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 REVENUES AND EARNINGS
FOR THE SECOND QUARTER 2008
| · | Second Quarter 2008 Revenue: | | $977 million; up 14% |
| · | Second Quarter 2008 Operating Income: | | $94 million; down 2% |
| · | Second Quarter 2008 EPS: | | 39 cents vs. 45 cents* |
| | * 2Q 2007 includes $10.3 million benefit, net of tax, (EPS impact 7 cents) for settlement of an IRS adjustment |
LOWELL, ARKANSAS, July 14, 2008 - J. B. Hunt Transport Services, Inc., (NASDAQ:JBHT) announced second quarter 2008 net earnings of $50.6 million, or diluted earnings per share of 39 cents vs. 2007 second quarter earnings of $63.9 million, or 45 cents per diluted share. Included in the second quarter 2007 results was a benefit of $10.3 million (EPS positive impact 7 cents), net of income taxes, resulting from the settlement of a tax adjustment by the IRS.
Total operating revenue for the current quarter was $977 million, a 14% increase from the $856 million for the second quarter 2007. The increase in operating revenue was primarily attributable to sharply higher fuel surcharge revenue and growth in our Intermodal (JBI) segment and our non-asset based Integrated Capacity Solutions (ICS) segment. Current quarter operating revenue, excluding fuel surcharges, increased 3% over the second quarter 2007. Containers and trailers grew from 55,886 to 60,290 over the same period. The growth in the fleet of containers and trailers was primarily to support additional intermodal business. The combined tractor fleet declined from 11,760 in the second quarter 2007 to 10,545 in the second quarter 2008, primarily due to our actions to reduce the size of the Truck segment fleet.
Operating income for the current quarter decreased slightly to $94.0 million vs. $96.2 million for the second quarter 2007. The income tax adjustment referred to above recorded in the second quarter of 2007 was related to a 1999 sale-and-leaseback transaction which had been disclosed previously. Our effective income tax rate for the current quarter increased to 39.0% in 2008, from 24.8% in 2007 which reflected the settlement of the IRS adjustment.
“We are delighted to report earnings per share growth in the second quarter 2008 (excluding the tax benefit in second quarter 2007) despite a significant freight recession and soaring fuel prices. We continue to offer our customers supply chain solutions that best suit their service and cost parameters without bias toward a particular mode or asset class. Importantly, this value enhancing strategy has allowed our customers to partially mitigate the impact of historically higher fuel prices by growing their use of intermodal vs. truckload. Whether it be saving our customers money on their transportation costs by converting truckload freight to intermodal, by offering true dedicated operations for service critical deliveries or by providing alternative outsourced capacity to complement our own trucks, we are committed to helping our customers achieve best-in-class performance of their supply chains. We are pleased to be able to achieve progress toward those goals and also produce higher earnings per share in this difficult environment,” said Kirk Thompson, JBHT President and CEO.
Segment Information:
Intermodal (JBI)
· | | Second Quarter 2008 Segment Revenue: | | $496 million; up 28% |
· | | Second Quarter 2008 Operating Income: | | $66.2 million; up 22% |
JBI revenue grew by 28% compared to the same quarter a year ago, driven mostly by load count that increased 17% and by higher fuel surcharge revenue. Results for the current quarter continue to reflect our customers’ confidence in our intermodal product as they look for alternatives to high fuel prices paid to over-the-road providers. As a result, our short haul loads continue to grow at a 40% plus pace. The resultant lane mix change drove overall length of haul down 4% and pricing up 2% in the current quarter.
JBI operating key factors continue to show positive results as both driver turnover and driver productivity improved during the current quarter. In conjunction with our eastern rail partner, Norfolk Southern Corporation (NSC), we have initiated service on more than a half dozen new intermodal lanes serving the Eastern half of the United States. While the initial volume impacts are expected to be small, our ability to meet new customer requests for over-the-road conversion to intermodal continues to expand. We are pleased with the execution of our network and operations by our experienced intermodal staff and in their ability to quickly adjust to a changing environment for the benefit of our customers.
