J.B. Hunt Transport Services, Inc. Reports U.S. GAAP Revenues, Net Earnings and Earnings Per Share for the Second Quarter 2022

Rhea-AI Summary

J.B. Hunt Transport Services achieved remarkable financial growth in Q2 2022, reporting $3.84 billion in total revenue, a 32% increase year-over-year. Operating income surged 46% to $353.1 million, while earnings per share rose 50% to $2.42. All segments contributed, especially Intermodal (JBI) with 42% revenue growth. Despite challenges like increased operating costs and market inefficiencies, the company remains optimistic, forecasting a 23.5%-24.5% tax rate for 2022.

Positive

• Total revenue increased by 32% to $3.84 billion.
• Operating income rose 46% to $353.1 million.
• EPS increased 50% to $2.42 year-over-year.
• Intermodal revenue grew 42% driven by volume and revenue per load increases.

Negative

• Operating costs increased due to higher wages, expenses, and inefficiencies.
• Segment performance affected by network inefficiencies and container utilization issues.

• Second Quarter 2022 Revenue: $3.84 billion; up 32%
• Second Quarter 2022 Operating Income: $353.1 million; up 46%
• Second Quarter 2022 EPS: $2.42 vs. $1.61; up 50%

LOWELL, Ark.--(BUSINESS WIRE)-- J.B. Hunt Transport Services, Inc. (NASDAQ: JBHT) announced second quarter 2022 U.S. GAAP (United States Generally Accepted Accounting Principles) net earnings of $255.3 million, or diluted earnings per share of $2.42 versus second quarter 2021 net earnings of $172.2 million, or $1.61 per diluted share.

Total operating revenue for the current quarter was $3.84 billion, compared with $2.91 billion for the second quarter 2021, an increase of 32%. All segments contributed to the year-over-year growth in consolidated revenue. Intermodal (JBI) revenue grew 42% driven by an 8% increase in volume and a 32% increase in revenue per load. Dedicated Contract Services^® (DCS^®) revenue grew 39% as a result of a 21% increase in average revenue producing trucks and a 14% improvement in fleet productivity versus the prior-year period. Despite a softer spot-rate environment, our asset-light Truckload (JBT) segment and our non-asset Integrated Capacity Solutions™ (ICS) segment grew revenue 46% and 3% year-over-year, respectively, as the blending of our drop-trailer and live network service offering eliminates waste and drives efficiencies for our customers by leveraging the capabilities of our J.B. Hunt 360°^® platform. Final Mile Services^® (FMS) revenue increased 21%, primarily driven by our recent acquisition. Current quarter total operating revenue, excluding fuel surcharge revenue, increased 21% versus the comparable quarter 2021.

Total freight transactions in the Marketplace for J.B. Hunt 360 increased 11% to $556 million in the second quarter 2022 compared to $500 million in the prior-year quarter. JBT and JBI executed approximately $113 million and $51 million of their third-party dray, independent contractor and power-only capacity costs through the platform during the quarter, an increase of 60% and 54% year-over-year respectively. ICS revenue on the platform decreased 1% to $392 million versus the year ago period.

Operating income for the current quarter totaled $353.1 million versus $241.5 million for the second quarter 2021. Operating income increased from second quarter 2021 primarily due to higher volumes, customer rate, cost-recovery efforts, and further scaling into our people and technology investments. These items were partially offset by increases in: professional driver and non-driver wages and benefits, rail and truck purchased transportation expense, costs associated with inefficiencies in container utilization in JBI, hiring and recruiting expense, and implementation costs for newly awarded business in both DCS and FMS segments. The company also incurred a net $18.4 million pre-tax expense consisting of an increase in casualty claim expenses, offset by a workers’ compensation insurance benefit.

Net interest expense for the current quarter increased from second quarter 2021 due to higher interest rates compared to the same period last year.

The effective income tax rate in the current quarter was 25.0% and in line with the second quarter 2021. We now expect our 2022 annual tax rate to be between 23.5% and 24.5%.

Segment Information:

Intermodal (JBI)

• Second Quarter 2022 Segment Revenue: $1.83 billion; up 42%
• Second Quarter 2022 Operating Income: $202.5 million; up 50%

Intermodal volumes increased 8% over the same period in 2021. Eastern network loads increased 13%, while transcontinental loads increased 5%. Demand for intermodal capacity remained strong throughout the quarter, however rail velocity and customer behavior negatively impacted network efficiencies and container utilization, and ultimately, our ability to execute even greater volume in the quarter. Despite the network inefficiencies, segment gross revenue increased 42% from the prior-year period, reflecting the 8% increase in volume and a 32% increase in gross revenue per load, resulting from changes in the mix of freight, customer rates, and fuel surcharge revenues. Revenue per load excluding fuel surcharge revenue was up 20% year-over-year.

