Exhibit 99.1
J.B. Hunt Transport Services, Inc. |
| Contact: | Kirk Thompson |
615 J.B. Hunt Corporate Drive |
|
| President and |
Lowell, Arkansas 72745 |
|
| Chief Executive Officer |
(NASDAQ: JBHT) |
|
| (479) 820-8110 |
FOR IMMEDIATE RELEASE
J. B. HUNT TRANSPORT SERVICES, INC. REPORTS RECORD REVENUES AND EARNINGS
FOR THE SECOND QUARTER OF 2003
LOWELL, ARKANSAS, July 15, 2003 - J. B. Hunt Transport Services, Inc., (NASDAQ:JBHT) announced second quarter 2003 net earnings of $25.1 million, or diluted earnings per share of 62 cents, compared with 2002 second quarter earnings of $15.5 million, or 40 cents per diluted share.
Total operating revenue for the current quarter was $600 million, compared with $557 million during the second quarter of 2002. During the second quarter of 2003, revenues of the Company’s Truck segment fell 2%, while the Intermodal segment revenue rose 14% over the comparable period of 2002. Dedicated segment (DCS) revenue increased 12% during the current quarter.
“Earnings improved significantly in the quarter as the operating ratios in each of our three operating segments showed substantial improvement. As we have been saying now for a couple of years, our Company has embraced the strategy of utilizing the three business segments as our basic service offering and achieving best-in-class customer service, safety and profitability as our overall goals. Given the success over the past 9 quarters at improving the Truck operating ratio relative to the comparable period, the obvious attainment of a new level of profitability in our Intermodal operations, and the return to a more normalized profitability of our DCS group, we are extremely pleased with the progress at delivering the profitability improvement we had anticipated and remain confident in our ability to achieve meaningful earnings growth and shareholder returns going forward,” stated Kirk Thompson, President and Chief Executive Officer. “While the improvement is gratifying, we are still short of our profitability goals of 90% or better operating ratios in each of the segments. We will continue to press on toward those goals.”
The Truck operating ratio was 94.0% for the quarter, an 80 basis point improvement vs. the comparable period last year. Revenue for the Truck segment declined to $208 million from $212 million as the truck fleet was reduced by approximately 300 units vs. the same quarter a year ago. The improvement in the Truck business segment continues a trend of reaching the Company’s stated objective of returning to acceptable margins. Net revenue (excluding fuel surcharges) per tractor per day improved to $541 or 1% over the second quarter of 2002, in spite of a decline in miles per tractor. Contributing to the decline in miles was the continuing slowness of the economy, particularly after the Easter holiday. Utilization of tractors, as measured by miles per truck per day, continued to be less than acceptable due to the lackluster economy. However, rate yields continued to improve as the loaded rate per mile (excluding fuel surcharges) increased
5.1% relative to a year ago. The end of June generated a spike in demand to the point that extra empty miles were incurred to provide needed capacity to some customers. Thus, the combination of sagging post-Easter demand and the increase in empty miles driven to reposition equipment to provide service to customers near the end of the quarter drove empty miles up slightly to 10.0% vs. 9.1% for the second quarter a year ago (even though we are paid for empty miles by some customers to meet their repositioning requests, we continue to categorize those paid empty miles as empty in calculating the empty mile percentage). The higher rates are a result of the Company’s yield management initiatives and price increases implemented to address the higher costs affecting the truckload industry. One of the significant cost increases that has plagued the trucking industry in recent months has been the spike in insurance and claims costs. Reflecting the significant risk associated with operating a large fleet of trucks on America’s congested highways, our Truck segment incurred a 59% increase in insurance and claims cost, or approximately 150 basis points on the operating ratio, during the quarter relative to a year ago. Contributing to the higher costs was an increase in insurance premiums and a number of costly accidents in April. May and June were, on the other hand, exceptionally good months from a safety perspective. We continue to put safe operations at the top of our priorities. While the improvement in profitability is noteworthy, the Company believes there is potential for further improvement. Better returns in the Truck segment are a prerequisite for re-investment in the truckload business. The Company has no plans to add capacity in the Truck segment until satisfactory margins are achieved. The average number of trucks was 5,610 for the second quarter of 2003 and 5,902 for the second quarter of 2002.