Dedicated Contract Services (DCS)
· | | Second Quarter 2008 Segment Revenue: | | $243 million; up 3% |
· | | Second Quarter 2008 Operating Income: | | $22.2 million; down 11% |
DCS revenue grew 3% compared to the same quarter last year. Excluding the effect of fuel surcharges, revenue declined 6%. However, revenue per average truck per week, excluding the effect of fuel surcharges, increased 3%. This increase was partially due to a decline in average trucks to 4,715 units in the second quarter 2008 vs. 5,215 units in the second quarter 2007. The decline in truck count was driven primarily by reduction in the number of units that operate in more generic dedicated business which, by our definition, now stands at approximately 8% of our fleet. Truck count in the value-added, true dedicated business increased when compared to both the second quarter 2007 and first quarter 2008. Operating statistics in the second quarter 2008 vs. the same period last year reflect this change in business mix. Utilization was down 5% and loaded length of haul down 29 miles to 224 miles, while revenue per loaded mile, excluding fuel surcharge, was up 10%.
Operating income declined $2.7 million and the operating ratio increased 140 basis points to 90.9%. The increase in the cost of fuel and the corresponding increase in fuel surcharge revenue caused a dilutive effect on the operating ratio of 80 basis points. As fuel surcharge revenue increased, the operating ratio was negatively impacted due to the additional revenue with no attendant margin.
Truck (JBT)
· | | Second Quarter 2008 Segment Revenue: | | $192 million; down 14% |
· | | Second Quarter 2008 Operating Income: | | $3.4 million; down 79% |
JBT segment revenue declined 14%, primarily due to a 17% reduction in loads, compared to the second quarter 2007. We have continued to right-size our random tractor fleet, which resulted in a reduction of 1,085 tractors, or 22%, compared to the tractor counts at the end of the second quarter 2007. As a result, current quarter revenue declined 23%, excluding fuel surcharges. We continue to make progress selling the JBT segment revenue equipment that was designated as held for sale at December 31, 2007.
JBT’s overall rate per loaded mile, excluding fuel surcharges, increased 2.3% during the current quarter, compared to the prior year period. However, rates must increase in order for JBT to produce acceptable returns. Inability to achieve rapid improvement in profitability will result in further truck count reductions.
We continue to be challenged by steep rises in fuel prices and, as typical in the truckload industry, unrealistic fuel economy assumptions in most customer-specific fuel surcharge programs. Fuel increased dramatically during the quarter, climbing 70 cents per gallon, or 18%, from its low in early April. We incur non-billable fuel consumption from idle time and extra miles from deadheading and mileage guide variances. Higher fuel costs, net of fuel surcharge revenues, reduced JBT operating income by approximately $3.2 million compared to the second quarter last year. JBT is evaluating its most unfavorable customer-specific fuel surcharge programs and will begin aggressively seeking improvements to better recover the high cost of fuel.
Integrated Capacity Solutions (ICS)
· | | Second Quarter 2008 Segment Revenue: | | $53 million; up 214% |
· | | Second Quarter 2008 Operating Income: | | $2.3 million; up 238% |
ICS segment revenue increased 214% from the second quarter 2007. We continue to see steady revenue growth from new and existing customers, with revenues increasing 42% from the first quarter 2008, primarily driven by increased volumes. Second quarter net operating revenue (gross revenue less purchased transportation) increased 186% year over year.
Operating expenses increased 167% from the second quarter 2007, primarily due to employee growth throughout 2007 and 2008. Year over year employee count increased 191% from 2007. We continued to grow our workforce during the second quarter 2008, in anticipation of continued growth in the segment, with employees growing 32% from the first quarter 2008. Despite the significant growth in our workforce, operating expenses, as a percentage of net operating revenue, decreased to 68.5% in the second quarter from 69% in the first quarter 2008.
During the current quarter, we began offering cash advance and quickpay services to our carriers. Our third party carrier base grew 21% during the current quarter to over 12,700 carriers by quarter-end.