Operating income increased 50% in the second quarter from an increase in volume, combined with customer rate and cost-recovery efforts. These items were partially offset by increases in rail and third-party dray purchased transportation costs, professional driver and non-driver wages and benefits, professional driver recruiting expense, and costs stemming from inefficiencies in the rail and port networks, as well as customer detention of equipment. The JBI segment incurred approximately $7.7 million of the net pre-tax insurance-related expense in the quarter. During the period, we successfully onboarded 1,325 new pieces of trailing equipment. We ended the quarter with approximately 110,600 containers and 6,620 power units in the dray fleet.

Dedicated Contract Services (DCS)

• Second Quarter 2022 Segment Revenue: $863 million; up 39%
• Second Quarter 2022 Operating Income: $89.2 million; up 13%

DCS revenue increased 39% during the current quarter over the same period 2021. Productivity (revenue per truck per week) increased approximately 14% versus the prior period. Productivity excluding fuel surcharge revenue increased 5% from a year ago driven by increases in contracted indexed-based price escalators, partially offset by lower productivity of equipment on start-up accounts. A net additional 2,122 revenue producing trucks were in the fleet by the end of the quarter compared to the prior-year period, and a net additional 456 versus the end of the first quarter 2022. Customer retention rates remain above 98%.

Operating income increased 13% from the prior-year quarter. Benefits from higher revenue were mostly offset by increases in professional driver and non-driver wages and benefits, higher driver-recruiting costs, other costs related to the implementation of new, long-term contractual business, and higher bad debt and group medical expense. The DCS segment incurred approximately $1.6 million of the net pre-tax insurance-related expense in the quarter.

Integrated Capacity Solutions (ICS)

• Second Quarter 2022 Segment Revenue: $623 million; up 3%
• Second Quarter 2022 Operating Income: $23.6 million; up 658%

ICS revenue increased 3% in the current quarter over the same period 2021. Overall segment volumes decreased 3% versus the prior-year period, which was consistent with truckload volume performance. Revenue per load increased 5% compared to the second quarter 2021 due to higher contractual rates in our truckload business as well as changes in customer freight mix, partially offset by lower revenue per load in our transactional or spot business. Contractual volumes represented approximately 54% of the total load volume and 48% of the total revenue in the current quarter compared to 48% and 35%, respectively, in second quarter 2021. Of the total reported ICS revenue, approximately $392 million was executed through the Marketplace for J.B. Hunt 360 compared to $396 million in second quarter 2021.

Operating income increased 658% to $23.6 million compared to $3.1 million in the second quarter 2021. Benefits from higher revenue and gross profit margin were partially offset by higher personnel cost, increased insurance and claims expense and higher technology costs as compared to the same period 2021. The ICS segment incurred approximately $6.7 million of the net pre-tax insurance-related expense in the quarter. Gross profit margins increased to 16.2% in the current period versus 10.5% in the prior period. ICS carrier base increased 33% year over year.

Truckload (JBT)

• Second Quarter 2022 Segment Revenue: $269 million; up 46%
• Second Quarter 2022 Operating Income: $25.0 million; up 76%

JBT revenue increased 46% as compared to the same period in the previous year. Revenue excluding fuel surcharge revenue increased 37% primarily due to increased load volume and higher revenue per load excluding fuel surcharge revenue. Volume for JBT was up 14% year-over-year as total trailer count increased by approximately 3,800 units, or 46% versus the prior-year period. Trailer turns in the quarter were down 18% from the prior period due to the onboarding of new trailers and freight mix. Revenue per load excluding fuel surcharge revenue was up 20% on a 1% increase in length of haul. Both mix and same-store rate increases contributed to the increase in revenue quality.

JBT operating income increased 76% to $25.0 million versus $14.2 million in the second quarter 2021. JBT continues to leverage the J.B. Hunt 360 platform to grow power capacity and capability for the J.B. Hunt 360box® service offering. Benefits from higher volume and revenue quality led to an improvement in contribution margins across the segment. These benefits were partially offset by higher purchased transportation expense, trailer parts and maintenance costs, personnel costs, insurance and claims expense and continued technology investments to build out 360box. The JBT segment incurred approximately $2.0 million of the net pre-tax insurance-related expense in the quarter.

