J.B. Hunt Transport Services, Inc. Reports Revenues, Net Earnings and Earnings Per Share for Both the Fourth Quarter and Year Ended December 31, 2020

Rhea-AI Summary

J.B. Hunt Transport Services (NASDAQ: JBHT) reported fourth quarter 2020 net earnings of $154 million ($1.44/share), up from $144.7 million ($1.35/share) in Q4 2019. Revenue increased to $2.74 billion, driven by strong growth in Integrated Capacity Solutions (up 56%) and Truck (up 50%). Despite this, Intermodal revenue fell 1% due to rail congestion. Operating income rose slightly to $207.7 million. The company also repurchased 144,000 shares for $17 million as of December 31, 2020.

Positive

• Revenue growth of 11.8% year-over-year.
• Integrated Capacity Solutions segment revenue increased 56%.
• Operating income increased to $207.7 million.

Negative

• Intermodal revenue declined 1%, with operating income down 16%.
• Higher costs in rail and third-party services impacted profitability.

J.B. Hunt Transport Services, Inc. (NASDAQ: JBHT) announced fourth quarter 2020 net earnings of $154.0 million, or diluted earnings per share of $1.44 vs. fourth quarter 2019 net earnings of $144.7 million, or $1.35 per diluted share.

Total operating revenue for the current quarter was $2.74 billion, compared with $2.45 billion for the fourth quarter 2019. Revenue growth in the quarter was driven primarily by our Integrated Capacity Solutions (ICS) and Truck (JBT) segments, which grew 56% and 50% respectively, as both segments were able to leverage capacity in the Marketplace for J.B. Hunt 360°^® for our customers during the quarter. Final Mile Services (FMS) revenue grew 30%, driven by the December 2019 acquisition and new contractual business onboarded throughout 2020. Dedicated (DCS) revenue grew 3%, primarily from a 9% increase in loads and a modest increase in the fleet. Revenue growth was partially offset by a 1% decline in revenue in Intermodal (JBI), and a 34% decline in fuel surcharge revenue. Current quarter total operating revenue, excluding fuel surcharges, increased approximately 18% vs. the comparable quarter 2019.

Total freight transactions in the Marketplace for J.B. Hunt 360° increased to $468 million in the fourth quarter 2020 compared to $289 million in the prior year quarter. ICS revenue on the platform increased to $387 million with an approximate 27% increase in volume versus the year ago period. JBI and JBT executed approximately $40 million and $41 million, respectively, of their third-party dray and independent contractor costs through the freight platform during the quarter.

Operating income for the current quarter totaled $207.7 million vs. $205.1 million for the fourth quarter 2019. The benefit from increased revenue was offset with cost increases in rail and other third-party purchase transportation costs, including outsource dray costs; increases in driver wages and recruiting costs; investments in technology spend on new applications and legacy operating systems; higher salary and wage expenses for non-driving personnel; and higher group medical expense.

Interest expense in the current quarter decreased primarily from lower interest rates from fourth quarter 2019. The fourth quarter effective tax rates for 2020 and 2019 were 22.0% and 24.8%, respectively. The annual effective tax rates for 2020 and 2019 were 24.0% and 24.2%, respectively. We expect our 2021 annual tax rate to be between 24.0% and 25.0%.

Segment Information:

Intermodal (JBI)

• Fourth Quarter 2020 Segment Revenue: $1.25 billion; down 1%
• Fourth Quarter 2020 Operating Income: $110.8 million; down 16%

JBI total volumes increased 1% over the same period in 2019. Transcontinental loads grew by 1% and eastern network loads were flat compared to the fourth quarter 2019. Volumes in the quarter continued to be heavily constrained by rail congestion and service issues stemming from elevated demand levels and labor challenges in rail, truck and customer operations that escalated into the mid-to-late part of December. Segment revenue decreased 1%, reflecting the 1% increase in volume offset by a 2% decrease in revenue per load, which is a result of the combination of freight mix, customer rates, and fuel surcharges. Revenue per load excluding fuel surcharge revenue was up 4% year over year.