In the Intermodal segment, the operating ratio was 90.3% for the second quarter of 2003, a 400 basis point improvement over the same quarter a year ago. Intermodal revenue rose to $226 million from $198 million in the second quarter of 2002. Significant cost reductions in the area of both tractor and container maintenance contributed to the improved margin. These cost reductions, along with an improvement in utilization of the assets, are a direct result of the replacement of 1/3 of the container fleet in 2002 and a significant continuing investment in new tractors and containers in 2003. The combined capital outlay for the conversion of the container fleet to 100% 53-foot containers and the replacement of a substantial part of the dray fleet was approximately $162 million over the two-year period. Dray costs per load, the pick-up and delivery portion of the intermodal move, were down 3% in the second quarter of 2003 vs. a year ago, positively impacting profitability. As in the Truck segment, yield management activity in Intermodal resulted in a more profitable freight mix by successfully de-emphasizing less profitable lanes. Utilization of company containers as measured in turns per month reached record levels during the quarter and improved 3% vs. a year ago. Intermodal demand was strong throughout the quarter. Intermodal revenue per loaded mile (excluding fuel surcharge) was up 0.7% when compared with the same period in 2002.
The operating ratio for the DCS segment was the best in the last 12 quarters at 92.9% for the current quarter, a 260 basis point improvement over the same period a year ago. Revenue per tractor per day increased 7.8%. While the truck fleet increased only 3%, DCS segment revenue rose 12%, to $169 million in 2003, from $151 million in 2002 and operating income was a record $12 million in the current quarter. Improved profits were driven by better asset utilization, improved productivity and pricing, expense controls and lower startup costs associated with new business vs. a year ago. DCS focus on asset utilization continued as idle capacity declined 66% year-over-year, loaded miles per load increased by 11%, backhaul volume increased by 5% and empty mile percent declined by 147 basis points. Also benefiting productivity was an increase in revenue per backhaul load of 4%. Expense controls continue to be a key initiative for DCS. A decrease in administrative headcount by 5.5% resulted in leverage as evidenced by a 16% improvement in the revenue per non-driver employee. Likewise, driver pay as a percent of net revenue (excluding fuel surcharge) declined by 189 basis points year over year. Maintenance costs declined 99 basis points largely due to a 16% reduction in age of tractor fleet. These cost savings were partially offset by increased insurance and claims expense. The average number of trucks was 4,519 for the second quarter of 2003 vs. 4,404 for the second quarter of 2002. DCS is focused on strategic asset deployment in areas where utilization and productivity are maximized
2
as well as cost control which will continue to play a key role in consistent operating margin improvement.