Final Mile Services (FMS)

• Second Quarter 2022 Segment Revenue: $257 million; up 21%
• Second Quarter 2022 Operating Income: $12.8 million; up 20%

FMS revenue increased 21% compared to the same period 2021 driven by the previously announced acquisition of Zenith Freight Lines, LLC (Zenith) that closed at the end of February, in addition to multiple customer contracts implemented over the last year. Revenue growth in the quarter was partially offset by internal efforts to improve revenue quality of the business. FMS revenue increased 8% over the prior-year period excluding the Zenith acquisition, which contributed approximately $28 million to segment revenue in the quarter.

Operating income increased 20% from second quarter 2021 which included the prior-year benefit of $3.2 million from a net settlement of claims. The increase in operating income was primarily driven by an improvement in revenue quality partially offset by increases in professional driver and non-driver wages and benefits, insurance and claims expense, higher technology costs, driver-recruiting expense and implementation costs for newly awarded business. The FMS segment incurred approximately $0.4 million of the net pre-tax insurance-related expense in the quarter.

Cash Flow and Capitalization:

At June 30, 2022, we had approximately $1.3 billion outstanding on various debt instruments which is comparable to levels at June 30, 2021 and at December 31, 2021.

Our net capital expenditures for the six months ended June 30, 2022 approximated $598 million compared to $261 million for the same period 2021. At June 30, 2022, we had cash and cash equivalents of approximately $124 million.

In the second quarter 2022, we purchased approximately 979,000 shares of common stock for approximately $164 million. At June 30, 2022, we had approximately $112 million remaining under our share repurchase authorization. Actual shares outstanding at June 30, 2022 approximated 103.8 million.

Conference Call Information:

The Company will hold a conference call today from 4:00–5:00 pm CDT to discuss the quarterly earnings. Investors will have the opportunity to listen to the conference call live over the internet by going to investor.jbhunt.com. Please log on 15 minutes early to register, download and install any necessary audio software. For those who cannot listen to the live broadcast, an online replay of the earnings call webcast will be available a few hours after the completion of the call.

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, 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 June 30
	2022						2021
				% Of						% Of
	Amount			Revenue			Amount			Revenue
Operating revenues, excluding fuel surcharge revenues	$	3,159,759					$	2,606,981
Fuel surcharge revenues		677,773						301,389
Total operating revenues		3,837,532		100.0	%			2,908,370		100.0	%
Operating expenses
Rents and purchased transportation		1,920,823		50.1	%			1,538,232		52.9	%
Salaries, wages and employee benefits		841,825		21.9	%			665,471		22.9	%
Fuel and fuel taxes		265,636		6.9	%			126,841		4.4	%
Depreciation and amortization		157,571		4.1	%			139,371		4.8	%
Operating supplies and expenses		126,383		3.3	%			91,019		3.1	%
Insurance and claims		87,258		2.3	%			35,508		1.2	%
General and administrative expenses, net of asset dispositions		59,764		1.6	%			47,505		1.6	%
Operating taxes and licenses		16,323		0.4	%			14,209		0.5	%
Communication and utilities		8,866		0.2	%			8,668		0.3	%
Total operating expenses		3,484,449		90.8	%			2,666,824		91.7	%
Operating income		353,083		9.2	%			241,546		8.3	%
Net interest expense		12,842		0.3	%			12,059		0.4	%
Earnings before income taxes		340,241		8.9	%			229,487		7.9	%
Income taxes		84,900		2.2	%			57,325		2.0	%
Net earnings	$	255,341		6.7	%		$	172,162		5.9	%
Average diluted shares outstanding		105,387						106,816
Diluted earnings per share	$	2.42					$	1.61

