J.B. Hunt's Q4 net income up 1.3% to US$242.2M from net earnings of US$154M last year; total operating revenue up 28% to US$3.50B from US$2.74B as all segments contribute to revenue growth, with Truckload up 85%, Integrated Capacity Solutions up 26%

Sample article from our Logistic & Supply Chain

LOWELL, Arkansas , January 25, 2022 (press release) –

 

  • Fourth  Quarter  2021  Revenue: $3.50  billion; up  28%
  • Fourth  Quarter  2021  Operating  Income:    $322.5  million; up  55%
  • Fourth  Quarter  2021  EPS: $2.28  vs.  $1.44; up  58%
  • Full Year  2021  Revenue: $12.17  billion; up  26%
  • Full  Year  2021  Operating  Income: $1.05  billion;  up  47%
  • Full Year  2021  EPS: $7.14  vs.  $4.74;  up  51%

J.B.  Hunt  Transport  Services,  Inc.  (NASDAQ:  JBHT)  announced fourth quarter 2021  U.S.  GAAP  (United  States  Generally  Accepted  Accounting  Principles)  net  income  of $242.2  million,  or  diluted earnings  per  share  of  $2.28  vs.  fourth  quarter  2020  net  earnings  of  $154.0  million,  or  diluted  earnings  per  share of $1.44.   

Total  operating  revenue  for  the  current  quarter  was  $3.50  billion,  compared with $2.74  billion  for  the  fourth  quarter 2020.  All  segments  contributed  to the  revenue  growth  versus  the prior  year  period.  Truckload  (JBT)  and Integrated Capacity  Solutions™  (ICS)  grew  revenue  85%  and  26%  year  over  year,  respectively,  as  both segments  were  able to  source capacity  for  customers  by  leveraging  the talents  and skills  of  our  people and  our  investments  in  technology across  the  organization,  including  the  Marketplace  for  J.B.  Hunt  360°®.  Intermodal  (JBI)  revenue  grew  26%,  driven by  a  30%  increase  in  revenue  per  load,  partially  offset  by  a  3%  decline  in  volume.  Dedicated  Contract  Services® (DCS®)  revenue grew  25%  as  a result  of  a  16%  increase in  average revenue  producing  trucks  and  a  7%  increase in fleet  productivity  versus  the prior  year  period.  Final Mile  Services®  (FMS)  revenue increased  4%  as  strong  demand for  services  in the segment  were  offset  by  supply-chain related  challenges  in  most  of  the primary  markets  served. Current  quarter  total  operating  revenue,  excluding  fuel  surcharges,  increased approximately  22%  vs. the comparable  quarter  2020.

Total  freight  transactions  in  the  Marketplace for  J.B.  Hunt  360  increased  27%  to  $593  million in the fourth quarter  2021 compared to  $468  million  in the prior  year  quarter.  ICS  revenue  on  the  platform  increased  11%  to  $431  million  versus the  year  ago  period.  JBT  and  JBI  executed  approximately  $113  million  and  $48  million,  respectively,  of  third-party dray,  independent  contractor  and  power-only  capacity  through the platform during  the  quarter.

U.S.  GAAP  operating  income  for  the  current  quarter  totaled  $322.5  million  vs.  $207.7  million  for  the  fourth  quarter 2020.  Operating  income  increased  from  fourth quarter  2020  primarily  from  customer  rate  and cost  recovery  efforts and  further  scaling  into  our  technology  investments  at  a consolidated  level,  in  addition  to  a  $5.7  million  benefit  from the reduction of  a  contingent  liability  in FMS.  These  items  were partially  offset  by  network  fluidity  challenges presented  from  both  rail  and  customer  activity  in  JBI  as  well  as  increases  in:  frontline  employee  bonuses;  driver wage  and recruiting costs;  rail  and truck  purchase transportation  expense;  non-driver  personnel  salary,  wages  and incentive compensation;  group medical  and casualty  insurance  expense;  and implementation costs  for  newly awarded  business  in both  DCS  and FMS  segments.  