This report 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 our Annual Report filed on Form 10-K for the year ended December 31, 2002. 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 related information will be available immediately to interested parties on our web site: www.jbhunt.com.
3
J.B. HUNT TRANSPORT SERVICES, INC.
Condensed Consolidated Statements of Earnings
(in thousands, except per share data)
(unaudited)
|
| Three Months Ended June 30 |
| ||||||||
|
| 2003 |
| 2002 |
| ||||||
|
| Amount |
| % Of |
| Amount |
| % Of |
| ||
|
|
|
|
|
|
|
|
|
| ||
Operating revenues |
| $ | 599,866 |
| 100.0 | % | $ | 557,328 |
| 100.0 | % |
|
|
|
|
|
|
|
|
|
| ||
Operating expenses |
|
|
|
|
|
|
|
|
| ||
Salaries, wages and employee benefits |
| 195,551 |
| 32.6 | % | 202,833 |
| 36.4 | % | ||
Rents and purchased transportation |
| 194,017 |
| 32.3 | % | 169,591 |
| 30.4 | % | ||
Fuel and fuel taxes |
| 54,291 |
| 9.1 | % | 50,982 |
| 9.1 | % | ||
Depreciation and amortization |
| 37,273 |
| 6.2 | % | 35,920 |
| 6.4 | % | ||
Operating supplies and expenses |
| 30,014 |
| 5.0 | % | 33,299 |
| 6.0 | % | ||
Insurance and claims |
| 17,746 |
| 3.0 | % | 13,704 |
| 2.5 | % | ||
Operating taxes and licenses |
| 8,143 |
| 1.4 | % | 8,339 |
| 1.5 | % | ||
General and administrative expenses, net of gains |
| 10,389 |
| 1.7 | % | 8,153 |
| 1.5 | % | ||
Communication and utilities |
| 6,004 |
| 1.0 | % | 5,998 |
| 1.1 | % | ||
Total operating expenses |
| 553,426 |
| 92.3 | % | 528,819 |
| 94.9 | % | ||
Operating income |
| 46,440 |
| 7.7 | % | 28,509 |
| 5.1 | % | ||
Interest expense |
| (5,279 | ) | (0.9 | )% | (6,913 | ) | (1.2 | )% | ||
Equity in earnings (loss) of associated companies |
| (154 | ) | (0.0 | )% | (830 | ) | (0.2 | )% | ||
Earnings before income taxes |
| 41,007 |
| 6.8 | % | 20,766 |
| 3.7 | % | ||
Income taxes |
| 15,878 |
| 2.6 | % | 5,287 |
| 0.9 | % | ||
Net earnings |
| $ | 25,129 |
| 4.2 | % | $ | 15,479 |
| 2.8 | % |
Average basic shares outstanding |
| 39,513 |
|
|
| 37,107 |
|
|
| ||
Basic earnings per share |
| $ | 0.64 |
|
|
| $ | 0.42 |
|
|
|
Average diluted shares outstanding |
| 40,657 |
|
|
| 38,302 |
|
|
| ||
Diluted earnings per share |
| $ | 0.62 |
|
|
| $ | 0.40 |
|
|
|
|
| Six Months Ended June 30 |
| ||||||||
|
| 2003 |
| 2002 |
| ||||||
|
| Amount |
| % Of |
| Amount |
| % Of |
| ||
|
|
|
|
|
|
|
|
|
| ||
Operating revenues |
| $ | 1,171,079 |
| 100.0 | % | $ | 1,067,549 |
| 100.0 | % |
|
|
|
|
|
|
|
|
|
| ||
Operating expenses |
|
|
|
|
|
|
|
|
| ||
Salaries, wages and employee benefits |
| 386,637 |
| 33.0 | % | 398,528 |
| 37.3 | % | ||
Rents and purchased transportation |
| 378,098 |
| 32.3 | % | 325,645 |
| 30.5 | % | ||
Fuel and fuel taxes |
| 119,692 |
| 10.2 | % | 97,962 |
| 9.2 | % | ||
Depreciation and amortization |
| 74,809 |
| 6.4 | % | 71,904 |
| 6.8 | % | ||
Operating supplies and expenses |
| 59,729 |
| 5.1 | % | 65,146 |
| 6.1 | % | ||
Insurance and claims |
| 35,191 |
| 3.0 | % | 24,664 |
| 2.3 | % | ||
Operating taxes and licenses |
| 16,402 |
| 1.4 | % | 16,327 |
| 1.5 | % | ||
General and administrative expenses, net of gains |
| 18,212 |
| 1.6 | % | 12,965 |
| 1.2 | % | ||
Communication and utilities |
| 12,007 |
| 1.0 | % | 12,269 |
