J.B. Hunt Transport Services (JBHT) 8-K J.B. Hunt Transport Services, Inc. Reports Earnings for the Second Quarter 2020

Exhibit 99.1

J.B. Hunt Transport Services, Inc.	Contact: Brad Delco
615 J.B. Hunt Corporate Drive	Vice President – Finance & Investor Relations
Lowell, Arkansas 72745	(479) 820-2723
(NASDAQ: JBHT)

FOR IMMEDIATE RELEASE

J.B. HUNT TRANSPORT SERVICES, INC. REPORTS EARNINGS FOR THE SECOND QUARTER 2020

■   Second Quarter 2020 Revenue: ■   Second Quarter 2020 Operating Income: ■   Second Quarter 2020 EPS: $2.15 billion; down 5% $175.2 million; down 9% $1.14 vs. $1.23

LOWELL, Ark., July 16, 2020 - J.B. Hunt Transport Services, Inc., (NASDAQ: JBHT) announced second quarter 2020 net earnings of $121.7 million, or diluted earnings per share of $1.14 vs. second quarter 2019 net earnings of $133.6 million, or $1.23 per diluted share.

Total operating revenue for the current quarter was $2.15 billion, compared with $2.26 billion for the second quarter 2019, a decrease of 5%. Current quarter total operating revenue, excluding fuel surcharge revenue, decreased 0.5% vs. the comparable quarter 2019. Revenue performance, excluding fuel surcharge revenue, was primarily driven by a 2% volume decline in Intermodal (JBI), 11% volume decline in Integrated Capacity Solutions (ICS), and 5% fewer stops in Final Miles Services (FMS), partially offset by a 17% increase in loads in Truckload (JBT), compared to the prior year period.

The amount of ICS operating revenue executed through the marketplace for J.B. Hunt 360°^® increased to $229 million from $222 million in second quarter 2019. In addition, JBI executed approximately $24 million of third-party dray cost and JBT executed approximately $28 million of its independent contractor costs through the platform during second quarter 2020.

Operating income for the current quarter totaled $175.2 million versus $193.1 million for the second quarter 2019. The prior year quarter included a $20.0 million pre-tax charge in settlement of a FMS claim. Lower revenue and higher purchased transportation costs, continued investment in technology across all segments, and employee and operating supplies costs related to COVID-19, were partially offset by benefits of lower driver turnover, decreased insurance and claims costs and significantly reduced travel and entertainment costs compared to the prior year. Additionally, operating income was lower due to approximately $4.6 million of additional charges for uncollectible customer accounts.

Interest expense in the current quarter decreased due to lower average debt levels and lower interest rates compared to the same period last year. The effective income tax rate for the quarter was 25% consistent with second quarter 2019.

Segment Information:

Intermodal (JBI)

■   Second Quarter 2020 Segment Revenue:   $1.07 billion; down 7%

■   Second Quarter 2020 Operating Income:  $107.0 million; down 14%

JBI load volumes declined 2% over the same period in 2019. Transcontinental loads increased approximately 3% and Eastern network volumes declined 7% from second quarter 2019. As previously released, COVID-19 related volume disruptions began to materialize in March and deteriorated further in April, followed by a steady rebound in demand for the remainder of the quarter. Revenue decreased 7% reflecting the 2% volume decline and an approximate 6% decline in revenue per load, which is the combination of customer rate changes, fuel surcharges, and freight mix. Revenue per load excluding fuel surcharge revenue was flat from second quarter 2019.

Operating income decreased by 14% from the prior year. Lower volumes, higher rail purchased transportation costs, and inefficiencies in the network related to less predictable demand patterns, were partially offset by lower driver turnover related costs and a decrease in insurance and claims costs. The current period ended with approximately 96,500 units of trailing capacity and 5,340 power units assigned to the dray fleet.

Dedicated Contract Services (DCS)

■   Second Quarter 2020 Segment Revenue:   $533 million; down 1%

■   Second Quarter 2020 Operating Income:  $83.1 million; up 9%

DCS revenue decreased 1% during the current quarter over the same period in 2019. Productivity, defined as revenue per truck per week, decreased approximately 3% vs. 2019. Productivity excluding fuel surcharge revenue was flat compared to a year ago. A net additional 130 revenue producing trucks were in the fleet by the end of the quarter compared to the prior year. Customer retention rates remain above 97%.

Operating income increased 9% over the prior year quarter. Benefits from lower driver turnover, travel and entertainment, and safety related costs were partially offset by higher bad debt costs for uncollectible customer accounts.

