J.B. HUNT Q4 2017 RESULTS · ICS recorded $1.8 million of the preannounced charges in the fourth...
Transcript of J.B. HUNT Q4 2017 RESULTS · ICS recorded $1.8 million of the preannounced charges in the fourth...
C O N F I D E N T I A L
Presented by
J.B. HUNTQ4 2017 RESULTS
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This presentation and discussion may contain forward-looking statements within the meaning of the Private
Securities Litigation Reform Act of 1995. Words such as “expects,” “anticipates,” “intends,” “estimates,” or
similar expressions are intended to identify these forward-looking statements. These statements are based
on J.B. Hunt’s current plans and expectations and involve risks and uncertainties that could cause future
activities and results of operations to be materially different from those set forth in the forward-looking
statements. For further information, please refer to J.B. Hunt’s reports and filings with the Securities and
Exchange Commission.
DISCLOSURE
DISTINCT AND COMPLEMENTARY BUSINESSESIntermodal (JBI)
Largest, 100% 53’ high-cube container fleet
Largest drayage fleet in North America
Priority loading and unloading at major rail terminals
Dedicated Contract Services (DCS)Fleet creation, conversion, and augmentation
Design & implementation of value-driven supply chain solutions
On-site management
Integrated Capacity Solutions (ICS)Non-asset based offering of dry van, flatbed, refrigerated,
expedited, and LTL services.
40- and 20-foot box domestic and international containers
and international intermodal services
Services to all 50 States, Canada, and Mexico
Truckload (JBT)One of the largest capacity networks in North America
Instant tracking via the Internet
GPS trailer tracking
55%
24%
16%
5%
4Q 2017 Revenue Mix
JBI
DCS
ICS
JBT
64%
24%
8%4%
0%
20%
40%
60%
80%
JBI DCS ICS JBT
Percentage of 4Q 2017 Operating Income by Business Segment
4Q 2017 RESULTSVS. 4Q 2016
OVERVIEW
4Q 2017 Revenue:$1.99 billion; up 16%
4Q 2017 Revenue, excl FSC:$1.77 billion; up 13%
4Q 2017 Operating Income:$146 million; down 25%
4Q 2017 EPS:$3.48 vs. $1.05; up 232%
SEGMENT PERFORMANCE
Intermodal (JBI)Revenue: $1.1 billion; up 10%
Operating Income: $93.3 million; down 25%
Dedicated Contract Services (DCS)Revenue: $477 million; up 20%
Operating Income: $34.9 million; down 39%
Integrated Capacity Solutions (ICS)Revenue: $323 million; up 40%
Operating Income: $11.3 million; up 86%
Truckload (JBT)Revenue: $97 million; up 1%
Operating Income: $6.4 million; down 5%
4Q 2017 RESULTSCONSOLIDATED
$4,527
$5,055
$5,585
$6,165 $6,188
$6,555
$7,190
$1,721
$1,990
$-
$1,000
$2,000
$3,000
$4,000
$5,000
$6,000
$7,000
$8,000
2011 2012 2013 2014 2015 2016 2017 4Q 16 4Q 17
Revenue(in millions)
$444 $530
$577 $632
$716 $721
$624
$194 $146
$-
$100
$200
$300
$400
$500
$600
$700
$800
2011 2012 2013 2014 2015 2016 2017 4Q 16 4Q 17
Operating Income(in millions)
$2.11 $2.59 $2.87 $3.16
$3.66 $3.81
$6.18
$1.05
$3.48
$-
$1.00
$2.00
$3.00
$4.00
$5.00
$6.00
$7.00
2011 2012 2013 2014 2015 2016 2017 4Q 16 4Q 17
Diluted EPS
KEY POINTS
• Industry leading Intermodal franchise
• Differentiated and specialized Dedicated business
• Independent brokerage/management services
• Lighter Truckload asset model
SEGMENT
DISCUSSION
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INTERMODAL (JBI)
JBI total volumes grew 5% over the same period in 2016.
Eastern network loads grew at 7% and transcontinental loads
increased 4% compared to the fourth quarter 2016.
