J.B. Hunt Transport Services, Inc. Reports Earnings for the Third Quarter 2021

Rhea-AI Summary

J.B. Hunt Transport Services reported impressive third quarter 2021 results, with revenue of $3.14 billion, a 27% increase year-over-year. Net earnings reached $199.8 million or $1.88 per share, compared to $125.5 million or $1.18 in Q3 2020. All segments saw double-digit growth, especially Truckload (up 87%) and Integrated Capacity Solutions (up 55%). Operating income rose 56% to $273.8 million. However, challenges such as labor shortages and higher costs in several areas were noted.

Positive

• Revenue grew 27% to $3.14 billion.
• Net earnings increased 59% to $199.8 million.
• EPS rose 59% to $1.88.
• Truckload revenue jumped 87%.
• Integrated Capacity Solutions revenue up 55%.

Negative

• Operating income impacted by higher driver wages and recruiting costs.
• Intermodal volume declined 6% despite revenue increase.
• Dedicated Contract Services operating income fell 3%.

• Third Quarter 2021 Revenue: $3.14 billion; up 27%
• Third Quarter 2021 Operating Income: $273.8 million; up 56%
• Third Quarter 2021 EPS: $1.88 vs. $1.18

LOWELL, Ark.--(BUSINESS WIRE)-- J.B. Hunt Transport Services, Inc., (NASDAQ: JBHT) announced third quarter 2021 net earnings of $199.8 million, or diluted earnings per share of $1.88 versus third quarter 2020 net earnings of $125.5 million, or $1.18 cents per diluted share.

Total operating revenue for the current quarter was $3.14 billion, an increase of 27% compared with $2.47 billion for the third quarter 2020. All segments contributed double-digit revenue growth versus the prior year period. Truckload (JBT) and Integrated Capacity Solutions (ICS) grew revenue 87% and 55% year-over-year, respectively, as both segments were able to source and secure capacity for customers in the Marketplace for J.B. Hunt 360°^® in this capacity-constrained freight environment. Intermodal (JBI) revenue grew 17%, driven by a 24% increase in revenue per load, partially offset by a 6% decline in volume. Dedicated Contract Services^® (DCS^®) revenue grew 20% as a result of a 12% increase in average revenue producing trucks and a 7% increase in fleet productivity versus the prior year period. Final Mile Services^® (FMS) revenue increased 13% as revenue per stop increased 17%, partially offset by 3% fewer stops. Current quarter total operating revenue, excluding fuel surcharges, increased 23% versus the comparable quarter 2020.

Total freight transactions in the Marketplace for J.B. Hunt 360 increased to $518 million in the third quarter 2021 compared to $358 million in the prior year quarter. ICS revenue on the platform increased 36% to $397 million versus a year ago. JBI and JBT executed approximately $34 million and $87 million, respectively, of third-party dray, independent contractor and power-only capacity through the platform during the quarter.

Operating income for the current quarter totaled $273.8 million versus $175.5 million for the third quarter 2020. Operating income increased from third quarter 2020 primarily from customer rate and cost recovery efforts and further scaling into our technology investments at a consolidated level, in addition to higher productivity of our assets and people across our ICS and JBT segments. These items were partially offset by a lack of network fluidity from both rail and customer activity in JBI as well as increases in: driver wage and recruiting costs; rail and truck purchase transportation expense; non-driver personnel salary, wages and incentive compensation; group medical expense; and implementation costs for new business in both our DCS and FMS segments.

Interest expense in the current quarter was comparable to the prior year period. The effective income tax rate for the current quarter was 23.7% compared to 23.3% for third quarter 2020. We expect our 2021 annual tax rate to fall between 23.5% and 24.0%.

Segment Information:

Intermodal (JBI)

• Third Quarter 2021 Segment Revenue: $1.41 billion; up 17%
• Third Quarter 2021 Operating Income: $165.1 million; up 52%

Overall intermodal volumes declined 6% versus the same period in 2020. Eastern network loads declined 2%, while transcontinental loads declined 9% compared to the third quarter 2020. Demand for intermodal capacity remains strong, however, volumes in the quarter were negatively impacted by a continuation of rail restrictions across the network and elevated detention of trailing equipment at customer facilities. We believe labor shortages across the industry in both rail and truck networks and at customer warehouses are at the core of the supply-chain fluidity challenges limiting our asset utilization and capacity. Despite these volume-related challenges, revenue increased by 17%, driven by a 24% increase in revenue per load resulting from a combination of mix, customer rates, and fuel surcharge revenue, partially offset by the volume decline. Revenue per load, excluding fuel surcharge revenue, increased 18% year over year.