Integrated Capacity Solutions (ICS)

■   Second Quarter 2020 Segment Revenue:  $304 million; down 9%

■   Second Quarter 2020 Operating Loss:   $(13.1) million; compared to $(0.6) million in 2Q’19

ICS revenue decreased 9% compared to the second quarter 2019. Volumes decreased 11% but revenue per load increased approximately 2% primarily due to customer freight mix. Contractual volumes represented approximately 71% of the total load volume and 63% of the total revenue in the current quarter compared to 68% and 55%, respectively, in second quarter 2019. Of the total reported ICS revenue, approximately $229 million was executed through the marketplace for J.B. Hunt 360 compared to $222 million in second quarter 2019.

Operating income decreased by $12.5 million from the second quarter 2019 from lower gross profit margins, increased costs to expand capacity and functionality of the marketplace for J.B. Hunt 360 and higher personnel costs. Gross profit margins decreased to 11.8% in the current period versus 13.4% in the same period last year primarily from a competitive pricing environment, weaker spot market activity, and tightening supply dynamics at various points throughout the quarter. ICS carrier base increased 12% vs. second quarter 2019.

Final Miles Services (FMS)

■   Second Quarter 2020 Segment Revenue:    $140 million; down 2% 

■   Second Quarter 2020 Operating Loss:   $(5.2) million; compared to $(15.8) million in 2Q’19

FMS revenue decreased 2% compared to the same period 2019. Stop count within FMS decreased 5% during the current quarter vs. a year ago, primarily from the temporary suspension of operations at several of our customers’ sites as a result of COVID-19. Productivity, defined as revenue per stop, increased approximately 2% compared to the prior year period primarily from a shift in the mix of services as different customers within our FMS network were affected by COVID-19 to varying degrees throughout the quarter.

Operating losses decreased from a year ago by approximately $10.5 million primarily from the absence of the $20 million pre-tax claim settlement incurred in 2019. Operating losses in the second quarter 2020 were primarily the result of lost revenue related to the temporary suspension of operations at several of our customers’ sites and higher costs related to operating supplies as a result of COVID-19.

Truckload (JBT)

■   Second Quarter 2020 Segment Revenue:      $108.3 million; up 9%

■   Second Quarter 2020 Operating Income:     $3.5 million; down 61%

JBT revenue increased 9% from the same period in 2019. Revenue excluding fuel surcharge revenue increased 13% primarily from a 17% increase in load count partially offset by a 4% decrease in revenue per load excluding fuel surcharge revenue compared to a year ago. Revenue per loaded mile excluding fuel surcharge revenue decreased approximately 7% year-over-year while comparable contractual customer rates were down approximately 5% compared to the same period 2019. At the end of the period, JBT operated 1,897 tractors and 7,985 trailers compared to 1,879 and 6,829 one year ago, respectively.

Operating income decreased 61% compared to the same quarter 2019. Benefits from the increased load count were offset by increases in purchased transportation expense, higher insurance and claims costs, increased investment in technology and the continued rollout of 360box.

Cash Flow and Capitalization:

At June 30, 2020, we had approximately $1.3 billion outstanding on various debt instruments compared to $1.4 billion at June 30, 2019 and $1.3 billion at December 31, 2019.

Our net capital expenditures for the six months ended June 30, 2020 approximated $265 million compared to $475 million for the same period 2019. At June 30, 2020, we had cash and cash equivalents of approximately $275 million.

We had no purchases of our stock during the second quarter 2020. At June 30, 2020, we had approximately $520 million remaining under our share repurchase authorization. Actual shares outstanding at June 30, 2020 approximated 105.5 million.

Conference Call Information:

The Company will hold a conference call today at 4:00–5:00 pm CT to discuss the quarterly earnings. To participate in the call, dial 1-833-397-0851 (domestic) or 516-575-8759 (international) 15 minutes prior to the start of the call and provide the following conference ID: 6252006. A replay of the call will be posted on its website here later this evening.

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, 2019 and Quarterly Report filed on Form 10-Q for the period ended March 31, 2020. 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
	2020					2019
			% Of					% Of
	Amount		Revenue			Amount		Revenue
Operating revenues, excluding fuel surcharge revenues	$	1,986,130				$	1,996,266
Fuel surcharge revenues		159,443					265,381
Total operating revenues		2,145,573		100.0	%		2,261,647		100.0	%
Operating expenses
Rents and purchased transportation		1,034,297		48.2	%		1,086,416		48.0	%
Salaries, wages and employee benefits		554,136		25.8	%		535,147		23.7	%
Depreciation and amortization		130,298		6.1	%		123,995		5.5	%
Fuel and fuel taxes		75,459		3.5	%		118,037		5.2	%
Operating supplies and expenses		79,134		3.7	%		84,264		3.7	%
General and administrative expenses, net of asset dispositions		44,599		2.1	%		46,539		2.1	%
Insurance and claims		30,899		1.4	%		52,013		2.3	%
Operating taxes and licenses		13,567		0.6	%		13,565		0.6	%
Communication and utilities		8,001		0.4	%		8,578		0.4	%
Total operating expenses		1,970,390		91.8	%		2,068,554		91.5	%
Operating income		175,183		8.2	%		193,093		8.5	%
Net interest expense		12,818		0.6	%		14,763		0.6	%
Earnings before income taxes		162,365		7.6	%		178,330		7.9	%
Income taxes		40,667		1.9	%		44,697		2.0	%
Net earnings	$	121,698		5.7	%	$	133,633		5.9	%
Average diluted shares outstanding		106,580					108,373
Diluted earnings per share	$	1.14				$	1.23

