in the fourth quarter of
2002 to the highest in history. The better velocity and the improved railroad service levels, along with a new incentive compensation package for the Intermodal drivers, also allowed the dray fleet to improve its productivity by almost 14%. A strong focus on revenue quality and close attention to dray and other costs contributed to the outstanding performance in Intermodal as well.
Truck rates continued the trend of the last several quarters by increasing 4.9% while empty miles declined to 9.3% in the 2002 fourth quarter vs. 12.0% in 2001. Revenue per truck per day in the Truck segment increased to $564 in the fourth quarter of 2002 vs. $525 per day in the fourth quarter of 2001. For the first time ever, revenue per truck per day surpassed the Company's target of $600 per day achieving $601 in November of 2002. The loss on the sale of a terminal facility negatively impacted the Truck operating ratio by roughly 30 basis points.
Improvements in the quality and profitability of individual DCS projects, a reduction in driver pay as a percent of revenue, and a reduction in administrative headcount relative to revenue, were overshadowed by unusually high claims costs, lingering start-up costs on a number of major projects equaling approximately 600 trucks initiated mid-year, and the elimination of some non-performing projects. The negative impact on the operating ratio for DCS during the quarter for the higher accident and claims cost was approximately 180 basis points. Management expects the new projects to produce more earnings as they continue to stabilize. Improvement in the new projects was evident as the fourth quarter progressed. DCS showed positive trends in fleet productivity with revenue per tractor per day up 6.3%. The DCS tractor fleet finished the fourth quarter of 2002 with over 300 more power units than the fourth quarter of 2001, and achieved an all time high in revenue per truck per day which resulted in a 14% increase in top-line revenue. As rate increases are applied to existing projects, non-performing projects are replaced and new start-ups reach optimum profitability, management expects to see continued improvement in operating earnings in the DCS segment.
Earnings for 2002 exceeded management expectations, as actual EPS was approximately 10% higher than the Company’s internal financial plan projected in December of 2001. Revenues were within 1% of the original plan. Similarly, the Company’s financial plan for 2003 anticipates continued margin improvement in the Company’s operations. Given an economy that does not lose ground or other unforeseen major impediments like a severe deterioration in the geopolitical environment, the Company is comfortable with the range of analysts estimates for the full year of 2003, but reminds investors that no more than 10% of the Company’s annual earnings have occurred in the first quarter of the last two years. Given the lackluster economy and shipping volumes experienced so far in January, management believes this trend will continue in 2003. The 2003 internal financial plan anticipates the composition of earnings, on a percentage basis, will follow a similar quarterly distribution as in 2002.