Operating income increased by 52% year over year primarily from higher customer rate and cost recovery efforts compared to the prior year period. Rate and cost recovery efforts were partially offset by higher rail and third-party dray purchased transportation costs, increases in driver wages, benefits and recruiting costs, and activity-based costs to accommodate network inefficiencies. Higher non-driver personnel, group medical and equipment costs also offset higher revenue per load. The current period ended with 102,230 units of trailing capacity and 6,017 power units in the dray fleet.

Dedicated Contract Services (DCS)

• Third Quarter 2021 Segment Revenue: $665 million; up 20%
• Third Quarter 2021 Operating Income: $78.1 million; down 3%

DCS revenue increased 20% during the current quarter over the same period in 2020. Productivity, defined as revenue per truck per week, was up 7% versus the prior period. Productivity, excluding fuel surcharge revenue, increased 3% versus the prior period. A net additional 1,527 revenue producing trucks were in the fleet by the end of the quarter compared to the prior year period, and a net additional 744 versus the end of the second quarter 2021. Customer retention rates remain above 98%.

Operating income decreased 3% from the prior year quarter. Benefits from higher revenue and increased productivity of assets were more than offset by increases in driver wage and recruiting costs, non-driver personnel salary, wages and incentive compensation, and other costs related to the implementation of new, long-term contractual business.

Integrated Capacity Solutions (ICS)

• Third Quarter 2021 Segment Revenue: $666 million; up 55%
• Third Quarter 2021 Operating Income: $14.7 million; compared to $(18.3) million loss in 3Q’20

ICS revenue increased 55% in the current quarter versus the third quarter 2020. Segment volumes increased 4% in the quarter while truckload volumes increased 14% from the prior year period. Revenue per load increased 48%. In addition to customer freight mix, revenue per load was favorably impacted by higher contractual and spot rates in our truckload business as compared to the third quarter 2020. Contractual volumes represented approximately 54% of the total load volume and 41% of the total revenue in the current quarter compared to 58% and 38%, respectively, in third quarter 2020. Of the total reported ICS revenue, approximately $397 million was executed through the Marketplace for J.B. Hunt 360 compared to $291 million in third quarter 2020.

Operating income increased to $14.7 million compared to an operating loss of $18.3 million in the third quarter 2020. Gross profit margins increased to 12.0% in the current period versus 7.6% in the prior period. Benefits from higher gross margin were partially offset by higher personnel and technology costs compared to the same period 2020. ICS carrier base increased 35% versus the third quarter 2020.

Final Mile Services (FMS)

• Third Quarter 2021 Segment Revenue: $206 million; up 13%
• Third Quarter 2021 Operating Income: $1.3 million; down 39%

FMS revenue increased 13% compared to the same period 2020. Stop count within FMS decreased 3% during the current quarter versus a year ago. The addition of multiple new customer contracts implemented over the last year were more than offset by the reduction in stops for several customers related to labor and supply-chain constraints. Productivity, defined as revenue per stop, increased approximately 17% compared to the prior year period primarily from a shift in customer mix of business, in addition to the implementation of higher rates.

Operating income decreased 39% over the prior year quarter primarily from implementation costs related to new long-term contractual business, higher third-party contract carrier costs, and lower volumes with certain customers related to product availability as a result of supply-chain disruptions. Higher personnel expense related to salary, wages and incentive compensation and group medical costs also contributed to the decline in operating income.

Truckload (JBT)

• Third Quarter 2021 Segment Revenue: $204 million; up 87%
• Third Quarter 2021 Operating Income: $14.7 million; up 397%

JBT revenue increased 87% from the same period in 2020. Revenue excluding fuel surcharge revenue increased 85%, primarily from a 65% increase in revenue per load excluding fuel surcharge revenue and a 12% increase in load count compared to a year ago. The increase in revenue per load excluding fuel surcharge revenue was driven by a 36% increase in revenue per loaded mile excluding fuel surcharge revenue and a 20% increase in average length of haul. Load count growth and the length of haul increase were primarily related to the continued expansion of J.B. Hunt 360box^® which leverages the J.B. Hunt 360 platform to access drop-trailer capacity for customers across our transportation network. Comparable contractual customer rates were up approximately 29% compared to the same period 2020. The current period ended with 9,906 trailers and 1,965 tractors, compared to 8,245 and 1,713 respectively for the prior year period.

