J.B. Hunt Transport Services, Inc. Reports Earnings for the Third Quarter 2015

• Third Quarter 2015 Revenue: $1.59 billion; down 1%
• Third Quarter 2015 Operating Income: $194 million; up 13%
• Third Quarter 2015 EPS: 99 cents vs. 87 cents

LOWELL, Ark.--(BUSINESS WIRE)-- J.B. Hunt Transport Services, Inc., (NASDAQ: JBHT) announced third quarter 2015 net earnings of $115.1 million, or diluted earnings per share of 99 cents vs. third quarter 2014 net earnings of $102.4 million, or 87 cents per diluted share.

Total operating revenue for the current quarter was $1.59 billion, compared with $1.60 billion for the third quarter 2014. Customer rate increases, load growth of 3% in Intermodal (JBI), a 6% increase in revenue producing trucks and improved asset productivity, excluding fuel surcharges, in Dedicated Contract Services (DCS)™, a 9% increase in load volume in Integrated Capacity Solutions (ICS) and 14% increase in truck count in our Truck (JBT) business segment could not offset the decrease in fuel surcharge revenue and tepid customer demand resulting in a decrease in consolidated revenue compared to prior year. Current quarter total operating revenue, excluding fuel surcharges, increased 8% vs. the comparable quarter 2014.

Operating income for the current quarter totaled $194 million vs. $172 million for the third quarter 2014. The increase in operating income from load growth, higher productivity and customer rate increases was partially offset by lower box turns from slower train speeds in some regions, increases in rail purchase transportation rates, increases in driver wages and recruiting costs and higher equipment ownership costs compared to third quarter 2014.

Interest expense in the current quarter increased from a year ago due to higher debt levels primarily from the timing of the issuance of new senior notes to refinance maturing senior notes. The effective income tax rate for both the current quarter and third quarter 2014 was 38.10%. We expect our 2015 annual tax rate to be approximately 38.10%.

Segment Information:

Intermodal (JBI)

• Third Quarter 2015 Segment Revenue: $949 million; down 2%
• Third Quarter 2015 Operating Income: $126.1 million; up 1%

Overall volumes increased 3% over the same period in 2014. The Eastern network load growth slowed to 1% and Transcontinental loads grew 4% over the third quarter 2014 as eastern network loads were challenged with recovering rail service while west coast import volumes began to improve. Revenue decreased 2% reflecting the 3% volume growth and an approximate 4.4% decrease in revenue per load, which is the combination of changes in customer rate, freight mix and fuel surcharges. Revenue per load excluding fuel surcharges increased approximately 5% compared to third quarter 2014.

Operating income increased 1% over prior year. Benefits from customer rate increases, reduced reliance on third party dray carriers and lower dray fleet maintenance costs were partially offset by increases in rail purchased transportation rates, equipment ownership costs including lower box utilization and increased costs to attract and retain drivers. The current period ended with approximately 77,900 units of trailing capacity and 5,040 power units assigned to the dray fleet.

Dedicated Contract Services (DCS)

• Third Quarter 2015 Segment Revenue: $370 million; up 3%
• Third Quarter 2015 Operating Income: $45.1 million; up 32%

DCS revenue increased 3% during the current quarter over the same period in 2014. Productivity (revenue per truck per week) decreased by approximately 4% vs. 2014 primarily from lower fuel surcharge revenue. Productivity excluding fuel surcharge revenue increased approximately 1.8% from a year ago primarily from customer rate increases and increased customer demand for capacity. A year-over-year net addition of 413 revenue producing trucks, 195 net additions compared to second quarter 2015, were in the fleet by the end of the quarter. Approximately 56% of these additions represent private fleet conversions versus traditional dedicated capacity services and primarily reflect new contract implementations in this and prior periods. Customer retention rates remain above 96% as value driven services continue to support necessary rate increases.

Operating income increased by 32% from a year ago. Revenue from new accounts, higher productivity excluding fuel surcharge revenue, less reliance on third party carrier capacity and lower equipment maintenance costs were partially offset with higher driver wages, higher driver recruiting costs and higher equipment ownership costs compared to the same period in 2014.