This press release contains 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 7 of the Company’s Annual Report filed on Form 10-K for the year ended December 31, 2001. The Company assumes no obligation to update any forward-looking statement to the extent it becomes aware that it will not be achieved for any reason. This press release and related information will be available immediately to interested parties at the Company’s web site, www.jbhunt.com.
2
J.B. HUNT TRANSPORT SERVICES, INC.
Condensed Consolidated Statements of Earnings
(in thousands, except per share data)
(unaudited)
|
| Three Months Ended December 31 |
| ||||||||
|
| 2002 |
| 2001 |
| ||||||
|
|
|
| % Of |
|
|
|
| % Of |
| |
|
| Amount |
| Revenue |
| Amount |
| Revenue |
| ||
|
|
|
|
|
|
|
|
|
| ||
Operating revenues |
| $ | 597,665 |
| 100.0 | % | $ | 546,240 |
| 100.0 | % |
|
|
|
|
|
|
|
|
|
| ||
Operating expenses |
|
|
|
|
|
|
|
|
| ||
Salaries, wages and employee benefits |
| 206,166 |
| 34.5 | % | 195,869 |
| 35.9 | % | ||
Rents and purchased transportation |
| 191,055 |
| 32.0 | % | 167,980 |
| 30.8 | % | ||
Fuel and fuel taxes |
| 57,842 |
| 9.7 | % | 48,311 |
| 8.8 | % | ||
Depreciation and amortization |
| 37,494 |
| 6.3 | % | 36,188 |
| 6.6 | % | ||
Operating supplies and expenses |
| 33,242 |
| 5.6 | % | 37,012 |
| 6.8 | % | ||
Insurance and claims |
| 18,054 |
| 3.0 | % | 5,037 |
| 0.9 | % | ||
Operating taxes and licenses |
| 7,760 |
| 1.3 | % | 7,562 |
| 1.4 | % | ||
General and administrative expenses, net of gains |
| 9,627 |
| 1.6 | % | 5,951 |
| 1.1 | % | ||
Communication and utilities |
| 5,629 |
| 0.9 | % | 6,255 |
| 1.1 | % | ||
Total operating expenses |
| 566,869 |
| 94.8 | % | 510,165 |
| 93.4 | % | ||
Operating income |
| 30,796 |
| 5.2 | % | 36,075 |
| 6.6 | % | ||
Interest expense |
| (5,472 | ) | (0.9% | ) | (9,036 | ) | (1.7% | ) | ||
Equity in earnings (loss) of associated companies |
| 71 |
| 0.0 | % | (1,324 | ) | (0.2% | ) | ||
Earnings before income taxes |
| 25,395 |
| 4.2 | % | 25,715 |
| 4.7 | % | ||
Income taxes |
| 10,668 |
| 1.8 | % | 7,532 |
| 1.4 | % | ||
Net earnings |
| $ | 14,727 |
| 2.5 | % | $ | 18,183 |
| 3.3 | % |
Average basic shares outstanding |
| 39,292 |
|
|
| 35,974 |
|
|
| ||
Basic earnings per share |
| $ | 0.37 |
|
|
| $ | 0.51 |
|
|
|
Average diluted shares outstanding |
| 40,307 |
|
|
| 36,275 |
|
|
| ||
Diluted earnings per share |
| $ | 0.37 |
|
|
| $ | 0.50 |
|
|
|
Condensed Consolidated Statements of Earnings
(in thousands, except per share data)
(unaudited)
|
| Twelve Months Ended December 31 |
| ||||||||
|
| 2002 |
| 2001 |
| ||||||
|
|
|
| % Of |
|
|
| % Of |
| ||
|
| Amount |
| Revenue |
| Amount |
| Revenue |
| ||
|
|
|
|
|
|
|
|
|
| ||
Operating revenues |
| $ | 2,247,886 |
| 100.0 | % | $ | 2,100,305 |
| 100.0 | % |
|
|
|
|
|
|
|
|
|
| ||
Operating expenses |
|
|
|
|
|
|
|
|
| ||
Salaries, wages and employee benefits |
| 818,318 |
| 36.4 | % | 790,210 |
| 37.6 | % | ||
Rents and purchased transportation |
| 698,456 |
| 31.1 | % | 604,542 |
| 28.8 | % | ||
Fuel and fuel taxes |
| 210,632 |
| 9.4 | % | 226,101 |
| 10.8 | % | ||
Depreciation and amortization |
| 145,848 |
| 6.5 | % | 142,755 |
| 6.8 | % | ||
Operating supplies and expenses |
| 130,853 |
| 5.8 | % | 145,850 |
| 6.9 | % | ||
Insurance and claims |
| 56,132 |
| 2.5 | % | 42,381 |
| 2.0 | % | ||
Operating taxes and licenses |
| 32,797 |