Operating income increased to $14.7 million compared $2.9 million in the third quarter 2020. Benefits from increased load counts and revenue per load were partially offset by increases in purchased transportation expense, higher driver wages and recruiting costs, higher non-driver personnel expense related to salary, wages and incentive compensation, and increases in group medical costs. Further investments in both personnel and technology related to the continued expansion of 360box also partially offset higher revenue.

Cash Flow and Capitalization:

At September 30, 2021, we had a total of $1.3 billion outstanding on various debt instruments which is comparable to total debt levels at September 30, 2020 and December 31, 2020.

Our net capital expenditures for the nine months ended September 30, 2021, approximated $511 million compared to $449 million for the same period 2020. At September 30, 2021, we had cash and cash equivalents of approximately $530 million.

In the third quarter 2021, we purchased approximately 286,000 shares of our common stock for approximately $50 million. At September 30, 2021, we had approximately $366 million remaining under our share repurchase authorization. Actual shares outstanding on September 30, 2021, approximated 105.0 million.

Conference Call Information:

The Company will hold a conference call today at 9:00–10:00 am CDT 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: 1065188. A replay of the call will be posted on the investor relations section of our website here later today.

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, 2020 and Quarterly Report filed on Form 10-Q for the period ended June 30, 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 September 30
		2021						2020
					% Of						% Of
		Amount			Revenue			Amount			Revenue
Operating revenues, excluding fuel surcharge revenues	$	2,813,939					$	2,296,053
Fuel surcharge revenues		330,873						176,470
Total operating revenues		3,144,812			100.0	%		2,472,523			100.0	%
Operating expenses
Rents and purchased transportation		1,667,236			53.0	%		1,297,333			52.5	%
Salaries, wages and employee benefits		711,694			22.6	%		594,162			24.0	%
Depreciation and amortization		138,923			4.4	%		132,392			5.4	%
Fuel and fuel taxes		139,155			4.4	%		87,350			3.5	%
Operating supplies and expenses		98,541			3.1	%		86,103			3.5	%
General and administrative expenses, net of asset dispositions		50,266			1.7	%		41,894			1.6	%
Insurance and claims		41,254			1.3	%		35,412			1.4	%
Operating taxes and licenses		15,464			0.5	%		13,696			0.6	%
Communication and utilities		8,450			0.3	%		8,678			0.4	%
Total operating expenses		2,870,983			91.3	%		2,297,020			92.9	%
Operating income		273,829			8.7	%		175,503			7.1	%
Net interest expense		11,977			0.4	%		11,895			0.5	%
Earnings before income taxes		261,852			8.3	%		163,608			6.6	%
Income taxes		62,023			1.9	%		38,112			1.5	%
Net earnings	$	199,829			6.4	%	$	125,496			5.1	%
Average diluted shares outstanding		106,436						106,798
Diluted earnings per share	$	1.88					$	1.18
J.B. HUNT TRANSPORT SERVICES, INC.
Condensed Consolidated Statements of Earnings
(in thousands, except per share data)
(unaudited)