Cash Flow and Capitalization:
At June 30, 2008, we had cash and cash equivalents of $1.3 million. We reduced our total debt to $825 million at June 30, 2008 from $913 million at December 31, 2007. In addition, our net capital expenditures year-to-date approximated $110 million vs. $210 million during the same time a year ago.
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, 2007. 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 at our web site, 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 | |
| | 2008 | | 2007 | |
| | | | % Of | | | | % Of | |
| | Amount | | Revenue | | Amount | | Revenue | |
| | | | | | | | | |
Operating revenues, excluding fuel surcharge revenues | | $ | 763,303 | | | | $ | 742,573 | | | |
Fuel surcharge revenues | | 214,036 | | | | 113,287 | | | |
Total operating revenues | | 977,339 | | 100.0 | % | 855,860 | | 100.0 | % |
| | | | | | | | | |
Operating expenses | | | | | | | | | |
Rents and purchased transportation | | 377,433 | | 38.6 | % | 292,155 | | 34.2 | % |
Salaries, wages and employee benefits | | 220,961 | | 22.6 | % | 223,350 | | 26.1 | % |
Fuel and fuel taxes | | 157,637 | | 16.1 | % | 114,784 | | 13.4 | % |
Depreciation and amortization | | 50,728 | | 5.2 | % | 50,526 | | 5.9 | % |
Operating supplies and expenses | | 40,965 | | 4.2 | % | 38,880 | | 4.5 | % |
Insurance and claims | | 14,262 | | 1.5 | % | 16,774 | | 2.0 | % |
Operating taxes and licenses | | 8,120 | | 0.8 | % | 8,554 | | 1.0 | % |
General and administrative expenses, net of gains | | 8,584 | | 0.9 | % | 9,517 | | 1.1 | % |
Communication and utilities | | 4,604 | | 0.5 | % | 5,093 | | 0.6 | % |
Total operating expenses | | 883,294 | | 90.4 | % | 759,633 | | 88.8 | % |
Operating income | | 94,045 | | 9.6 | % | 96,227 | | 11.2 | % |
Net interest expense | | 10,065 | | 1.0 | % | 10,771 | | 1.3 | % |
Equity in loss of associated companies | | 1,023 | | 0.1 | % | 545 | | 0.1 | % |
Earnings before income taxes | | 82,957 | | 8.5 | % | 84,911 | | 9.9 | % |
Income taxes | | 32,353 | | 3.3 | % | 21,054 | | 2.5 | % |
Net earnings | | $ | 50,604 | | 5.2 | % | $ | 63,857 | | 7.5 | % |
Average diluted shares outstanding | | 128,476 | | | | 142,030 | | | |
Diluted earnings per share | | $ | 0.39 | | | | $ | 0.45 | | | |
J.B. HUNT TRANSPORT SERVICES, INC.
Condensed Consolidated Statements of Earnings
(in thousands, except per share data)
(unaudited)
| | Six Months Ended June 30 | |
| | 2008 | | 2007 | |
| | | | % Of | | | | % Of | |
| | Amount | | Revenue | | Amount | | Revenue | |
| | | | | | | | | |
Operating revenues, excluding fuel surcharge revenues | | $ | 1,487,474 | | | | $ | 1,449,045 | | | |
Fuel surcharge revenues | | 368,248 | | | | 204,266 | | | |
Total operating revenues | | 1,855,722 | | 100.0 | % | 1,653,311 | | 100.0 | % |
| | | | | | | | | |
Operating expenses | | | | | | | | | |
Rents and purchased transportation | | 708,108 | | 38.2 | % | 558,665 | | 33.8 | % |
Salaries, wages and employee benefits | | 434,596 | | 23.4 | % | 442,575 | | 26.8 | % |
Fuel and fuel taxes | | 291,639 | | 15.7 | % | 219,829 | | 13.3 | % |