Integrated Capacity Solutions (ICS)

• Third Quarter 2015 Segment Revenue: $173 million; down 7%
• Third Quarter 2015 Operating Income: $ 11.5 million; up 36%

ICS revenue decreased 7% in the current quarter vs. the third quarter 2014. Load volume increased 9% while revenue per load decreased 14% due to lower fuel prices and freight mix changes driven by customer demand including less transactional or “spot” business. Contractual volumes increased 13% to approximately 66% of total load volume and 61% of total revenue in the current quarter compared to 65% and 58%, respectively, in third quarter 2014.

Operating income increased 36% over the same period 2014 primarily due to improved gross profit margin. Gross profit margin increased to 15.9% in the current quarter vs. 13.3% in the prior year. The increase in operating income was partially offset by increased personnel costs as the total branch count grew to 33 compared to 28 at the end of third quarter last year. ICS’s carrier base increased 17% and the employee count increased 13% vs. third quarter 2014.

Truck (JBT)

• Third Quarter 2015 Segment Revenue: $ 98 million; up 2%
• Third Quarter 2015 Operating Income: $ 11.2 million; up 159%

JBT revenue for the current quarter increased 2% from the same period in 2014. Revenue excluding fuel surcharge increased 10%, primarily from increased truck count and core rate increases of approximately 4.5%, but was partially offset by lower asset utilization. At the end of the period, JBT operated 2,100 tractors compared to 1,843 a year ago.

Operating income increased by 159% compared to third quarter 2014. Favorable changes in core rates, increased fleet count, lower equipment maintenance costs, lower safety and insurance costs and improved fuel economy were partially offset by increased driver and independent contractor costs per mile, increased driver hiring costs, and lower asset utilization compared to third quarter 2014.

Cash Flow and Capitalization:

At September 30, 2015, we had a total of $993 million outstanding on various debt instruments compared to $837 million at September 30, 2014 and $934 million at December 31, 2014.

Our net capital expenditures for the nine months ended September 30, 2015 approximated $431 million compared to $479 million for the same period 2014. At September 30, 2015, we had cash and cash equivalents of approximately $5.5 million.

We purchased approximately 2.2 million shares of our common stock during the quarter for $177.9 million. At September 30, 2015 we had approximately $1 million remaining under our share repurchase authorization. Shares outstanding at September 30, 2015 approximated 114.6 million.