J.B. HUNT TRANSPORT SERVICES, INC.

Condensed Consolidated Statements of Earnings

(in thousands, except per share data)

(unaudited)

	Six Months Ended June 30
	2020					2019
			% Of					% Of
	Amount		Revenue			Amount		Revenue
Operating revenues, excluding fuel surcharge revenues	$	4,031,824				$	3,851,608
Fuel surcharge revenues		394,574					499,666
Total operating revenues		4,426,398		100.0	%		4,351,274		100.0	%
Operating expenses
Rents and purchased transportation		2,170,449		49.0	%		2,086,305		47.9	%
Salaries, wages and employee benefits		1,128,386		25.5	%		1,051,472		24.2	%
Depreciation and amortization		260,393		5.9	%		243,924		5.6	%
Fuel and fuel taxes		176,582		4.0	%		230,162		5.3	%
Operating supplies and expenses		164,732		3.7	%		162,436		3.7	%
General and administrative expenses, net of asset dispositions		89,761		2.0	%		91,578		2.1	%
Insurance and claims		63,260		1.4	%		81,007		1.9	%
Operating taxes and licenses		26,879		0.6	%		26,725		0.6	%
Communication and utilities		16,032		0.4	%		16,777		0.4	%
Total operating expenses		4,096,474		92.5	%		3,990,386		91.7	%
Operating income		329,924		7.5	%		360,888		8.3	%
Net interest expense		24,854		0.6	%		27,796		0.6	%
Earnings before income taxes		305,070		6.9	%		333,092		7.7	%
Income taxes		78,538		1.8	%		79,858		1.9	%
Net earnings	$	226,532		5.1	%	$	253,234		5.8	%
Average diluted shares outstanding		106,765					109,015
Diluted earnings per share	$	2.12				$	2.32

Financial Information By Segment 

(in thousands)

(unaudited)

	Three Months Ended June 30
	2020						2019
				% Of						% Of
	Amount			Total			Amount			Total
Revenue
Intermodal	$	1,065,106			50	%	$	1,149,723			51	%
Dedicated		533,158			25	%		536,995			24	%
Integrated Capacity Solutions		304,267			14	%		334,267			15	%
Final Mile Services		139,550			6	%		142,876			6	%
Truck		108,298			5	%		99,627			4	%
Subtotal		2,150,379			100	%		2,263,488			100	%
Intersegment eliminations		(4,806	)		(0	%)		(1,841	)		(0	%)
Consolidated revenue	$	2,145,573			100	%	$	2,261,647			100	%
Operating income
Intermodal	$	106,965			61	%	$	124,357			64	%
Dedicated		83,102			47	%		76,240			39	%
Integrated Capacity Solutions		(13,072	)		(7	%)		(570	)		(0	%)
Final Mile Services		(5,249	)		(3	%)		(15,751	)		(8	%)
Truck		3,480			2	%		8,889			5	%
Other (1)		(43	)		(0	%)		(72	)		(0	%)
Operating income	$	175,183			100	%	$	193,093			100	%

	Six Months Ended June 30
	2020						2019
				% Of						% Of
	Amount			Total			Amount			Total
Revenue
Intermodal	$	2,214,825			50	%	$	2,237,822			51	%
Dedicated		1,074,904			24	%		1,028,434			23	%
Integrated Capacity Solutions		639,761			14	%		635,078			15	%
Final Mile Services		293,179			7	%		253,349			6	%
Truck		213,223			5	%		201,479			5	%
Subtotal		4,435,892			100	%		4,356,162			100	%
Intersegment eliminations		(9,494	)		(0	%)		(4,888	)		(0	%)
Consolidated revenue	$	4,426,398			100	%	$	4,351,274			100	%
Operating income
Intermodal	$	209,240			64	%	$	227,674			63	%
Dedicated		155,992			47	%		126,321			35	%
Integrated Capacity Solutions		(31,970	)		(10	%)		6,395			2	%
Final Mile Services		(8,549	)		(3	%)		(15,587	)		(4	%)
Truck		5,259			2	%		16,128			4	%
Other (1)		(48	)		(0	%)		(43	)		(0	%)
Operating income	$	329,924			100	%	$	360,888			100	%