Revenue increased 10%, reflecting volume growth of 5% and a 5%
increase in revenue per load which is the combination of freight mix,
customer rate increases and fuel surcharges.
Revenue per load excluding fuel surcharges increased
approximately 2% compared to a year ago.
Benefits from increased volume and revenue per load were offset by
increased costs to attract and retain drivers, higher third-party dray
costs, increased insurance and claims costs and inefficiencies in the
rail networks due to congestion and track and yard maintenance.
JBI recorded $28.7 million of the preannounced charges during the
fourth quarter 2017.
In fourth quarter 2016, JBI recorded approximately $5.7 million from
the change in paid time off policy.
$2,673
$3,071
$3,456
$3,687 $3,665
$3,796
$4,084
$998 $1,098
$-
$500
$1,000
$1,500
$2,000
$2,500
$3,000
$3,500
$4,000
$4,500
2011 2012 2013 2014 2015 2016 2017 4Q 16 4Q 17
JBI Revenue(in millions)
INTERMODAL (JBI)PERFORMANCE
-1%
4%
8%
10%
-5%
0%
5%
10%
FY15/FY14 FY16/FY15 FY17/FY16 4Q Y/Y
JBI Revenue Change
4%
-6% -9%
-25%-30%
-25%
-20%
-15%
-10%
-5%
0%
5%
10%
FY15/FY14 FY16/FY15 FY17/FY16 4Q Y/Y
JBI Operating Income Change
1,657
1,681 1,685 1,684
1,625
1,650
1,675
1,700
2016 2017 4Q 16 4Q 17
JBI Average Length of Haul
$1,981
$2,042 $2,030
$2,129
$1,800
$1,900
$2,000
$2,100
$2,200
2016 2017 4Q 16 4Q 17
JBI Revenue per Load
DEDICATED (DCS)DCS revenue increased 20% during the current quarter over
the same period 2016.
Productivity (revenue per truck per week) increased
approximately 4% vs. 2016.
A year over year net additional 1,326 revenue producing
trucks, 331 net additions compared to third quarter 2017,
were in the fleet by the end of the quarter.
Operating income decreased by 39% from a year ago. The
increase in revenue and improved asset utilization was offset
with higher driver wages including the timing between wage
increases and recovery through customer contracts, higher
driver recruiting costs including the length of time to fill open
positions, increased insurance and claims costs, higher
equipment ownership costs and $1.9 million in intangible
asset amortization compared to the same period in 2016.
DCS recorded $7.6 million of the preannounced charges
during the fourth quarter 2017 and recognized a $7.3 million
benefit in the fourth quarter 2016 from the change in paid time
off policy.
$1,031 $1,080
$1,231
$1,394
$1,451
$1,533
$1,719
$398 $477
$-
$200
$400
$600
$800
$1,000
$1,200
$1,400
$1,600
$1,800
2011 2012 2013 2014 2015 2016 2017 4Q 16 4Q 17
DCS Revenue(in millions)
DEDICATED (DCS)PERFORMANCE
40%
26%
-17%
-39%-50%
-40%
-30%
-20%
-10%
0%
10%
20%
30%
40%
50%
FY15/FY14 FY16/FY15 FY17/FY16 4Q Y/Y
DCS Operating Income Change
4%6%
12%
20%
0%
5%
10%
15%
20%
25%
FY15/FY14 FY16/FY15 FY17/FY16 4Q Y/Y
DCS Revenue Change
4,077
4,226 4,247
4,426
3,500
3,700
3,900
4,100
4,300
4,500
2016 2017 4Q 16 4Q 17
DCS Revenue Per Truck Per Week
2,401,332 2,575,245
606,900
686,475
-
500,000
1,000,000
1,500,000
2,000,000
2,500,000
3,000,000
2016 2017 4Q 16 4Q 17
DCS Loads
INTEGRATED (ICS)NON-ASSET BASED
$356
$456
$537
$718 $699
$852
$1,025
$232
$323
$-
$100
$200
$300
$400
$500
$600
$700
$800
$900
$1,000
$1,100
2011 2012 2013 2014 2015 2016 2017 4Q 16 4Q 17
ICS Revenue(in millions)
ICS revenue increased 40% in the current quarter vs. the fourth quarter
2016. Revenue per load increased 19% and volume increased 17%
mostly due to increased spot market activity.