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, 2014. 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 immediately to interested parties on 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 September 30
				2015									2014
									% Of									% Of
				Amount					Revenue				Amount					Revenue
Operating revenues, excluding fuel surcharge revenues				$	1,419,451								$	1,316,951
Fuel surcharge revenues					167,043									284,205
Total operating revenues					1,586,494				100.0	%				1,601,156				100.0	%
Operating expenses
Rents and purchased transportation					770,148				48.5	%				802,092				50.1	%
Salaries, wages and employee benefits					351,651				22.2	%				327,106				20.4	%
Fuel and fuel taxes					76,755				4.8	%				115,503				7.2	%
Depreciation and amortization					86,201				5.4	%				75,416				4.7	%
Operating supplies and expenses					57,299				3.6	%				56,978				3.6	%
Insurance and claims					20,078				1.3	%				21,904				1.4	%
General and administrative expenses, net of asset dispositions					14,866				1.0	%				15,057				0.9	%
Operating taxes and licenses					10,683				0.7	%				9,893				0.7	%
Communication and utilities					4,967				0.3	%				5,107				0.3	%
Total operating expenses					1,392,648				87.8	%				1,429,056				89.3	%
Operating income					193,846				12.2	%				172,100				10.7	%
Net interest expense					7,838				0.5	%				6,649				0.4	%
Earnings before income taxes					186,008				11.7	%				165,451				10.3	%
Income taxes					70,869				4.4	%				63,037				3.9	%
Net earnings				$	115,139				7.3	%			$	102,414				6.4	%
Average diluted shares outstanding					116,282									118,221
Diluted earnings per share				$	0.99								$	0.87
J.B. HUNT TRANSPORT SERVICES, INC.
Condensed Consolidated Statements of Earnings
(in thousands, except per share data)
(unaudited)
				Nine Months Ended September 30
				2015									2014
									% Of									% Of
				Amount					Revenue				Amount					Revenue
Operating revenues, excluding fuel surcharge revenues				$	4,043,991								$	3,737,936
Fuel surcharge revenues					522,640									817,994
Total operating revenues					4,566,631				100.0	%				4,555,930				100.0	%
Operating expenses
Rents and purchased transportation					2,194,683				48.1	%				2,282,992				50.1	%
Salaries, wages and employee benefits					1,030,438				22.6	%				951,517				20.9	%
Fuel and fuel taxes					243,459				5.3	%				352,452				7.7	%
Depreciation and amortization					251,239				5.5	%				216,109				4.7	%
Operating supplies and expenses					164,497				3.6	%				165,939				3.6	%
Insurance and claims					55,714				1.2	%				57,622				1.3	%
General and administrative expenses, net of asset dispositions					56,471				1.3	%				36,525				0.9	%
Operating taxes and licenses					31,505				0.7	%				28,517				0.7	%
Communication and utilities					15,824				0.3	%				15,620				0.3	%
Total operating expenses					4,043,830				88.6	%				4,107,293				90.2	%
Operating income					522,801				11.4	%				448,637				9.8	%
Net interest expense					21,202				0.4	%				21,358				0.4	%
Earnings before income taxes					501,599				11.0	%				427,279				9.4	%
Income taxes					191,109				4.2	%				162,793				3.6	%
Net earnings				$	310,490				6.8	%			$	264,486				5.8	%
Average diluted shares outstanding					117,293									118,567
Diluted earnings per share				$	2.65								$	2.23
Financial Information By Segment
(in thousands)
(unaudited)
				Three Months Ended September 30
				2015									2014
									% Of									% Of
				Amount					Total				Amount					Total
Revenue
Intermodal				$	948,779				60	%			$	963,568				60	%
Dedicated					370,360				23	%				361,030				22	%
Integrated Capacity Solutions					172,894				11	%				185,135				12	%
Truck					97,521				6	%				95,754				6	%
Subtotal					1,589,554				100	%				1,605,487				100	%
Intersegment eliminations					(3,060	)			(0	%)				(4,331	)			(0	%)
Consolidated revenue				$	1,586,494				100	%			$	1,601,156				100	%
Operating income
Intermodal				$	126,077				65	%			$	125,044				73	%
Dedicated					45,123				23	%				34,294				20	%
Integrated Capacity Solutions					11,453				6	%				8,442				5	%
Truck					11,244				6	%				4,333				2	%
Other (1)					(51	)			(0	%)				(13	)			(0	%)
Operating income				$	193,846				100	%			$	172,100				100	%
				Nine Months Ended September 30
				2015									2014
									% Of									% Of
				Amount					Total				Amount					Total
Revenue
Intermodal				$	2,697,537				59	%			$	2,729,731				60	%
Dedicated					1,082,264				24	%				1,030,802				23	%
Integrated Capacity Solutions					509,985				11	%				520,659				11	%
Truck					286,218				6	%				289,297				6	%
Subtotal					4,576,004				100	%				4,570,489				100	%
Intersegment eliminations					(9,373	)			(0	%)				(14,559	)			(0	%)
Consolidated revenue				$	4,566,631				100	%			$	4,555,930				100	%
Operating income
Intermodal				$	348,955				67	%			$	331,610				74	%
Dedicated					121,511				23	%				80,212				18	%
Integrated Capacity Solutions					22,974				4	%				20,788				5	%
Truck					29,448				6	%				16,144				3	%
Other (1)					(87	)			(0	%)				(117	)			(0	%)
Operating income				$	522,801				100	%			$	448,637				100	%
(1) Includes corporate support activity