Operating income decreased 16% from the prior year period. The decline in operating income is primarily attributable to lost productivity and higher costs across rail, truck and customer operations associated with congestion and service disruptions stemming from strong demand, general labor tightness, and other challenges attributable to COVID-19. Specific to JBI, greater utilization and costs related to third party drayage capacity, higher costs to attract and retain drivers, and increased group medical expense also contributed to the decline. The current period ended with approximately 98,700 units of trailing capacity and approximately 5,660 power units in the dray fleet.

Dedicated Contract Services (DCS)

• Fourth Quarter 2020 Segment Revenue: $568 million; up 3%
• Fourth Quarter 2020 Operating Income: $77.6 million; up 4%

DCS revenue increased 3% during the current quarter over the same period 2019. Productivity (revenue per truck per week) increased approximately 1% vs. 2019. Productivity excluding fuel surcharge revenue increased approximately 4% from a year ago primarily from higher utilization of assets, contracted indexed-based price escalators, and less equipment idled in the quarter. A net additional 132 revenue producing trucks, 188 net additions sequentially from third quarter 2020, were in the fleet by the end of the quarter. Customer retention rates remain above 98%.

Operating income increased 4% over the prior year quarter. The benefits from increased productivity of assets, reduced driver turnover and lower travel and entertainment expenses were partially offset by increases in driver wages and recruiting costs partially related to recent customer start-up accounts, higher salary and wages for non-driver personnel, and group medical cost increases.

Integrated Capacity Solutions (ICS)

• Fourth Quarter 2020 Segment Revenue: $587 million; up 56%
• Fourth Quarter 2020 Operating Income: $5.6 million; compared to $(11.8) million Operating Loss in 4Q’19

ICS revenue increased 56% in the current quarter vs. the fourth quarter 2019. Revenue growth was driven primarily from a 39% increase in revenue per load which was favorably impacted by freight mix changes and higher spot and contractual rates as compared to the fourth quarter 2019. Segment volumes increased 13%, with truckload volumes increasing at a rate greater than 20% in the quarter vs. the prior year period. Contractual volumes represented approximately 51% of the total load volume and 35% of the total revenue in the current quarter compared to 66% and 54%, respectively, in fourth quarter 2019. Of the total reported ICS revenue, approximately $387 million was executed through the Marketplace for J.B. Hunt 360° compared to $225 million in fourth quarter 2019.

Operating income increased to $5.6 million compared to an operating loss of $11.8 million in the fourth quarter of 2019. Benefits from increased scale in the Marketplace for J.B Hunt 360° platform, combined with higher gross margins, were partially offset by higher personnel and technology investments as compared to the same period of 2019. Gross profit margins increased to 10.8% in the current period versus 10.6% in the prior year period. ICS carrier base increased 19% year over year.

Final Mile Services (FMS)

• Fourth Quarter 2020 Segment Revenue: $213 million; up 30%
• Fourth Quarter 2020 Operating Income: $5.5 million; up 12%

FMS revenue increased 30% compared to the same period 2019. Stop count within FMS increased 42% during the current quarter vs. a year ago, primarily from the December 2019 acquisition and the addition of multiple customer contracts implemented throughout 2020. Productivity, defined as revenue per stop, decreased approximately 9% compared to the prior year period primarily from a shift in the mix of business between asset and asset-light operations.

Operating income increased 12% over the prior year quarter driven primarily by increases in revenue, which was partially offset by investments in service quality performance controls across the network, increased insurance and claims costs, higher bad debt expense, and increases in group medical expense.

Truck (JBT)

• Fourth Quarter 2020 Segment Revenue: $140 million; up 50%
• Fourth Quarter 2020 Operating Income: $8.4 million; up 32%

JBT revenue increased 50% in the quarter compared to the same period in 2019. Revenue excluding fuel surcharge revenue increased 58% as a result of a 23% increase in load count and a 28% increase in revenue per load excluding fuel surcharge revenue compared to a year ago. Load count growth was primarily driven from the continued expansion of 360box which leverages the J.B. Hunt 360° platform to access a greater amount of capacity for customers. Revenue per loaded mile excluding fuel surcharge revenue increased approximately 19% year over year while comparable contractual customer rates were up approximately 5% compared to the same period 2019. At the end of the period, JBT operated 1,769 tractors and 8,567 trailers compared to 1,831 and 6,975 one year ago, respectively.