		Nine Months Ended September 30
		2021						2020
					% Of						% Of
		Amount			Revenue			Amount			Revenue
Operating revenues, excluding fuel surcharge revenues	$	7,808,954					$	6,327,876
Fuel surcharge revenues		862,377						571,045
Total operating revenues		8,671,331			100.0	%		6,898,921			100.0	%
Operating expenses
Rents and purchased transportation		4,557,770			52.6	%		3,467,782			50.3	%
Salaries, wages and employee benefits		1,997,196			23.0	%		1,722,548			25.0	%
Depreciation and amortization		415,839			4.8	%		392,786			5.7	%
Fuel and fuel taxes		379,036			4.4	%		263,932			3.8	%
Operating supplies and expenses		271,257			3.1	%		250,835			3.6	%
General and administrative expenses, net of asset dispositions		142,662			1.7	%		131,654			1.9	%
Insurance and claims		114,792			1.3	%		98,672			1.4	%
Operating taxes and licenses		43,488			0.5	%		40,575			0.6	%
Communication and utilities		26,264			0.3	%		24,710			0.4	%
Total operating expenses		7,948,304			91.7	%		6,393,494			92.7	%
Operating income		723,027			8.3	%		505,427			7.3	%
Net interest expense		36,061			0.4	%		36,749			0.5	%
Earnings before income taxes		686,966			7.9	%		468,678			6.8	%
Income taxes		168,369			1.9	%		116,650			1.7	%
Net earnings	$	518,597			6.0	%	$	352,028			5.1	%
Average diluted shares outstanding		106,688						106,776
Diluted earnings per share	$	4.86					$	3.30
Financial Information By Segment
(in thousands)
(unaudited)
		Three Months Ended September 30
		2021						2020
					% Of						% Of
		Amount			Total			Amount			Total
Revenue
Intermodal	$	1,412,806			45	%	$	1,211,183			49	%
Dedicated		664,766			21	%		552,948			22	%
Integrated Capacity Solutions		666,217			21	%		431,144			18	%
Final Mile Services		205,908			7	%		182,091			7	%
Truckload		203,607			6	%		109,113			5	%
Subtotal		3,153,304			100	%		2,486,479			101	%
Intersegment eliminations		(8,492	)		(0	%)		(13,956	)		(1	%)
Consolidated revenue	$	3,144,812			100	%	$	2,472,523			100	%
Operating income
Intermodal	$	165,095			60	%	$	108,412			62	%
Dedicated		78,138			29	%		80,431			46	%
Integrated Capacity Solutions		14,748			5	%		(18,304	)		(11	%)
Final Mile Services		1,278			1	%		2,090			1	%
Truckload		14,664			5	%		2,948			2	%
Other (1)		(94	)		(0	%)		(74	)		(0	%)
Operating income	$	273,829			100	%	$	175,503			100	%
		Nine Months Ended September 30
		2021						2020
					% Of						% Of
		Amount			Total			Amount			Total
Revenue
Intermodal	$	3,879,338			45	%	$	3,426,008			50	%
Dedicated		1,865,903			21	%		1,627,852			24	%
Integrated Capacity Solutions		1,798,778			21	%		1,070,905			15	%
Final Mile Services		620,056			7	%		475,270			7	%
Truckload		536,772			6	%		322,336			4	%
Subtotal		8,700,847			100	%		6,922,371			100	%
Intersegment eliminations		(29,516	)		(0	%)		(23,450	)		(0	%)
Consolidated revenue	$	8,671,331			100	%	$	6,898,921			100	%
Operating income
Intermodal	$	407,203			56	%	$	317,652			63	%
Dedicated		231,487			32	%		236,423			47	%
Integrated Capacity Solutions		25,134			3	%		(50,274	)		(10	%)
Final Mile Services		20,467			3	%		(6,459	)		(1	%)
Truckload		39,033			6	%		8,207			1	%
Other (1)		(297	)		(0	%)		(122	)		(0	%)
Operating income	$	723,027			100	%	$	505,427			100	%
(1) Includes corporate support activity