| 1.5 | % | 32,616 |
| 1.6 | % | ||
General and administrative expenses, net of gains |
| 30,029 |
| 1.3 | % | 19,282 |
| 0.9 | % | ||
Communication and utilities |
| 23,859 |
| 1.1 | % | 24,358 |
| 1.2 | % | ||
Total operating expenses |
| 2,146,924 |
| 95.5 | % | 2,028,095 |
| 96.6 | % | ||
Operating income |
| 100,962 |
| 4.5 | % | 72,210 |
| 3.4 | % | ||
Interest expense |
| (24,762 | ) | (1.1% | ) | (27,044 | ) | (1.3% | ) | ||
Equity in earnings (loss) of associated companies |
| (1,353 | ) | (0.1% | ) | (2,083 | ) | (0.1% | ) | ||
Earnings before income taxes |
| 74,847 |
| 3.3 | % | 43,083 |
| 2.1 | % | ||
Income taxes |
| 23,031 |
| 1.0 | % | 10,138 |
| 0.5 | % | ||
Net earnings |
| $ | 51,816 |
| 2.3 | % | $ | 32,945 |
| 1.6 | % |
Average basic shares outstanding |
| 37,984 |
|
|
| 35,602 |
|
|
| ||
Basic earnings per share |
| $ | 1.36 |
|
|
| $ | 0.93 |
|
|
|
Average diluted shares outstanding |
| 39,042 |
|
|
| 36,199 |
|
|
| ||
Diluted earnings per share |
| $ | 1.33 |
|
|
| $ | 0.91 |
|
|
|
3
Financial Information By Segment |
(dollars in thousands) |
(unaudited) |
|
| Three Months Ended December 31 |
| ||||
|
| 2002 |
| 2001 |
| ||
|
|
|
|
|
| ||
Gross revenue |
|
|
|
|
| ||
|
|
|
|
|
| ||
Truck |
| $ | 213,097 |
| $ | 203,116 |
|
Intermodal |
| 218,499 |
| 198,400 |
| ||
Dedicated |
| 169,767 |
| 148,631 |
| ||
Logistics |
| (1 | ) | (57 | ) | ||
Subtotal |
| 601,362 |
| 550,090 |
| ||
Intersegment eliminations |
| (3,697 | ) | (3,850 | ) | ||
Consolidated revenue |
| $ | 597,665 |
| $ | 546,240 |
|
|
|
|
|
|
| ||
Operating income (loss) |
|
|
|
|
| ||
|
|
|
|
|
| ||
Truck |
| $ | 7,841 |
| $ | 4,296 |
|
Intermodal |
| 19,543 |
| 13,248 |
| ||
Dedicated |
| 3,481 |
| 6,495 |
| ||
Logistics and other (1) |
| (69 | ) | 12,036 |
| ||
Operating income |
| $ | 30,796 |
| $ | 36,075 |
|
|
| Twelve Months Ended December 31 |
| ||||
|
| 2002 |
| 2001 |
| ||
Gross revenue |
|
|
|
|
| ||
|
|
|
|
|
| ||
Truck |
| $ | 827,348 |
| $ | 828,577 |
|
Intermodal |
| 809,087 |
| 740,491 |
| ||
Dedicated |
| 628,348 |
| 548,749 |
| ||
Logistics |
| (5 | ) | (95 | ) | ||
Subtotal |
| 2,264,778 |
| 2,117,722 |
| ||
Intersegment eliminations |
| (16,892 | ) | (17,417 | ) | ||
Consolidated revenue |
| $ | 2,247,886 |
| $ | 2,100,305 |
|
|
|
|
|
|
| ||
Operating income (loss) |
|
|
|
|
| ||
|
|
|
|
|
| ||
Truck |
| $ | 26,625 |
| $ | 8,708 |
|
Intermodal |
| 54,558 |
| 42,082 |
| ||
Dedicated |
| 19,666 |
| 17,419 |
| ||
Logistics and other (1) |
| 113 |
| 4,001 |
| ||
Operating income |
| $ | 100,962 |
| $ | 72,210 |
|
(1) Includes unallocated corporate support and insurance amounts.
4
Operating Statistics by Segment |
(unaudited) |
|
| Three Months Ended December 31 |
| ||||
|
| 2002 |
| 2001 |
| ||
Truck |
|
|
|
|
| ||
Operating ratio |
| 96.3 | % | 97.9 | % | ||
Loads |
| 234,077 |
| 233,981 |
| ||
Net revenue (excl. fuel surcharge) per tractor per week |
| $ | 2,818 |
| $ | 2,624 |
|
Length of haul |
| 565 |
| 583 |
| ||
RPLM (excl. fsc) |
| 1.472 |
| 1.403 |
| ||
Loaded miles (000) |
| 134,867 |
| 137,580 |
| ||
Total miles (000) |
| 148,636 |
| 156,326 |
| ||
Empty miles % |
| 9.3 | % | 12.0 | % | ||
Average tractors during the period |
| 5,589 |
| 5,826 |
| ||
Tractors (end of period) |
|
|
|
|
| ||
Company owned |
| 4,924 |
| 5,382 |
| ||
Independent contractor |