Operating income increased 32% compared to the same quarter 2019. Benefits from increased load counts and revenue per load were partially offset by increases in purchased transportation expense. In addition, higher salary and wage expenses for non-driving personnel and increased investment in technology, related to the expansion of 360box, weighed on operating income performance.

Cash Flow and Capitalization:

At December 31, 2020, we had total debt outstanding of $1.31 billion outstanding on various debt instruments which is comparable to the total debt levels at December 31, 2019, and September 30, 2020.

Our net capital expenditures for 2020 approximated $601 million vs. $688 million in 2019. At December 31, 2020, we had cash and cash equivalents of $313 million.

In the fourth quarter 2020, we purchased approximately 144,000 shares of our common stock for approximately $17 million. At December 31, 2020, we had approximately $503 million remaining under our share repurchase authorization. Actual shares outstanding at December 31, 2020, approximated 105.7 million.

Conference Call Information:

The Company will hold a conference call today from 4:00–5:15 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: 2070198. 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 September 30, 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 December 31
		2020				2019
				% Of				% Of
		Amount		Revenue		Amount		Revenue
Operating revenues, excluding fuel surcharge revenues	$	2,551,777			$	2,168,497
Fuel surcharge revenues		185,875				281,826
Total operating revenues		2,737,652		100.0%		2,450,323		100.0%
Operating expenses
Rents and purchased transportation		1,486,341		54.3%		1,246,130		50.9%
Salaries, wages and employee benefits		625,168		22.8%		561,507		22.9%
Depreciation and amortization		134,589		4.9%		128,418		5.2%
Fuel and fuel taxes		93,551		3.4%		118,269		4.8%
Operating supplies and expenses		83,515		3.1%		83,633		3.4%
General and administrative expenses, net of asset dispositions		48,431		1.8%		51,277		2.1%
Insurance and claims		35,809		1.3%		32,289		1.3%
Operating taxes and licenses		13,757		0.5%		14,345		0.6%
Communication and utilities		8,800		0.3%		9,381		0.4%
Total operating expenses		2,529,961		92.4%		2,245,249		91.6%
Operating income		207,691		7.6%		205,074		8.4%
Net interest expense		10,344		0.4%		12,776		0.6%
Earnings before income taxes		197,347		7.2%		192,298		7.8%
Income taxes		43,340		1.6%		47,622		1.9%
Net earnings	$	154,007		5.6%	$	144,676		5.9%
Average diluted shares outstanding		106,738				107,529
Diluted earnings per share	$	1.44			$	1.35