Depreciation and amortization | | 101,267 | | 5.5 | % | 100,047 | | 6.0 | % |
Operating supplies and expenses | | 77,762 | | 4.2 | % | 75,441 | | 4.6 | % |
Insurance and claims | | 32,064 | | 1.7 | % | 34,076 | | 2.1 | % |
Operating taxes and licenses | | 16,173 | | 0.9 | % | 16,933 | | 1.0 | % |
General and administrative expenses, net of gains | | 18,114 | | 1.0 | % | 18,593 | | 1.1 | % |
Communication and utilities | | 9,898 | | 0.5 | % | 10,526 | | 0.6 | % |
Total operating expenses | | 1,689,621 | | 91.0 | % | 1,476,685 | | 89.3 | % |
Operating income | | 166,101 | | 9.0 | % | 176,626 | | 10.7 | % |
Net interest expense | | 21,572 | | 1.2 | % | 18,126 | | 1.1 | % |
Equity in loss of associated companies | | 1,878 | | 0.1 | % | 1,060 | | 0.1 | % |
Earnings before income taxes | | 142,651 | | 7.7 | % | 157,440 | | 9.5 | % |
Income taxes | | 55,634 | | 3.0 | % | 49,412 | | 3.0 | % |
Net earnings | | $ | 87,017 | | 4.7 | % | $ | 108,028 | | 6.5 | % |
Average diluted shares outstanding | | 128,195 | | | | 144,240 | | | |
Diluted earnings per share | | $ | 0.68 | | | | $ | 0.75 | | | |
Financial Information By Segment
(in thousands)
(unaudited)
| | Three Months Ended June 30 | |
| | 2008 | | 2007 | |
| | | | % Of | | | | % Of | |
| | Amount | | Total | | Amount | | Total | |
| | | | | | | | | |
Revenue | | | | | | | | | |
| | | | | | | | | |
Intermodal | | $ | 495,834 | | 51 | % | $ | 387,371 | | 45 | % |
Dedicated | | 243,271 | | 25 | % | 236,310 | | 28 | % |
Truck | | 191,842 | | 20 | % | 222,456 | | 26 | % |
Integrated Capacity Solutions | | 53,123 | | 5 | % | 16,942 | | 2 | % |
Subtotal | | 984,070 | | 101 | % | 863,079 | | 101 | % |
Intersegment eliminations | | (6,731 | ) | (1 | )% | (7,219 | ) | (1 | )% |
Consolidated revenue | | $ | 977,339 | | 100 | % | $ | 855,860 | | 100 | % |
| | | | | | | | | |
Operating income | | | | | | | | | |
| | | | | | | | | |
Intermodal | | $ | 66,152 | | 70 | % | $ | 54,185 | | 56 | % |
Dedicated | | 22,161 | | 24 | % | 24,830 | | 26 | % |
Truck | | 3,386 | | 4 | % | 16,465 | | 17 | % |
Integrated Capacity Solutions | | 2,291 | | 2 | % | 678 | | 1 | % |
Other (1) | | 55 | | 0 | % | 69 | | 0 | % |
Operating income | | $ | 94,045 | | 100 | % | $ | 96,227 | | 100 | % |
| | Six Months Ended June 30 | |
| | 2008 | | 2007 | |
| | | | % Of | | | | % Of | |
| | Amount | | Total | | Amount | | Total | |
Revenue | | | | | | | | | |
| | | | | | | | | |
Intermodal | | $ | 932,638 | | 50 | % | $ | 741,691 | | 45 | % |
Dedicated | | 471,626 | | 25 | % | 460,597 | | 28 | % |
Truck | | 376,825 | | 20 | % | 436,768 | | 26 | % |
Integrated Capacity Solutions | | 90,616 | | 5 | % | 29,919 | | 2 | % |
Subtotal | | 1,871,705 | | 101 | % | 1,668,975 | | 101 | % |
Intersegment eliminations | | (15,983 | ) | (1 | )% | (15,664 | ) | (1 | )% |
Consolidated revenue | | $ | 1,855,722 | | 100 | % | $ | 1,653,311 | | 100 | % |
| | | | | | | | | |
Operating income | | | | | | | | | |
| | | | | | | | | |
Intermodal | | $ | 117,994 | | 71 | % | $ | 100,747 | | 57 | % |
Dedicated | | 40,484 | | 24 | % | 46,796 | | 26 | % |
Truck | | 3,340 | | 2 | % | 27,890 | | 16 | % |