| 679 |
| 336 |
| ||
Total tractors |
| 5,603 |
| 5,718 |
| ||
Trailers (end of period) |
| 20,382 |
| 20,948 |
| ||
Avg. effective trailing equip. usage* |
| 15,283 |
| 15,677 |
| ||
|
|
|
|
|
| ||
Intermodal |
|
|
|
|
| ||
Operating ratio |
| 91.1 | % | 93.3 | % | ||
Loads |
| 123,216 |
| 117,075 |
| ||
Net change in revenue per loaded mile (excl. fsc) |
| 0.6 | % | 2.4 | % | ||
Revenue per load (excl. fsc) |
| $ | 1,726 |
| $ | 1,662 |
|
Tractors (end of period) |
| 917 |
| 910 |
| ||
Containers (end of period) |
| 19,672 |
| 18,711 |
| ||
Avg. effective trailing equip. usage* |
| 19,204 |
| 17,927 |
| ||
|
|
|
|
|
| ||
Dedicated |
|
|
|
|
| ||
Operating ratio |
| 97.9 | % | 95.6 | % | ||
Loads |
| 355,235 |
| 322,315 |
| ||
Net revenue (excl. fuel surcharge) per tractor per week |
| $ | 2,749 |
| $ | 2,586 |
|
Average tractors during the period |
| 4,828 |
| 4,530 |
| ||
Tractors (end of period) |
| 4,812 |
| 4,478 |
| ||
Trailers (end of period) |
| 5,705 |
| 4,631 |
| ||
Avg. effective trailing equip. usage* |
| 11,459 |
| 10,766 |
| ||
|
| Twelve Months Ended December 31 |
| ||||
|
| 2002 |
| 2001 |
| ||
Truck |
|
|
|
|
| ||
Operating ratio |
| 96.8 | % | 98.9 | % | ||
Loads |
| 970,055 |
| 946,672 |
| ||
Net revenue (excl. fuel surcharge) per tractor per week |
| $ | 2,695 |
| $ | 2,575 |
|
Length of haul |
| 556 |
| 590 |
| ||
RPLM (excl. fsc) |
| 1.434 |
| 1.374 |
| ||
Loaded miles (000) |
| 545,480 |
| 569,715 |
| ||
Total miles (000) |
| 601,775 |
| 647,514 |
| ||
Empty miles % |
| 9.4 | % | 12.0 | % | ||
Average tractors during the period |
| 5,751 |
| 5,923 |
| ||
Tractors (end of period) |
|
|
|
|
| ||
Company owned |
| 4,924 |
| 5,382 |
| ||
Independent contractor |
| 679 |
| 336 |
| ||
Total tractors |
| 5,603 |
| 5,718 |
| ||
Trailers (end of period) |
| 20,382 |
| 20,948 |
| ||
Avg. effective trailing equip. usage* |
| 15,591 |
| 16,222 |
| ||
|
|
|
|
|
| ||
Intermodal |
|
|
|
|
| ||
Operating ratio |
| 93.3 | % | 94.3 | % | ||
Loads |
| 473,856 |
| 446,569 |
| ||
Net change in revenue per loaded mile (excl. fsc) |
| 0.6 | % | 1.7 | % | ||
Revenue per load (excl. fsc) |
| $ | 1,680 |
| $ | 1,612 |
|
Tractors (end of period) |
| 917 |
| 910 |
| ||
Containers (end of period) |
| 19,672 |
| 18,711 |
| ||
Avg. effective trailing equip. usage* |
| 18,517 |
| 18,845 |
| ||
|
|
|
|
|
| ||
Dedicated |
|
|
|
|
| ||
Operating ratio |
| 96.9 | % | 96.8 | % | ||
Loads |
| 1,382,049 |
| 1,146,676 |
| ||
Net revenue (excl. fuel surcharge) per tractor per week |
| $ | 2,667 |
| $ | 2,498 |
|
Average tractors during the period |
| 4,602 |
| 4,235 |
| ||
Tractors (end of period) |
| 4,812 |
| 4,478 |
| ||
Trailers (end of period) |
| 5,705 |
| 4,631 |
| ||
Avg. effective trailing equip. usage* |
| 10,860 |
| 9,515 |
| ||
* Reflects intra business unit use of trailing equipment
5
Selected Balance Sheet Data |
(dollars in thousands) |
(unaudited) |
|
| December |
| December |
| ||
|
| 2002 |
| 2001 |
| ||
|
|
|
|
|
| ||
Current assets |
| $ | 433,182 |
| $ | 384,799 |
|
|
|
|
|
|
| ||
Total assets |
| 1,318,728 |
| 1,260,298 |
| ||
|
|
|
|
|
| ||
Current liabilities |
| 325,329 |
| 265,834 |
| ||
|
|
|
|
|
| ||
Total debt and capitalized leases |
| 343,114 |
| 392,032 |
| ||
|
|
|
|
|
| ||
Stockholders' equity |
| 590,487 |
| 458,317 |
| ||
6