| 1.2 | % | ||
Total operating expenses |
| 1,100,779 |
| 94.0 | % | 1,025,409 |
| 96.1 | % | ||
Operating income |
| 70,299 |
| 6.0 | % | 42,140 |
| 3.9 | % | ||
Interest expense |
| (10,687 | ) | (0.9 | )% | (13,749 | ) | (1.3 | )% | ||
Equity in earnings (loss) of associated companies |
| (577 | ) | (0.1 | )% | (1,280 | ) | (0.1 | )% | ||
Earnings before income taxes |
| 59,036 |
| 5.0 | % | 27,111 |
| 2.5 | % | ||
Income taxes |
| 22,729 |
| 1.9 | % | 6,778 |
| 0.6 | % | ||
Net earnings |
| $ | 36,307 |
| 3.1 | % | $ | 20,333 |
| 1.9 | % |
Average basic shares outstanding |
| 39,427 |
|
|
| 36,688 |
|
|
| ||
Basic earnings per share |
| $ | 0.92 |
|
|
| $ | 0.55 |
|
|
|
Average diluted shares outstanding |
| 40,473 |
|
|
| 37,788 |
|
|
| ||
Diluted earnings per share |
| $ | 0.90 |
|
|
| $ | 0.54 |
|
|
|
4
Financial Information By Segment
(dollars in thousands)
(unaudited)
|
| Three Months Ended June 30 |
| ||||
|
| 2003 |
| 2002 |
| ||
|
|
|
|
|
| ||
Gross revenue |
|
|
|
|
| ||
Truck |
| $ | 207,913 |
| $ | 211,858 |
|
Intermodal |
| 226,366 |
| 198,241 |
| ||
Dedicated |
| 169,261 |
| 151,325 |
| ||
Logistics |
| — |
| (1 | ) | ||
Subtotal |
| 603,540 |
| 561,423 |
| ||
Intersegment eliminations |
| (3,674 | ) | (4,095 | ) | ||
Consolidated revenue |
| $ | 599,866 |
| $ | 557,328 |
|
|
|
|
|
|
| ||
Operating income (loss) |
|
|
|
|
| ||
Truck |
| $ | 12,386 |
| $ | 10,925 |
|
Intermodal |
| 21,931 |
| 11,286 |
| ||
Dedicated |
| 12,088 |
| 6,744 |
| ||
Logistics and other (1) |
| 35 |
| (446 | ) | ||
Operating income |
| $ | 46,440 |
| $ | 28,509 |
|
|
| Six Months Ended June 30 |
| ||||
|
| 2003 |
| 2002 |
| ||
|
|
|
|
|
| ||
Gross revenue |
|
|
|
|
| ||
Truck |
| $ | 407,425 |
| $ | 399,587 |
|
Intermodal |
| 440,948 |
| 383,713 |
| ||
Dedicated |
| 330,847 |
| 294,194 |
| ||
Logistics |
| (1 | ) | (2 | ) | ||
Subtotal |
| 1,179,219 |
| 1,077,492 |
| ||
Intersegment eliminations |
| (8,140 | ) | (9,943 | ) | ||
Consolidated revenue |
| $ | 1,171,079 |
| $ | 1,067,549 |
|
|
|
|
|
|
| ||
Operating income (loss) |
|
|
|
|
| ||
Truck |
| $ | 13,691 |
| $ | 8,735 |
|
Intermodal |
| 40,780 |
| 21,795 |
| ||
Dedicated |
| 15,829 |
| 12,065 |
| ||
Logistics and other (1) |
| (1 | ) | (455 | ) | ||
Operating income |
| $ | 70,299 |
| $ | 42,140 |
|
(1) Includes unallocated corporate support and insurance expenses.
5
Operating Statistics by Segment
(unaudited)
|
| Three Months Ended June 30 |
| ||||
|
| 2003 |
| 2002 |
| ||
|
|
|
|
|
| ||
Truck |
|
|
|
|
| ||
Operating ratio |
| 94.0 | % | 94.8 | % | ||
Loads |
| 241,510 |
| 259,380 |
| ||
Net revenue (excl. fuel surcharge) per tractor per week |
| $ | 2,703 |
| $ | 2,675 |
|
Length of haul |
| 531 |
| 544 |
| ||
RPLM (excl.fsc) |
| $ | 1.490 |
| $ | 1.418 |
|
Loaded miles (000) |
| 130,028 |
| 142,052 |
| ||
Total miles (000) |
| 144,399 |
| 156,318 |
| ||
Empty miles % |
| 10.0 | % | 9.1 | % | ||
Average tractors during the period |
| 5,610 |
| 5,902 |
| ||
Tractors (end of period) |
|
|
|
|
| ||
Company owned |
| 4,745 |
| 5,238 |
| ||
Independent contractor |
| 845 |
| 524 |
| ||
Total tractors |
| 5,590 |
| 5,762 |
| ||
Trailers (end of period) |
| 19,926 |
| 20,831 |
| ||
Average effective trailing equipment usage |