      (1) Includes corporate support activity

Operating Statistics by Segment

(unaudited)

	Three Months Ended June 30
	2020			2019
Intermodal
Loads		473,486			480,938
Average length of haul		1,676			1,660
Revenue per load	$	2,249		$	2,391
Average tractors during the period *		5,420			5,652
Tractors (end of period) *		5,343			5,637
Trailing equipment (end of period)		96,512			96,659
Dedicated
Loads		907,221			850,196
Average length of haul		160			168
Revenue per truck per week**	$	4,250		$	4,398
Average trucks during the period***		9,718			9,454
Trucks (end of period) ***		9,674			9,544
Trailing equipment (end of period)		27,497			26,762
Integrated Capacity Solutions
Loads		274,399			306,817
Revenue per load	$	1,109		$	1,089
Gross profit margin		11.8	%		13.4	%
Employee count (end of period)		1,117			1,198
Approximate number of third-party carriers (end of period)		89,900			80,000
Marketplace for J.B. Hunt 360°:
Approximate carrier tractor count (end of period)		717,700			600,600
Revenue (millions)	$	228.9		$	222.4
Final Mile Services
Stops		1,093,182			1,146,125
Average trucks during the period***		1,333			1,256
Truck
Loads		103,314			87,994
Loaded miles (000)		44,555			36,744
Nonpaid empty mile percentage		19.1	%		18.6	%
Revenue per tractor per week**	$	3,686		$	3,940
Average tractors during the period *		1,979			1,973
Tractors (end of period)
Company-owned		800			946
Independent contractor		1,097			933
Total tractors		1,897			1,879
Trailers (end of period)		7,985			6,829

* 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
	2020			2019
Intermodal
Loads		964,776			940,862
Average length of haul		1,677			1,656
Revenue per load	$	2,296		$	2,378
Average tractors during the period *		5,453			5,656
Tractors (end of period) *		5,343			5,637
Trailing equipment (end of period)		96,512			96,659
Dedicated
Loads		1,786,230			1,615,584
Average length of haul		161			170
Revenue per truck per week**	$	4,288		$	4,321
Average trucks during the period***		9,721			9,294
Trucks (end of period) ***		9,674			9,544
Trailing equipment (end of period)		27,497			26,762
Integrated Capacity Solutions
Loads		570,146			595,750
Revenue per load	$	1,122		$	1,066
Gross profit margin		10.7	%		14.9	%
Employee count (end of period)		1,117			1,198
Approximate number of third-party carriers (end of period)		89,900			80,000
Marketplace for J.B. Hunt 360°:
Approximate carrier tractor count (end of period)		717,700			600,600
Revenue (millions)	$	463.8		$	408.9
Final Mile Services
Stops		2,317,624			1,933,099
Average trucks during the period***		1,318			1,228
Truck
Loads		200,792			172,922
Loaded miles (000)		85,119			73,712
Nonpaid empty mile percentage		18.7	%		18.9	%
Revenue per tractor per week**	$	3,842		$	3,913
Average tractors during the period*		1,897			2,024
Tractors (end of period)
Company-owned		800			946
Independent contractor		1,097			933
Total tractors		1,897			1,879
Trailers (end of period)		7,985			6,829

* 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, 2020		December 31, 2019
ASSETS
Current assets:
Cash and cash equivalents	$	274,654	$	35,000
Accounts Receivable, net		950,636		1,011,829
Prepaid expenses and other		319,407		434,470
Total current assets		1,544,697		1,481,299
Property and equipment		5,730,544		5,640,806
Less accumulated depreciation		2,104,148		2,019,940
Net property and equipment		3,626,396		3,620,866
Other assets, net		382,539		368,689
	$	5,553,632	$	5,470,854
LIABILITIES & STOCKHOLDERS' EQUITY
Current liabilities:
Trade accounts payable	$	513,517	$	602,601
Claims accruals		269,825		279,590
Accrued payroll		98,692		68,220
Other accrued expenses		88,648		85,355
Total current liabilities		970,682		1,035,766
Long-term debt		1,307,019		1,295,740
Other long-term liabilities		185,390		173,241
Deferred income taxes		699,698		699,078
Stockholders' equity		2,390,843		2,267,029
	$	5,553,632	$	5,470,854

Supplemental Data

(unaudited)

	June 30, 2020		December 31, 2019
Actual shares outstanding at end of period (000)		105,507		106,213
Book value per actual share outstanding at end of period	$	22.66	$	21.34

	Six Months Ended June 30
	2020		2019
Net cash provided by operating activities (000)	$	639,950	$	606,661
Net capital expenditures (000)	$	264,614	$	475,331