(1) Includes corporate support activity

J.B. HUNT TRANSPORT SERVICES, INC.
Condensed Consolidated Statements of Earnings
(in thousands, except per share data)
(unaudited)
		Twelve Months Ended December 31
		2020				2019
				% Of				% Of
		Amount		Revenue		Amount		Revenue
Operating revenues, excluding fuel surcharge revenues	$	8,879,653			$	8,122,600
Fuel surcharge revenues		756,920				1,042,658
Total operating revenues		9,636,573		100.0%		9,165,258		100.0%
Operating expenses
Rents and purchased transportation		4,954,123		51.4%		4,528,812		49.4%
Salaries, wages and employee benefits		2,347,716		24.4%		2,167,851		23.7%
Depreciation and amortization		527,375		5.5%		499,145		5.4%
Fuel and fuel taxes		357,483		3.7%		463,195		5.1%
Operating supplies and expenses		334,350		3.5%		333,113		3.6%
General and administrative expenses, net of asset dispositions		180,083		1.8%		191,933		2.1%
Insurance and claims		134,482		1.4%		157,251		1.7%
Operating taxes and licenses		54,331		0.6%		55,336		0.6%
Communication and utilities		33,511		0.3%		34,797		0.4%
Total operating expenses		8,923,454		92.6%		8,431,433		92.0%
Operating income		713,119		7.4%		733,825		8.0%
Net interest expense		47,094		0.5%		52,930		0.6%
Earnings before income taxes		666,025		6.9%		680,895		7.4%
Income taxes		159,990		1.6%		164,575		1.8%
Net earnings	$	506,035		5.3%	$	516,320		5.6%
Average diluted shares outstanding		106,766				108,307
Diluted earnings per share	$	4.74			$	4.77
Financial Information By Segment
(in thousands)
(unaudited)
		Three Months Ended December 31
		2020				2019
				% Of				% Of
		Amount		Total		Amount		Total
Revenue
Intermodal	$	1,249,065		46%	$	1,267,142		52%
Dedicated		568,349		21%		552,712		22%
Integrated Capacity Solutions		587,277		21%		376,537		15%
Final Mile Services		213,161		8%		164,228		7%
Truck		140,384		5%		93,640		4%
Subtotal		2,758,236		101%		2,454,259		100%
Intersegment eliminations		(20,584)		(1%)		(3,936)		(0%)
Consolidated revenue	$	2,737,652		100%	$	2,450,323		100%
Operating income
Intermodal	$	110,751		53%	$	131,097		64%
Dedicated		77,564		37%		74,629		36%
Integrated Capacity Solutions		5,575		3%		(11,843)		(6%)
Final Mile Services		5,514		3%		4,936		3%
Truck		8,367		4%		6,321		3%
Other (1)		(80)		0%		(66)		0%
Operating income	$	207,691		100%	$	205,074		100%
		Twelve Months Ended December 31
		2020				2019
				% Of				% Of
		Amount		Total		Amount		Total
Revenue
Intermodal	$	4,675,074		48%	$	4,744,636		52%
Dedicated		2,196,200		23%		2,128,247		23%
Integrated Capacity Solutions		1,658,182		17%		1,348,336		15%
Final Mile Services		688,431		7%		566,564		6%
Truck		462,720		5%		389,301		4%
Subtotal		9,680,607		100%		9,177,084		100%
Intersegment eliminations		(44,034)		(0%)		(11,826)		(0%)
Consolidated revenue	$	9,636,573		100%	$	9,165,258		100%
Operating income
Intermodal	$	428,403		60%	$	447,479		61%
Dedicated		313,987		44%		277,376		38%
Integrated Capacity Solutions		(44,699)		(6%)		(11,088)		(2%)
Final Mile Services		(945)		(0%)		(8,797)		(1%)
Truck		16,574		2%		29,046		4%
Other (1)		(201)		(0%)		(191)		(0%)
Operating income	$	713,119		100%	$	733,825		100%

Operating Statistics by Segment
(unaudited)
		Three Months Ended December 31
		2020				2019
Intermodal
Loads		524,906				520,898
Average length of haul		1,711				1,707
Revenue per load	$	2,380			$	2,433
Average tractors during the period *		5,667				5,587
Tractors (end of period) *		5,663				5,559
Trailing equipment (end of period)		98,689				96,743
Average effective trailing equipment usage		97,267				92,571
Dedicated
Loads		949,757				874,892
Average length of haul		159				164
Revenue per truck per week**	$	4,544			$	4,481
Average trucks during the period***		9,833				9,721
Trucks (end of period) ***		9,911				9,779
Trailing equipment (end of period)		27,290				27,015
Integrated Capacity Solutions
Loads		369,188				328,060
Revenue per load	$	1,591			$	1,148
Gross profit margin		10.8%				10.6%
Employee count (end of period)		1,011				1,213
Approximate number of third-party carriers (end of period)		100,200				84,400
Marketplace for J.B. Hunt 360° revenue (millions)	$	387.1			$	225.5
Final Mile Services
Stops		1,849,215				1,299,691
Average trucks during the period***		1,537				1,298
Truck
Loads		107,253				86,891
Loaded miles (000)		45,423				34,388
Nonpaid empty mile percentage		18.4%				19.2%
Revenue per tractor per week**	$	4,410			$	4,017
Average tractors during the period *		1,772				1,875
Tractors (end of period)
Company-owned		798				845
Independent contractor		971				986
Total tractors		1,769				1,831
Trailers (end of period)		8,567				6,975
* Includes company-owned and independent contractor tractors
** Using weighted workdays
*** Includes company-owned, independent contractor, and customer-owned trucks