Integrated Capacity Solutions | | 4,241 | | 3 | % | 1,156 | | 1 | % |
Other (1) | | 42 | | 0 | % | 37 | | 0 | % |
Operating income | | $ | 166,101 | | 100 | % | $ | 176,626 | | 100 | % |
(1) Includes corporate support activity
Operating Statistics by Segment
(unaudited)
| | Three Months Ended June 30 | |
| | 2008 | | 2007 | |
| | | | | |
Intermodal | | | | | |
| | | | | |
Loads | | 206,566 | | 176,681 | |
Average length of haul | | 1,844 | | 1,918 | |
Revenue per load | | $ | 2,400 | | $ | 2,192 | |
Average tractors during the period * | | 2,019 | | 1,651 | |
| | | | | |
Tractors (end of period) | | | | | |
Company-owned | | 2,050 | | 1,680 | |
Independent contractor | | 5 | | 14 | |
Total tractors | | 2,055 | | 1,694 | |
| | | | | |
Containers (end of period) | | 35,427 | | 29,494 | |
Average effective trailing equipment usage | | 34,578 | | 29,037 | |
| | | | | |
Dedicated | | | | | |
| | | | | |
Loads | | 343,742 | | 356,042 | |
Average length of haul | | 224 | | 253 | |
Revenue per truck per week** | | $ | 3,993 | | $ | 3,518 | |
Average trucks during the period*** | | 4,715 | | 5,215 | |
| | | | | |
Trucks (end of period) | | | | | |
Company-owned | | 4,546 | | 5,060 | |
Independent contractor | | 82 | | 113 | |
Customer-owned (Dedicated operated) | | 94 | | 40 | |
Total trucks | | 4,722 | | 5,213 | |
| | | | | |
Trailing equipment (end of period) | | 8,084 | | 7,382 | |
Average effective trailing equipment usage | | 12,682 | | 13,235 | |
| | | | | |
Truck | | | | | |
| | | | | |
Loads | | 174,193 | | 209,814 | |
Average length of haul | | 463 | | 513 | |
Loaded miles (000) | | 79,943 | | 108,829 | |
Total miles (000) | | 90,630 | | 123,288 | |
Average nonpaid empty miles per load | | 62.2 | | 68.3 | |
Revenue per tractor per week** | | $ | 3,804 | | $ | 3,446 | |
Average tractors during the period * | | 3,912 | | 5,022 | |
| | | | | |
Tractors (end of period) | | | | | |
Company-owned | | 3,015 | | 3,854 | |
Independent contractor | | 753 | | 999 | |
Total tractors | | 3,768 | | 4,853 | |
| | | | | |
Trailers (end of period) | | 16,779 | | 19,010 | |
Average effective trailing equipment usage | | 12,198 | | 13,167 | |
| | | | | |
Integrated Capacity Solutions | | | | | |
| | | | | |
Loads | | 34,147 | | 11,775 | |
* 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 | |
| | 2008 | | 2007 | |
| | | | | |
Intermodal | | | | | |
| | | | | |
Loads | | 397,586 | | 337,539 | |
Average length of haul | | 1,862 | | 1,936 | |
Revenue per load | | $ | 2,346 | | $ | 2,197 | |
Average tractors during the period * | | 1,927 | | 1,612 | |
| | | | | |
Tractors (end of period) | | | | | |
Company-owned | | 2,050 | | 1,680 | |
Independent contractor | | 5 | | 14 | |
Total tractors | | 2,055 | | 1,694 | |
| | | | | |
Containers (end of period) | | 35,427 | | 29,494 | |
Average effective trailing equipment usage | | 34,148 | | 28,512 | |
| | | | | |
Dedicated | | | | | |
| | | | | |
Loads | | 674,583 | | 693,983 | |
Average length of haul | | 228 | | 256 | |
Revenue per truck per week** | | $ | 3,809 | | $ | 3,418 | |