Operating Statistics by Segment
(unaudited)
				Three Months Ended September 30
				2015						2014
Intermodal
Loads					458,584						445,385
Average length of haul					1,660						1,645
Revenue per load				$	2,069					$	2,163
Average tractors during the period *					4,977						4,615
Tractors (end of period)
Company-owned					4,292						3,895
Independent contractor					750						754
Total tractors					5,042						4,649
Net change in trailing equipment during the period					1,658						1,954
Trailing equipment (end of period)					77,937						71,678
Average effective trailing equipment usage					74,669						70,516
Dedicated
Loads					578,628						544,304
Average length of haul					174						176
Revenue per truck per week**				$	3,998					$	4,170
Average trucks during the period***					7,098						6,650
Trucks (end of period)
Company-owned					6,758						6,252
Independent contractor					9						6
Customer-owned (Dedicated operated)					400						496
Total trucks					7,167						6,754
Trailing equipment (end of period)					21,141						20,027
Average effective trailing equipment usage					22,420						21,052
Integrated Capacity Solutions
Loads					127,016						116,401
Revenue per load				$	1,361					$	1,590
Gross profit margin					15.9	%					13.3	%
Employee count (end of period)					650						577
Approximate number of third-party carriers (end of period)					44,000						37,700
Truck
Loads					91,639						89,636
Average length of haul					454						419
Loaded miles (000)					41,376						37,674
Total miles (000)					49,213						44,436
Average nonpaid empty miles per load					80.9						73.6
Revenue per tractor per week**				$	3,630					$	4,109
Average tractors during the period *					2,080						1,816
Tractors (end of period)
Company-owned					1,471						1,249
Independent contractor					629						594
Total tractors					2,100						1,843
Trailers (end of period)					7,740						6,776
Average effective trailing equipment usage					6,610						5,816
* 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
				2015						2014
Intermodal
Loads					1,305,347						1,260,809
Average length of haul					1,648						1,652
Revenue per load				$	2,067					$	2,165
Average tractors during the period *					4,903						4,437
Tractors (end of period)
Company-owned					4,292						3,895
Independent contractor					750						754
Total tractors					5,042						4,649
Net change in trailing equipment during the period					4,639						5,699
Trailing equipment (end of period)					77,937						71,678
Average effective trailing equipment usage					71,395						67,750
Dedicated
Loads					1,671,407						1,553,092
Average length of haul					175						178
Revenue per truck per week**				$	4,021					$	4,069
Average trucks during the period***					6,957						6,559
Trucks (end of period)
Company-owned					6,758						6,252
Independent contractor					9						6
Customer-owned (Dedicated operated)					400						496
Total trucks					7,167						6,754
Trailing equipment (end of period)					21,141						20,027
Average effective trailing equipment usage					22,324						20,706
Integrated Capacity Solutions
Loads					371,060						329,287
Revenue per load				$	1,374					$	1,581
Gross profit margin					15.0	%					12.7	%
Employee count (end of period)					650						577
Approximate number of third-party carriers (end of period)					44,000						37,700
Truck
Loads					271,107						280,678
Average length of haul					446						404
Loaded miles (000)					120,366						113,389
Total miles (000)					142,419						133,625
Average nonpaid empty miles per load					77.8						69.7
Revenue per tractor per week**				$	3,711					$	4,063
Average tractors during the period*					2,015						1,862
Tractors (end of period)
Company-owned					1,471						1,249
Independent contractor					629						594
Total tractors					2,100						1,843
Trailers (end of period)					7,740						6,776
Average effective trailing equipment usage					6,342						5,788
* 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, 2015						December 31, 2014
ASSETS
Current assets:
Cash and cash equivalents				$	5,542					$	5,961
Accounts Receivable					671,398						653,795
Prepaid expenses and other					72,600						201,743
Deferred income taxes					18,631						18,631
Total current assets					768,171						880,130
Property and equipment					3,957,722						3,719,757
Less accumulated depreciation					1,287,213						1,237,225
Net property and equipment					2,670,509						2,482,532
Other assets					80,584						34,455
				$	3,519,264					$	3,397,117
LIABILITIES & STOCKHOLDERS' EQUITY
Current liabilities:
Current debt				$	-					$	250,000
Trade accounts payable					355,671						325,838
Claims accruals					100,649						96,719
Accrued payroll					69,447						80,547
Other accrued expenses					18,281						17,966
Total current liabilities					544,048						771,070
Long-term debt					993,353						683,539
Other long-term liabilities					59,646						59,561
Deferred income taxes					673,030						678,424
Stockholders' equity					1,249,187						1,204,523
				$	3,519,264					$	3,397,117
Supplemental Data
(unaudited)
				September 30, 2015						December 31, 2014
Actual shares outstanding at end of period (000)					114,602						116,575
Book value per actual share outstanding at end of period				$	10.90					$	10.33
				Nine Months Ended September 30
				2015						2014
Net cash provided by operating activities (000)				$	696,960					$	486,365
Net capital expenditures (000)				$	430,660					$	479,225

View source version on businesswire.com: http://www.businesswire.com/news/home/20151014005176/en/

J.B. Hunt Transport Services, Inc.
David G. Mee, 479-820-8363
Executive Vice President, Finance/Administration and Chief Financial Officer

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

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