Net  interest  expense  in the  current  quarter  decreased  primarily  from  lower  interest  rates  from  fourth  quarter  2020. The fourth quarter  effective  tax  rates  for  2021  and  2020  were  22.6%  and  22.0%,  respectively.  The  annual  effective tax  rates  for  2021  and  2020  were  23.9%  and  24.0%,  respectively.  We  expect  our  2022  annual  tax  rate  to  be  between 24.0%  and 25.0%.  

Segment Information:

Intermodal  (JBI)

  • Fourth  Quarter  2021  Segment  Revenue:    $1.57  billion; up 26%
  • Fourth  Quarter  2021  Operating  Income:    $195.3  million;  up  76%

Intermodal  volumes  declined 3%  over  the same period  in  2020.  Eastern  network  loads  increased 1%,  while transcontinental  loads  declined  5%  compared  to  the  fourth quarter  2020.  While demand for  intermodal  capacity remains  strong,  ongoing  network  fluidity  challenges  driven by  rail  restrictions  and  customer  detention  of  equipment, were  even  further  impacted  by  weather,  derailments  and  COVID-related labor  shortages  and  disruptions  during the quarter.  Despite  these volume-related  challenges,  revenue  increased  26%  for  the quarter  versus  the prior  year,  driven by  a  30%  increase  in 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  22%  year  over  year.

Operating income  increased 76%  in the fourth  quarter  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  and  non-driver  wages  and  benefits,  higher  driver  recruiting  costs, and  activity-based costs  incurred  to  counteract  network  inefficiencies  stemming from rail  and customer  fluidity challenges.  The current  period ended with approximately  105,000  units  of  trailing capacity  and  approximately  6,190 power  units  in  the  dray  fleet.

Dedicated  Contract  Services  (DCS)

  • Fourth  Quarter  2021  Segment  Revenue:    $712  million; up  25%
  • Fourth  Quarter  2021  Operating  Income:    $72.6  million;  down  6%

DCS revenue  increased  25%  during the current  quarter  over  the same period  2020.  Productivity  (revenue  per  truck per  week)  increased approximately  7%  versus  the  prior  period.  Productivity  excluding fuel  surcharge  revenue increased  2%  from  a  year  ago  primarily  from  contracted  indexed-based  price  escalators  partially  offset  by  lower productivity  on  start-up  accounts  and  a  greater  number  of  open  trucks  due  to  the  tight  labor  market  and  COVIDrelated  labor  disruptions.  A  net  additional  1,778  revenue producing trucks  were  in  the fleet  by  the  end  of  the  quarter compared  to  the  prior  year  period,  and  a  net  additional  439  versus  the  end  of  the  third  quarter  2021.  Customer retention  rates  remain  above  98%.

Operating  income  decreased  6%  from  the  prior  year  quarter.  Benefits  from  higher  revenue  and  increased productivity  of  assets  were more than offset  by  increases  in  casualty  insurance expense,  frontline employee bonuses,  group  medical  benefits,  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)

  • Fourth  Quarter  2021  Segment  Revenue:    $739  million; up  26%
  • Fourth  Quarter  2021  Operating  Income:  $21.2  million;  up  280%

ICS  revenue  increased  26%  in  the  current  quarter  versus  the  fourth  quarter  2020.  Revenue  growth  was  primarily driven  by  a 27%  increase  in  revenue  per  load resulting from changes  in customer  freight  mix  and higher  contractual and spot  rates  in our  truckload business  as  compared to the  fourth quarter  2020.  Overall  segment  volumes  declined 1%  with  truckload  volumes  increasing  3%  versus  the  prior  year  period.  Contractual  volumes  represented approximately  54%  of  the  total  load volume and  43%  of  the total  revenue in the current  quarter  compared to  51% and  35%,  respectively,  in  fourth  quarter  2020.  Of  the  total  reported  ICS  revenue,  approximately  $431  million  was executed  through the  Marketplace for  J.B.  Hunt  360 compared  to $387  million  in  fourth  quarter  2020.