| 14,932 |
| 16,013 |
| ||
|
|
|
|
|
| ||
Intermodal |
|
|
|
|
| ||
Operating ratio |
| 90.3 | % | 94.3 | % | ||
Loads |
| 128,127 |
| 118,675 |
| ||
Net change in revenue per loaded mile (excl. fsc) |
| 0.7 | % | 0.5 | % | ||
Revenue per load (excl. fsc) |
| 1,700 |
| 1,649 |
| ||
Tractors (end of period) |
| 936 |
| 918 |
| ||
Containers (end of period) |
| 19,770 |
| 19,024 |
| ||
Average effective trailing equipment usage |
| 19,347 |
| 18,135 |
| ||
|
|
|
|
|
| ||
Dedicated |
|
|
|
|
| ||
Operating ratio |
| 92.9 | % | 95.5 | % | ||
Loads |
| 348,516 |
| 345,661 |
| ||
Net revenue (excl. fuel surcharge) per tractor per week |
| $ | 2,862 |
| $ | 2,654 |
|
Average tractors during the period |
| 4,519 |
| 4,404 |
| ||
Tractors (end of period) |
| 4,474 |
| 4,550 |
| ||
Trailers (end of period) |
| 6,348 |
| 4,776 |
| ||
Average effective trailing equipment usage |
| 11,553 |
| 10,257 |
| ||
|
| Six Months Ended June 30 |
| ||||
|
| 2003 |
| 2002 |
| ||
|
|
|
|
|
| ||
Truck |
|
|
|
|
| ||
Operating ratio |
| 96.6 | % | 97.8 | % | ||
Loads |
| 469,890 |
| 488,677 |
| ||
Net revenue (excl. fuel surcharge) per tractor per week |
| $ | 2,650 |
| $ | 2,578 |
|
Length of haul |
| 539 |
| 551 |
| ||
RPLM (excl fsc) |
| $ | 1.470 |
| $ | 1.406 |
|
Loaded miles (000) |
| 256,977 |
| 271,476 |
| ||
Total miles (000) |
| 284,673 |
| 300,324 |
| ||
Empty miles % |
| 9.7 | % | 9.6 | % | ||
Average tractors during the period |
| 5,603 |
| 5,891 |
| ||
Tractors (end of period) |
|
|
|
|
| ||
Company owned |
| 4,745 |
| 5,238 |
| ||
Independent contractor |
| 845 |
| 524 |
| ||
Total tractors |
| 5,590 |
| 5,762 |
| ||
Trailers (end of period) |
| 19,926 |
| 20,831 |
| ||
Average effective trailing equipment usage |
| 14,925 |
| 15,709 |
| ||
|
|
|
|
|
| ||
Intermodal |
|
|
|
|
| ||
Operating ratio |
| 90.8 | % | 94.3 | % | ||
Loads |
| 248,982 |
| 229,445 |
| ||
Net change in revenue per loaded mile (excl. fsc) |
| 0.9 | % | 1.0 | % | ||
Revenue per load (excl. fsc) |
| 1,703 |
| 1,657 |
| ||
Tractors (end of period) |
| 936 |
| 918 |
| ||
Containers (end of period) |
| 19,770 |
| 19,024 |
| ||
Average effective trailing equipment usage |
| 19,289 |
| 18,036 |
| ||
|
|
|
|
|
| ||
Dedicated |
|
|
|
|
| ||
Operating ratio |
| 95.2 | % | 95.9 | % | ||
Loads |
| 669,804 |
| 663,156 |
| ||
Net revenue (excl. fuel surcharge) per tractor per week |
| $ | 2,749 |
| $ | 2,616 |
|
Average tractors during the period |
| 4,599 |
| 4,411 |
| ||
Tractors (end of period) |
| 4,474 |
| 4,550 |
| ||
Trailers (end of period) |
| 6,348 |
| 4,776 |
| ||
Average effective trailing equipment usage |
| 11,467 |
| 10,631 |
| ||
6
Selected Balance Sheet Data
(dollars in thousands)
(unaudited)
|
| June 30, |
| December 31, |
| June 30, |
| |||
|
|
|
|
|
|
|
| |||
Current assets |
| $ | 454,667 |
| $ | 433,181 |
| $ | 406,808 |
|
|
|
|
|
|
|
|
| |||
Total assets |
| 1,337,501 |
| 1,318,728 |
| 1,289,907 |
| |||
|
|
|
|
|
|
|
| |||
Current liabilities |
| 296,695 |
| 325,329 |
| 230,853 |
| |||
|
|
|
|
|
|
|
| |||
Total debt and capitalized leases |
| 323,004 |
| 343,115 |
| 368,330 |
| |||
|
|
|
|
|
|
|
| |||
Stockholders’ equity |
| 632,281 |
| 590,487 |
| 556,736 |
| |||
7
