J.B. Hunt's Q4 earnings surge 39% to US$57.9M, operating revenues jump 16% to US$1.02B, largely on higher Intermodal volumes, revenue growth in Integrated Capacity Solutions and Dedicated Contract Services segments
January 31, 2011
* Fourth Quarter 2010 Revenue: $1.02 billion; up 16%
* Fourth Quarter 2010 Operating Income: $97 million; up 33%
* Fourth Quarter 2010 EPS: 46 cents vs. 32 cents
* Full Year 2010 Revenue: $3.79 billion; up 18%
* Full Year 2010 Operating Income: $348 million; up 40%
* Full Year 2010 EPS: $1.56 vs. $1.05
J.B. Hunt Transport Services, Inc., (NASDAQ:JBHT - News) announced fourth quarter 2010 net earnings of $57.9 million, or diluted earnings per share of 46 cents vs. 2009 fourth quarter earnings of $41.7 million, or 32 cents per diluted share.
Total operating revenue for the current quarter was $1.02 billion compared with $877 million for the fourth quarter 2009. This increase in operating revenue was primarily attributable to 13% higher Intermodal segment volumes and revenue growth in our Integrated Capacity Solutions (ICS) and Dedicated Contract Services (DCS) segments. Current quarter operating revenue, excluding fuel surcharges, increased 13% vs. the comparable quarter 2009.
Operating income for the current quarter increased to $97.3 million vs. $72.9 million for the fourth quarter 2009. This increase was primarily due to a 30% increase in Intermodal operating income and positive Truck operating income vs. a loss last year.
Compared with the same period 2009, net interest expense in the current quarter was up $1.4 million, primarily due to higher debt levels. The effective income tax rate for the current quarter was 35.1% vs. 40.7% in 2009. This decrease in the effective tax rate was related to the resolution of uncertain tax positions and a sale last year of all the Company’s interest in Transplace, which increased last year’s tax rate.
“In 2010, we continued our strategic mission of integrating our distinct and complementary services, while simultaneously maintaining execution discipline in our four business segments. Our portfolio of services offers a comprehensive approach to the supply chain solutions we can provide our customers.
“By taking a more ‘horizontal view’ of the flow of inventory beginning with 1) manufacturing and importing, 2) various distribution channels, 3) retail replenishment and 4) final delivery to the consumer, we see a growing correlation in our ability to provide a higher level of value to our customers. Collaborating with strategically minded clients in pursuit of new ways to connect our services and generate increased efficiencies continues to be a priority.
”We are generally pleased with the year’s progress of all of our businesses, given the sluggish and prolonged macroeconomic conditions under which we operate. Attention to revenue quality and the appropriate addition of assets across all business segments remain a constant focus. We are especially pleased with the continued efforts shown by our employee associates who safely deliver industry-leading service and strive for improved asset utilization,” said John N. Roberts III, President and CEO.
* Fourth Quarter 2010 Segment Revenue: $588 million; up 20%
* Fourth Quarter 2010 Operating Income: $69.9 million; up 30%
JBI’s increased revenue for the current quarter was driven by a 13% increase in load count, base price increases of 2% and higher fuel surcharges over the same quarter a year ago. Volume increases for the eastern network were 23% while transcontinental business grew at 10% from the same period 2009. West coast demand remained strong, continuing the need for abnormally high levels of empty repositions. We had approximately 45,700 containers and trailers at year end to be well positioned for 2011 growth.
Operating income improved 30% over the same period last year. This improvement was mostly driven by increases in volume and modest price recovery. Our focus on cost reduction, increased container utilization and reduced usage of outside dray services also contributed to the improvement in margin from the same quarter 2009. Railroad service was consistent throughout the current quarter and contributed to our ability to meet peak demand levels in different parts of the country.
Demand for expanded intermodal services continued as new over the road freight conversion opportunities were identified. Pricing continued to recover as railroad, driver and equipment cost increases were able to be passed through to customers as contracts came due.
Dedicated Contract Services (DCS)
* Fourth quarter 2010 Segment Revenue: $238 million; up 15%
* Fourth quarter 2010 Operating Income: $19.6 million; up 5%
DCS revenue increased 15% while revenue, excluding fuel surcharges, increased 13% over the same period 2009. Revenue in our delivery channel, defined as delivering product to its point of consumption, increased 28% and revenue in our replenishment channel, defined as delivering product to point of sale, increased 21% vs. the same quarter 2009. The revenue increases in delivery and replenishment channels related to new contracts awarded in each channel. Revenue in our capacity channel, which has more traditional truck-load characteristics, declined 22% as we continued to move away from this highly competitive business.
Operating income increased 5% vs. the same quarter 2009. Our productivity increased 6% vs. same quarter 2009. We define productivity as revenue per truck per week, excluding fuel surcharges. The leverage we gained in the current quarter due to increases in revenue and productivity was diluted by unusually high casualty and workers’ compensation costs in the current quarter.
* Fourth Quarter 2010 Segment Revenue: $118 million; up 0.1%
* Fourth Quarter 2010 Operating Income: $4.4 million vs. $(1.3) million
JBT revenue for the current quarter increased slightly vs. the same period 2009 despite a 10% reduction in tractors year-over-year. Excluding fuel surcharges, current quarter revenue decreased 2% vs. the same quarter 2009. At the end of the current quarter, our tractor count was 2,588 vs. 2,861 in 2009.
Rate per mile, excluding fuel surcharges, gained 8% over the same period in 2009. Moreover, the average length of haul was 4% longer than a year ago, multiplying the effect of the year-over-year rate change. Rates from consistent shippers improved year-over-year by 5.1% and spot prices gained 9.5%.
Fuel prices increased significantly throughout the quarter. Our current quarter fuel cost per gallon was 16% above the fourth quarter 2009 and 9% over the last quarter.
Integrated Capacity Solutions (ICS)
* Fourth Quarter 2010 Segment Revenue: $83 million; up 24%
* Fourth Quarter 2010 Operating Income: $3.3 million; up 89%
ICS revenue increased 24% vs. fourth quarter 2009, due to a 6% increase in load volume and higher pricing in both our contractual and transactional business. Our gross profit (gross revenue less purchased transportation expense) increased 20% to $11.4 million from fourth quarter 2009, however our gross profit margin decreased to 13.8% in the current quarter vs. 14.2% last year due to higher transportation costs and higher fuel prices. Our carrier base increased 14% and our end of period employee count increased 2% compared to fourth quarter 2009.
Cash Flow and Capitalization:
At December 31, 2010, we had total debt outstanding of $654 million on various debt instruments compared to $565 million at December 31, 2009 and $649 million at September 30, 2010.
Our net capital expenditures for the year ended 2010 approximated $226 million vs. $249 million in 2009. At December 21, 2010, we had cash and cash equivalents of $7.7 million.
During the current quarter we used $76 million to purchase approximately 2 million shares of our common stock. At December 31, 2010, we had approximately $249 million remaining under a previously announced $500 million share repurchase authorization. Actual shares outstanding at December 31, 2010 were approximately 121 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, 2009. 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 at our web site, www.jbhunt.com.
About J.B. Hunt
J.B. Hunt Transport Services, Inc. focuses on providing safe and reliable transportation services to a diverse group of customers throughout the continental United States, Canada and Mexico. Utilizing an integrated, multimodal approach, we provide capacity-oriented solutions centered on delivering customer value and industry-leading service.
Our stock is traded on NASDAQ under the ticker symbol JBHT and is a component of the Dow Jones Transportation Average. For more information about our Company, visit www.jbhunt.com.
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