J.B. HUNT TRANSPORT SERVICES, INC.
Condensed Consolidated Statements of Earnings
(in thousands, except per share data)
(unaudited)
	Six Months Ended June 30
	2022						2021
				% Of						% Of
	Amount			Revenue			Amount			Revenue
Operating revenues, excluding fuel surcharge revenues	$	6,201,976					$	4,995,015
Fuel surcharge revenues		1,124,144						531,504
Total operating revenues		7,326,120		100.0	%			5,526,519		100.0	%
Operating expenses
Rents and purchased transportation		3,758,163		51.3	%			2,890,533		52.3	%
Salaries, wages and employee benefits		1,605,416		21.9	%			1,285,502		23.3	%
Fuel and fuel taxes		455,102		6.2	%			239,881		4.4	%
Depreciation and amortization		306,334		4.2	%			276,916		5.0	%
Operating supplies and expenses		233,322		3.2	%			172,717		3.1	%
Insurance and claims		133,389		1.8	%			73,538		1.3	%
General and administrative expenses, net of asset dispositions		97,209		1.4	%			92,396		1.7	%
Operating taxes and licenses		32,073		0.4	%			28,024		0.5	%
Communication and utilities		17,735		0.2	%			17,814		0.3	%
Total operating expenses		6,638,743		90.6	%			5,077,321		91.9	%
Operating income		687,377		9.4	%			449,198		8.1	%
Net interest expense		25,429		0.4	%			24,084		0.4	%
Earnings before income taxes		661,948		9.0	%			425,114		7.7	%
Income taxes		163,282		2.2	%			106,346		1.9	%
Net earnings	$	498,666		6.8	%		$	318,768		5.8	%
Average diluted shares outstanding		105,729						106,816
Diluted earnings per share	$	4.72					$	2.98

Financial Information By Segment
(in thousands)
(unaudited)
		Three Months Ended June 30
		2022					2021
					% Of					% Of
		Amount			Total		Amount			Total
Revenue
Intermodal		$	1,832,778		48%		$	1,289,400		44%
Dedicated			863,038		22%			621,179		22%
Integrated Capacity Solutions			623,233		16%			607,614		21%
Truckload			268,796		7%			183,634		6%
Final Mile Services			257,364		7%			212,265		7%
Subtotal			3,845,209		100%			2,914,092		100%
Intersegment eliminations			(7,677)		(0%)			(5,722)		(0%)
Consolidated revenue		$	3,837,532		100%		$	2,908,370		100%
Operating income
Intermodal		$	202,529		57%		$	134,641		56%
Dedicated			89,197		25%			79,010		33%
Integrated Capacity Solutions			23,623		7%			3,118		1%
Truckload			24,968		7%			14,195		6%
Final Mile Services			12,848		4%			10,691		4%
Other (1)			(82)		(0%)			(109)		(0%)
Operating income		$	353,083		100%		$	241,546		100%
		Six Months Ended June 30
		2022					2021
					% Of					% Of
		Amount			Total		Amount			Total
Revenue
Intermodal		$	3,436,164		47%		$	2,466,532		45%
Dedicated			1,604,344		22%			1,201,137		22%
Integrated Capacity Solutions			1,298,624		18%			1,132,561		20%
Truckload			533,139		7%			333,165		6%
Final Mile Services			475,818		6%			414,148		7%
Subtotal			7,348,089		100%			5,547,543		100%
Intersegment eliminations			(21,969)		(0%)			(21,024)		(0%)
Consolidated revenue		$	7,326,120		100%		$	5,526,519		100%
Operating income
Intermodal		$	403,500		59%		$	242,108		54%
Dedicated			166,301		24%			153,349		34%
Integrated Capacity Solutions			48,587		7%			10,387		2%
Truckload			56,458		8%			24,369		6%
Final Mile Services			12,668		2%			19,189		4%
Other (1)			(137)		(0%)			(204)		(0%)
Operating income		$	687,377		100%		$	449,198		100%