Operating Statistics by Segment
(unaudited)
		Three Months Ended September 30
		2021				2020
Intermodal
Loads		497,603				529,709
Average length of haul		1,677				1,695
Revenue per load	$	2,839			$	2,287
Average tractors during the period *		5,956				5,546
Tractors (end of period) *		6,017				5,647
Trailing equipment (end of period)		102,230				97,439
Average effective trailing equipment usage		99,453				94,846
Dedicated
Loads		1,027,705				940,225
Average length of haul		161				157
Revenue per truck per week**	$	4,692			$	4,372
Average trucks during the period***		10,887				9,697
Trucks (end of period) ***		11,250				9,723
Trailing equipment (end of period)		27,804				27,376
Integrated Capacity Solutions
Loads		339,867				326,563
Revenue per load	$	1,960			$	1,320
Gross profit margin		12.0%				7.6%
Employee count (end of period)		954				1,037
Approximate number of third-party carriers (end of period)		126,700				94,200
Marketplace for J.B. Hunt 360 revenue (millions)	$	397.4			$	291.2
Final Mile Services
Stops		1,554,485				1,604,694
Average trucks during the period***		1,512				1,448
Truckload
Loads		110,430				98,505
Loaded miles (000)		55,103				40,599
Nonpaid empty mile percentage		19.6%				19.2%
Revenue per tractor per week**	$	4,715			$	3,849
Average tractors during the period *		1,921				1,783
Tractors (end of period)
Company-owned		750				800
Independent contractor		1,215				913
Total tractors		1,965				1,713
Trailers (end of period)		9,906				8,245
* Includes company-owned and independent contractor tractors
** Using weighted workdays
*** Includes company-owned, independent contractor, and customer-owned trucks
Operating Statistics by Segment
(unaudited)
		Nine Months Ended September 30
		2021				2020
Intermodal
Loads		1,475,570				1,494,485
Average length of haul		1,681				1,683
Revenue per load	$	2,629			$	2,292
Average tractors during the period *		5,818				5,484
Tractors (end of period) *		6,017				5,647
Trailing equipment (end of period)		102,230				97,439
Average effective trailing equipment usage		97,422				88,262
Dedicated
Loads		2,966,575				2,726,455
Average length of haul		161				160
Revenue per truck per week**	$	4,662			$	4,316
Average trucks during the period***		10,357				9,713
Trucks (end of period) ***		11,250				9,723
Trailing equipment (end of period)		27,804				27,376
Integrated Capacity Solutions
Loads		962,359				896,709
Revenue per load	$	1,869			$	1,194
Gross profit margin		11.6%				9.4%
Employee count (end of period)		954				1,037
Approximate number of third-party carriers (end of period)		126,700				94,200
Marketplace for J.B. Hunt 360 revenue (millions)	$	1,152.4			$	755.1
Final Mile Services
Stops		4,963,472				3,922,318
Average trucks during the period***		1,505				1,362
Truckload
Loads		322,030				299,297
Loaded miles (000)		154,083				125,718
Nonpaid empty mile percentage		19.2%				18.9%
Revenue per tractor per week**	$	4,567			$	3,844
Average tractors during the period*		1,809				1,859
Tractors (end of period)
Company-owned		750				800
Independent contractor		1,215				913
Total tractors		1,965				1,713
Trailers (end of period)		9,906				8,245
* 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)
		September 30, 2021				December 31, 2020
ASSETS
Current assets:
Cash and cash equivalents	$	529,595			$	313,302
Accounts Receivable, net		1,442,948				1,124,403
Prepaid expenses and other		292,604				404,412
Total current assets		2,265,147				1,842,117
Property and equipment		6,350,141				5,908,710
Less accumulated depreciation		2,495,557				2,219,816
Net property and equipment		3,854,584				3,688,894
Other assets, net		393,459				397,337
	$	6,513,190			$	5,928,348
LIABILITIES & STOCKHOLDERS' EQUITY
Current liabilities:
Current debt	$	354,755			$	-
Trade accounts payable		749,071				587,510
Claims accruals		288,137				276,056
Accrued payroll		163,940				130,943
Other accrued expenses		88,724				90,294
Total current liabilities		1,644,627				1,084,803
Long-term debt		944,887				1,305,424
Other long-term liabilities		270,860				245,961
Deferred income taxes		730,588				692,022
Stockholders' equity		2,922,228				2,600,138
	$	6,513,190			$	5,928,348
Supplemental Data
(unaudited)
		September 30, 2021				December 31, 2020
Actual shares outstanding at end of period (000)		105,014				105,654
Book value per actual share outstanding at end of period	$	27.83			$	24.61
		Nine Months Ended September 30
		2021				2020
Net cash provided by operating activities (000)	$	969,849			$	910,994
Net capital expenditures (000)	$	511,075			$	448,721

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20211015005090/en/

Brad Delco

Vice President – Finance & Investor Relations

(479) 820-2723

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

FAQ

What were J.B. Hunt's Q3 2021 revenue and earnings results?

In Q3 2021, J.B. Hunt reported revenue of $3.14 billion and net earnings of $199.8 million, or $1.88 per diluted share.

How did J.B. Hunt's Truckload segment perform in Q3 2021?

The Truckload segment saw an 87% increase in revenue during Q3 2021.

What challenges did J.B. Hunt face in Q3 2021?

J.B. Hunt faced challenges including labor shortages and increased costs in driver wages, recruiting, and operational expenses.

What is the outlook for J.B. Hunt following their Q3 2021 results?

While J.B. Hunt's revenue and earnings improved significantly, ongoing labor and cost challenges may impact future performance.