J.B. Hunt Transport posts Q3 profit of US$68.7M, up 32% year-over-year as revenue climbs 19% to US$1.17B; company reports 15% load growth in intermodal volume

LOWELL, Arkansas , October 14, 2011 (press release) – Third Quarter 2011 Revenue: $1.17 billion; up 19%

Third Quarter 2011 Operating Income: $119 million; up 30%

--Third Quarter 2011 EPS: 57 cents vs. 41* cents

--*3Q 2010 results included $4.0 million of pretax expense (2 cents per diluted share) related to a charitable contribution.

J.B. Hunt Transport Services, Inc. /quotes/zigman/73439/quotes/nls/jbht JBHT -1.31% announced record third quarter 2011 net earnings of $68.7 million, or diluted earnings per share of 57 cents vs. third quarter 2010 net earnings of $52.2 million, or 41 cents per diluted share. Third quarter 2010 results included $4.0 million of pretax expense related to a commitment to the Arkansas Children's Hospital which reduced net earnings by 2 cents per diluted share.

Total operating revenue for the current quarter was $1.17 billion, compared with $986 million for the third quarter 2010. All four segments contributed to this increase in operating revenue. Load growth of 15% in Intermodal (JBI) and 14% in Integrated Capacity Solutions (ICS) helped drive 24% and 21% increases in segment revenue, respectively. Our Dedicated Contract Services (DCS) segment increased operating revenue by 16% primarily from new accounts, while Truck (JBT) segment revenue rose 2% due to higher rates and an increase in fuel surcharges. Current quarter total operating revenue, excluding fuel surcharges, increased 11% vs. the comparable quarter 2010.

Operating income for the current quarter totaled $119 million vs. $91 million for the third quarter 2010. Again, all four segments contributed to this increase in operating income with JBI accounting for nearly $18 million of the increase, while DCS, ICS and JBT combined to add approximately $9.0 million.

Net earnings rose 32% to $68.7 million in the current quarter from $52.2 million in 2010, primarily due to the growth of revenue, the reduction in charitable contribution expense and other cost efficiencies. The effective income tax rate for the quarter was 38.5% in both 2011 and 2010.

"Combining the right mix of services and the commitment of our people, we overcame less predictable freight patterns and some weather related events to produce another record quarter. We continued to invest capital in businesses that show resiliency despite the ongoing concern many have expressed about the economy. Intermodal, DCS and ICS all delivered double digit growth year over year in both revenue and operating income, while our Truck business yielded modest growth in both categories. In addition to improving trends in our business units, we were also able to repurchase approximately 4.0 million shares of stock during the current quarter using our strong balance sheet and cash flow generation," said John N. Roberts, JBHT President and CEO.

Segment Information:

Intermodal (JBI)

-- Third Quarter 2011 Segment Revenue: $691 million; up 24%

-- Third Quarter 2011 Operating Income: $78.4 million; up 30%

JBI load volume grew 15% on the continued success of converting freight from over-the-road to intermodal. Our eastern network grew 31% and our transcontinental volume grew 8% over prior year reflecting a later start to peak shipping season. Overall revenue grew 24% as a result of the volume growth, fuel surcharge increases, and a 4% increase in rates, excluding fuel surcharge.

The weather related interruptions in the northeast negatively impacted our driver productivity, customer service and container utilization for the current quarter; however the overall impact on volume and cost was minimal. The improvement in overall operating income can be partially attributed to a reduction in the number of empty repositioning moves compared to third quarter 2010, due to the later start to peak shipping season and additional container capacity. The current quarter ended with almost 52,000 units of trailing capacity and approximately 3,100 tractors in our dray fleet.

Dedicated Contract Services (DCS)

-- Third Quarter 2011 Segment Revenue: $269 million; up 16%

-- Third Quarter 2011 Operating Income: $29.7 million; up 34%

DCS revenue increased 16% during the current quarter vs. 2010, while revenue, excluding fuel surcharges, increased 10%. The increase in revenue related to an increase in truck count as a result of new contracts awarded. Productivity (revenue per truck per week) was virtually the same as the third quarter 2010.

Operating income increased 34% vs. the same quarter 2010. The increase in operating income primarily related to improved cost controls, the transfer of assets to more profitable accounts, and the increase in revenue partly related to a higher truck count.

Truck (JBT)

-- Third Quarter 2011 Segment Revenue: $127 million; up 2%

-- Third Quarter 2011 Operating Income: $6.8 million; up 4%

JBT earned $6.8 million in operating income compared to $6.5 million in the same quarter of 2010. Excluding fuel surcharges, revenue for the current quarter decreased 5% on a 7% reduction in tractors year over year. At the end of the quarter, our tractor count was 2,605 compared to 2,793 in 2010.

