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

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·18 min read
In this article:
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  • 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., October 15, 2021--(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/

Contacts

Brad Delco
Vice President – Finance & Investor Relations
(479) 820-2723