Operating  income increased to $21.2  million compared to $5.6  million  in the fourth quarter  2020.  Benefits  from higher  gross  margin  were  partially  offset  by  higher  personnel  and technology  costs  as  compared  to  the  same period 2020.  Gross  profit  margins  increased  to  12.2%  in  the  current  period  versus  10.8%  in  the  prior  period.  ICS  carrier base increased  36%  year  over  year.

Final  Mile Services  (FMS)

  • Fourth  Quarter  2021  Segment  Revenue:    $222  million;  up  4%
  • Fourth  Quarter  2021  Operating  Income:    $7.4  million;  up  35%

FMS revenue  increased  4%  compared  to  the  same  period  2020.  Stop count  within  FMS  decreased  22%  during  the current  quarter  versus  a year  ago.  The addition  of  multiple customer  contracts  implemented over  the last  year  were more  than  offset  by  the  reduction  of  stops  at  several  customers  due  to  labor  shortages  and  supply  chain  constraints. Productivity,  defined  as  revenue  per  stop,  increased  approximately  33%  compared to the prior  year  period  primarily from  a  shift  in  the  mix  of  business  between  asset  and  asset-light  operations.

Operating  income,  which  included a  $5.7  million  benefit  from  the reduction  of  a contingent  liability,  increased  35% over  the prior  year  quarter.  Excluding  the  benefit,  operating income  declined  68%  versus  the prior  year  period. Higher  revenue from  multiple new  customer  contracts  was  more than offset  by  significant  increases  in implementation  expenses  as  a result  of  those same contracts,  along  with  less  revenue  at  some  existing customers due  to  supply-chain  constraints.  Higher  personnel  expense  related  to  salary,  wages  and  incentive  compensation were also  offsetting  items  in the  quarter.

Truckload  (JBT)

  •  Fourth  Quarter  2021  Segment  Revenue:    $259  million;  up  85%
  •  Fourth  Quarter  2021  Operating  Income:    $25.9  million;  up  210%

JBT  revenue  increased 85%  from the same  period in  2020.  Revenue excluding fuel  surcharge revenue increased 79%,  primarily  from a  55%  increase  in  revenue  per  load  excluding  fuel  surcharge  revenue  and  a  15%  increase in load count  compared to a  year  ago.  The  increase  in revenue  per  load  excluding  fuel  surcharge revenue  was  driven by  a  32%  increase  in  revenue  per  loaded  mile  excluding  fuel  surcharge  revenue  and  a  19%  increase  in  average length of  haul.  Load count  growth and the  length of  haul  increase were primarily  related to the continued net  trailer additions  and  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  27%  compared  to  the  same  period  2020.  The  current  period  ended  with  11,172  trailers  and  2,235 tractors,  compared to  8,567  and  1,769 respectively  for  the prior  year  period.   Operating  income increased to $25.9  million compared  to  $8.4  million  in the fourth 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  and higher  non-driver  personnel  expense  related to  salary,  wages  and incentive compensation.  Further  investments  in  both  building  out  our  trailer  network  and technology  related  to the continued  expansion of  360box  also  partially  offset  higher  revenue.

Cash  Flow  and  Capitalization:

At  December  31,  2021,  we  had  total  debt  outstanding  of  $1.3  billion  outstanding on  various  debt  instruments  which is  comparable to  the  total  debt  levels  at  December  31,  2020,  and September  30,  2021. Our net  capital  expenditures  for  2021  approximated  $877  million  vs. $601  million  in  2020.  At  December  31,  2021,  we had cash  and  cash equivalents  of  $356  million. In the  fourth  quarter  2021,  we purchased  approximately  76,000  shares  of  our  common  stock  for  approximately  $15 million.  At  December  31,  2021,  we had approximately  $351  million remaining under  our  share repurchase authorization.  Actual  shares  outstanding at  December  31,  2021,  approximated 105.1  million.

Conference  Call  Information: The Company  will  hold  a  conference  call  today  from  4:00–5:00  pm  CST  to  discuss  the quarterly  earnings.  To participate  in  the  call,  dial  1-833-360-0810  (domestic)  or  470-495-0976  (international)  15  minutes  prior  to  the  start of  the  call  and  provide  the  following  conference  ID:  8876825.  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.  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. 

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