Average trucks during the period*** | | 4,806 | | 5,239 | |
| | | | | |
Trucks (end of period) | | | | | |
Company-owned | | 4,546 | | 5,060 | |
Independent contractor | | 82 | | 113 | |
Customer-owned (Dedicated operated) | | 94 | | 40 | |
Total trucks | | 4,722 | | 5,213 | |
| | | | | |
Trailing equipment (end of period) | | 8,084 | | 7,382 | |
Average effective trailing equipment usage | | 12,901 | | 13,081 | |
| | | | | |
Truck | | | | | |
| | | | | |
Loads | | 344,487 | | 411,552 | |
Average length of haul | | 478 | | 520 | |
Loaded miles (000) | | 164,864 | | 216,481 | |
Total miles (000) | | 187,555 | | 245,759 | |
Average nonpaid empty miles per load | | 66.3 | | 70.6 | |
Revenue per tractor per week** | | $ | 3,606 | | $ | 3,343 | |
Average tractors during the period* | | 4,068 | | 5,111 | |
| | | | | |
Tractors (end of period) | | | | | |
Company-owned | | 3,015 | | 3,854 | |
Independent contractor | | 753 | | 999 | |
Total tractors | | 3,768 | | 4,853 | |
| | | | | |
Trailers (end of period) | | 16,779 | | 19,010 | |
Average effective trailing equipment usage | | 12,284 | | 13,231 | |
| | | | | |
Integrated Capacity Solutions | | | | | |
| | | | | |
Loads | | 62,227 | | 20,136 | |
* 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, 2008 | | December 31, 2007 | |
| | | | | |
ASSETS | | | | | |
Current assets: | | | | | |
Cash and cash equivalents | | $ | 1,260 | | $ | 14,957 | |
Accounts receivable | | 382,121 | | 330,202 | |
Assets held for sale | | 25,938 | | 39,747 | |
Prepaid expenses and other | | 57,030 | | 103,988 | |
Total current assets | | 466,349 | | 488,894 | |
Property and equipment | | 2,125,382 | | 2,080,893 | |
Less accumulated depreciation | | 742,988 | | 722,170 | |
Net property and equipment | | 1,382,394 | | 1,358,723 | |
Other assets | | 11,072 | | 15,129 | |
| | $ | 1,859,815 | | $ | 1,862,746 | |
| | | | | |
LIABILITIES & STOCKHOLDERS’ EQUITY | | | | | |
Current liabilities: | | | | | |
Current debt | | $ | 209,000 | | $ | 234,000 | |
Trade accounts payable | | 188,325 | | 189,987 | |
Claims accruals | | 19,335 | | 19,402 | |
Accrued payroll | | 43,356 | | 34,310 | |
Other accrued expenses | | 22,870 | | 26,663 | |
Deferred income taxes | | 19,935 | | 20,070 | |
Total current liabilities | | 502,821 | | 524,432 | |
| | | | | |
Long-term debt | | 615,700 | | 679,100 | |
Other long-term liabilities | | 35,387 | | 34,453 | |
Deferred income taxes | | 279,652 | | 281,564 | |
Stockholders’ equity | | 426,255 | | 343,197 | |
| | $ | 1,859,815 | | $ | 1,862,746 | |
Supplemental Data
(unaudited)
| | June 30, 2008 | | December 31, 2007 | |
| | | | | |
Actual shares outstanding at end of period (000) | | 125,617 | | 124,572 | |
| | | | | |
Book value per actual share outstanding at end of period | | $ | 3.39 | | $ | 2.76 | |
| | | | | | | |
| | Six Months Ended June 30 | |
| | 2008 | | 2007 | |
| | | | | |
Net cash provided by operating activities (000) | | $ | 202,648 | | $ | 210,645 | |
| | | | | |
Net capital expenditures (000) | | $ | 110,400 | | $ | 210,032 | |
| | | | | |
Purchases of common stock (000) | | $ | — | | $ | 300,473 | |