Operating Statistics by Segment
(unaudited)
		Twelve Months Ended December 31
		2020				2019
Intermodal
Loads		2,019,391				1,979,169
Average length of haul		1,690				1,679
Revenue per load	$	2,315			$	2,397
Average tractors during the period *		5,530				5,635
Tractors (end of period) *		5,663				5,559
Trailing equipment (end of period)		98,689				96,743
Average effective trailing equipment usage		90,514				86,836
Dedicated
Loads		3,676,212				3,353,553
Average length of haul		160				168
Revenue per truck per week**	$	4,373			$	4,378
Average trucks during the period***		9,743				9,471
Trucks (end of period) ***		9,911				9,779
Trailing equipment (end of period)		27,290				27,015
Integrated Capacity Solutions
Loads		1,265,897				1,243,992
Revenue per load	$	1,310			$	1,084
Gross profit margin		9.9%				13.1%
Employee count (end of period)		1,011				1,213
Approximate number of third-party carriers (end of period)		100,200				84,400
Marketplace for J.B. Hunt 360° revenue (millions)	$	1,142.2			$	839.8
Final Mile Services
Stops		5,771,533				4,432,591
Average trucks during the period***		1,405				1,254
Truck
Loads		406,550				346,459
Loaded miles (000)		171,141				143,511
Nonpaid empty mile percentage		18.8%				18.9%
Revenue per tractor per week**	$	3,978			$	3,917
Average tractors during the period*		1,837				1,958
Tractors (end of period)
Company-owned		798				845
Independent contractor		971				986
Total tractors		1,769				1,831
Trailers (end of period)		8,567				6,975
* 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)
		December 31, 2020				December 31, 2019
ASSETS
Current assets:
Cash and cash equivalents	$	313,302			$	35,000
Accounts Receivable		1,124,403				1,011,829
Prepaid expenses and other		423,269				434,470
Total current assets		1,860,974				1,481,299
Property and equipment		5,908,710				5,640,806
Less accumulated depreciation		2,219,816				2,019,940
Net property and equipment		3,688,894				3,620,866
Other assets, net		397,337				368,689
	$	5,947,205			$	5,470,854
LIABILITIES & STOCKHOLDERS' EQUITY
Current liabilities:
Trade accounts payable	$	587,510			$	602,601
Claims accruals		276,056				279,590
Accrued payroll		172,327				68,220
Other accrued expenses		90,294				85,355
Total current liabilities		1,126,187				1,035,766
Long-term debt		1,305,424				1,295,740
Other long-term liabilities		204,577				173,241
Deferred income taxes		710,879				699,078
Stockholders' equity		2,600,138				2,267,029
	$	5,947,205			$	5,470,854

Supplemental Data
(unaudited)
		December 31, 2020				December 31, 2019
Actual shares outstanding at end of period (000)		105,654				106,213
Book value per actual share outstanding at end of period	$	24.61			$	21.34
		Twelve Months Ended December 31
		2020				2019
Net cash provided by operating activities (000)	$	1,122,859			$	1,098,347
Net capital expenditures (000)	$	600,769			$	688,197

 

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FAQ

What were J.B. Hunt's earnings for the fourth quarter of 2020?

J.B. Hunt reported net earnings of $154 million or $1.44 per diluted share in Q4 2020.

How did J.B. Hunt's revenue perform in the fourth quarter of 2020?

The company reported total operating revenue of $2.74 billion, an increase of 11.8% year-over-year.

What challenges did J.B. Hunt face in its Intermodal segment?

The Intermodal segment experienced a 1% decline in revenue and 16% decrease in operating income due to rail congestion and service disruptions.

What strategic actions did J.B. Hunt take regarding its shares?

In Q4 2020, J.B. Hunt repurchased approximately 144,000 shares for about $17 million.