(1) Includes corporate support activity

Operating Statistics by Segment
(unaudited)
	Three Months Ended June 30
	2022				2021
Intermodal
Loads		539,024				499,682
Average length of haul		1,658				1,678
Revenue per load	$	3,400			$	2,580
Average tractors during the period *		6,562				5,782
Tractors (end of period) *		6,620				5,823
Trailing equipment (end of period)		110,654				99,377
Average effective trailing equipment usage		108,860				98,210
Dedicated
Loads		1,121,054				996,650
Average length of haul		164				161
Revenue per truck per week**	$	5,380			$	4,707
Average trucks during the period***		12,412				10,224
Trucks (end of period) ***		12,628				10,506
Trailing equipment (end of period)		27,108				27,354
Integrated Capacity Solutions
Loads		321,685				330,127
Revenue per load	$	1,937			$	1,841
Gross profit margin		16.2	%			10.5	%
Employee count (end of period)		1,044				966
Approximate number of third-party carriers (end of period)		154,770				116,600
Marketplace for J.B. Hunt 360 revenue (millions)	$	392.1			$	396.1
Truckload
Loads		123,592				108,538
Average trailers during the period		12,135				8,662
Revenue per load	$	2,175			$	1,692
Average length of haul		490				485
Tractors (end of period)
Company-owned		726				752
Independent contractor		1,897				1,018
Total tractors		2,623				1,770
Trailers (end of period)		12,770				8,958
Final Mile Services
Stops		1,441,796				1,732,962
Average trucks during the period***		1,873				1,488
* 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
		2022			2021
Intermodal
Loads			1,049,760			977,967
Average length of haul			1,665			1,683
Revenue per load		$	3,273		$	2,522
Average tractors during the period *			6,412			5,750
Tractors (end of period) *			6,620			5,823
Trailing equipment (end of period)			110,654			99,377
Average effective trailing equipment usage			107,372			96,406
Dedicated
Loads			2,162,896			1,938,870
Average length of haul			164			161
Revenue per truck per week**		$	5,120		$	4,643
Average trucks during the period***			12,179			10,093
Trucks (end of period) ***			12,628			10,506
Trailing equipment (end of period)			27,108			27,354
Integrated Capacity Solutions
Loads			650,397			622,492
Revenue per load		$	1,997		$	1,819
Gross profit margin			14.5%			11.4%
Employee count (end of period)			1,044			966
Approximate number of third-party carriers (end of period)			154,770			116,600
Marketplace for J.B. Hunt 360 revenue (millions)		$	822.4		$	755.0
Truckload
Loads			244,119			211,600
Average trailers during the period			11,796			8,616
Revenue per load		$	2,184		$	1,575
Average length of haul			491			465
Tractors (end of period)
Company-owned			726			752
Independent contractor			1,897			1,018
Total tractors			2,623			1,770
Trailers (end of period)			12,770			8,958
Final Mile Services
Stops			2,786,625			3,408,987
Average trucks during the period***			1,761			1,501
* 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, 2022			December 31, 2021
ASSETS
Current assets:
Cash and cash equivalents		$	123,841		$	355,549
Accounts Receivable, net			1,776,773			1,506,619
Prepaid expenses and other			381,304			451,201
Total current assets			2,281,918			2,313,369
Property and equipment			7,294,079			6,680,316
Less accumulated depreciation			2,846,384			2,612,661
Net property and equipment			4,447,695			4,067,655
Other assets, net			522,949			413,324
		$	7,252,562		$	6,794,348
LIABILITIES & STOCKHOLDERS' EQUITY
Current liabilities:
Current debt		$	349,955		$	355,972
Trade accounts payable			886,617			772,736
Claims accruals			324,758			307,210
Accrued payroll			185,829			190,950
Other accrued expenses			122,906			102,732
Total current liabilities			1,870,065			1,729,600
Long-term debt			945,999			945,257
Other long-term liabilities			301,003			256,233
Deferred income taxes			810,631			745,442
Stockholders' equity			3,324,864			3,117,816
		$	7,252,562		$	6,794,348

Supplemental Data
(unaudited)
		June 30, 2022			December 31, 2021
Actual shares outstanding at end of period (000)			103,813			105,094
Book value per actual share outstanding at end of period		$	32.03		$	29.67
		Six Months Ended June 30
		2022			2021
Net cash provided by operating activities (000)		$	784,527		$	668,748
Net capital expenditures (000)		$	598,094		$	260,711

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20220719006049/en/

Brad Delco

Senior Vice President – Finance

(479) 820-2723

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

FAQ

What were J.B. Hunt's Q2 2022 earnings results?

In Q2 2022, J.B. Hunt reported earnings of $2.42 per share, up 50% from $1.61 in Q2 2021.

What was the revenue growth reported by J.B. Hunt in Q2 2022?

J.B. Hunt reported a 32% increase in revenue, totaling $3.84 billion.

How did J.B. Hunt's segment revenues perform in Q2 2022?

All segments reported growth, with Intermodal revenue up 42% and Dedicated Contract Services up 39%.

What challenges did J.B. Hunt face in Q2 2022?

Challenges included increased operating costs and inefficiencies in container utilization affecting segment performance.

What is J.B. Hunt's tax rate guidance for 2022?

J.B. Hunt expects its 2022 annual tax rate to be between 23.5% and 24.5%.