Utilization increased 1% and rates per mile excluding fuel surcharges increased 2.4% vs. the same quarter 2010. Rates from consistent shippers improved 3% year over year. Demand was softer vs. third quarter 2010 resulting in fewer yield management opportunities that negatively affected the overall rate per mile. Improvements in safety and accident costs and gains on equipment trades were partly offset with increases in driver wages and higher fuel costs, excluding fuel surcharges.

Integrated Capacity Solutions (ICS)

-- Third Quarter 2011 Segment Revenue: $93 million; up 21%

-- Third Quarter 2011 Operating Income: $3.8 million; up 43%

ICS revenue increased 21% in the current quarter vs. the third quarter 2010, due to a 14% increase in load volume, higher pricing in our transactional business and an increase in the cost of fuel. Gross profit (gross revenue less purchased transportation expense) increased 14% to $12.6 million from third quarter 2010. Gross profit margin decreased to 13.5% in the current quarter vs. 14.3% last year due to higher fuel prices and increased transportation costs. Lower overhead costs and operating leverage gained from a more experienced workforce contributed to the operating income increase compared with the third quarter 2010.

Our carrier base increased 16% during the current quarter to over 28,000 carriers and our employee count at period end increased 12% to 369 vs. third quarter 2010.

Cash Flow and Capitalization:

At September 30, 2011, we had a total of $768 million outstanding on various debt instruments compared to $649 million at September 30, 2010 and $654 million at December 31, 2010.

Our net capital expenditures for the nine months ended September 30, 2011 approximated $324 million compared to $145 million for the same period 2010. At September 30, 2011, we had cash and cash equivalents of $7.7 million.

During the nine months ended September 30, 2011, we used $246 million to purchase approximately 6.0 million shares of our common stock. At September 30, 2011, we had approximately $3.0 million remaining under a previously announced $500 million share repurchase authorization. Actual shares outstanding at September 30, 2011 approximated 117 million.

        
                                                      J.B. HUNT TRANSPORT SERVICES, INC.
                                                 Condensed Consolidated Statements of Earnings
                                                     (in thousands, except per share data)
                                                                  (unaudited)
                                                                                          Three Months Ended September 30
                                                                            ----------------------------------------------------------
                                                                                        2011                          2010
                                                                            ----------------------------  ----------------------------
                                                                                                 % Of                          % Of
                                                                                 Amount         Revenue        Amount         Revenue
                                                                            ----------------  ----------  ----------------  ----------
        Operating revenues, excluding fuel surcharge revenues                $   947,381                   $   854,836
        Fuel surcharge revenues                                                  223,889                       131,188
                                                                               ---------                     ---------
           Total operating revenues                                            1,171,270      100.0 %          986,024      100.0 %
        Operating expenses
           Rents and purchased transportation                                    552,509       47.2 %          446,721       45.3 %
           Salaries, wages and employee benefits                                 255,982       21.9 %          237,353       24.1 %
           Fuel and fuel taxes                                                   117,779       10.1 %           84,592        8.6 %
           Depreciation and amortization                                          54,404        4.6 %           49,808        5.1 %
           Operating supplies and expenses                                        43,164        3.7 %           39,905        4.0 %
           Insurance and claims                                                   11,042        0.9 %           11,543        1.2 %
           General and administrative expenses, net of asset dispositions          6,114        0.5 %           13,147        1.2 %
           Operating taxes and licenses                                            7,095        0.6 %            6,790        0.7 %
           Communication and utilities                                             4,501        0.4 %            4,675        0.5 %
                                                                               ---------      ----- ---      ---------      ----- ---
              Total operating expenses                                         1,052,590       89.9 %          894,534       90.7 %
                                                                               ---------      ----- ---      ---------      ----- ---
              Operating income                                                   118,680       10.1 %           91,490        9.3 %
        Net interest expense                                                       7,145        0.6 %            6,662        0.7 %
                                                                               ---------      ----- ---      ---------      ----- ---
              Earnings before income taxes                                       111,535        9.5 %           84,828        8.6 %
        Income taxes                                                              42,885        3.6 %           32,659        3.3 %
                                                                               ---------      ----- ---      ---------      ----- ---
              Net earnings                                                   $    68,650        5.9 %      $    52,169        5.3 %
                                                                            == =========      ===== ===   == =========      ===== ===
        Average diluted shares outstanding                                       121,126                       126,404
                                                                               =========                     =========
              Diluted earnings per share                                     $      0.57                   $      0.41
                                                                            == =========                  == =========

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