Contractual volumes represent approximately 66% of the total load
volume but only 46% of the total revenue in the current quarter
compared to 75% and 62%, respectively, in fourth quarter 2016.
Operating income increased 86% over the same period in 2016. Gross
profit margin increased to 14.1% in the current period from 12.9% last
year primarily from the increased spot market activity which more than
offset the margin compression realized in the contractual volumes.
The increase in gross margin was partially offset with higher
technology spending as JBHunt360 continues to be rolled out to more
customers.
ICS recorded $1.8 million of the preannounced charges in the fourth
quarter 2017 and recognized a $1.0 million benefit in the fourth quarter
2016 for the change in paid time off policy.
Total branches at the end of the period grew to 44 from 42 at the end of
the same period in 2016.
ICS’s carrier base increased 11% and the employee count increased
16% from a year ago.
INTEGRATED (ICS)PERFORMANCE
14.3% 13.3%12.9%
14.1%
0%
5%
10%
15%
20%
2016 2017 4Q 16 4Q 17
ICS Gross Profit Margin
-3%
22%20%
40%
-10%
0%
10%
20%
30%
40%
FY15/FY14 FY16/FY15 FY17/FY16 4Q Y/Y
ICS Revenue Change
20%
1%
-37%
86%
-60%
-40%
-20%
0%
20%
40%
60%
80%
100%
FY15/FY14 FY16/FY15 FY17/FY16 4Q Y/Y
ICS Operating Income Change
852,179
992,834
237,845 277,911
-
200,000
400,000
600,000
800,000
1,000,000
1,200,000
2016 2017 4Q 16 4Q 17
ICS Loads
JBT Revenue (in millions)
TRUCKLOAD (JBT)JBT revenue for the current quarter increased 1% from the
same period in 2016.
Revenue per load increased 13% primarily from a 12% increase
in rates per loaded mile on an equivalent length of haul
compared to fourth quarter 2016 but was offset with an 10%
decreased in load count.
At the end of the period, JBT operated 2,032 tractors compared
to 2,128 a year ago.
Operating income decreased 5% from fourth quarter 2016
levels.
Favorable changes from higher revenue per load were offset by
higher driver wages and independent contractor costs per mile,
lower tractor utilization from an increase in unseated trucks and
higher insurance and claims costs compared to fourth quarter
2016.
JBT recorded approximately $0.7 million of the preannounced
charges in the fourth quarter 2017 and recorded a $1.2 million
benefit in the fourth quarter 2016 from the change in paid time
off policy.
$504 $484
$391 $386 $386 $388
$378
$96 $97
$-
$50
$100
$150
$200
$250
$300
$350
$400
$450
$500
$550
2011 2012 2013 2014 2015 2016 2017 4Q 16 4Q 17
TRUCKLOAD (JBT)PERFORMANCE
455435 439 432
300
350
400
450
500
2016 2017 4Q 16 4Q 17
JBT Average Length of Haul
385,298 370,591
96,906 87,538
-
100,000
200,000
300,000
400,000
500,000
2016 2017 4Q 16 4Q 17
JBT Loads
85.6 85.1
82.6 84.0
70
72
74
76
78
80
82
84
86
88
2016 2017 4Q 16 4Q 17
JBT Average Nonpaid Empty Miles Per Load
$3,458 $3,556 $3,540
$3,782
$-
$1,000
$2,000
$3,000
$4,000
2016 2017 4Q 16 4Q 17
JBT Revenue per Tractor per Week
SUMMARY
Competitively differentiated
Unique intermodal network
Distinct advantages in dedicated segments
Network economics and brand strength to penetrate new markets
Complemented by industry dynamics
Shippers need to reduce costs
Shippers demand on-time service
Increasingly complex supply-chains
Positioned for growth
Leading positions in large and consolidating markets
Clear value proposition for our customers
Best-in-class systems and technology
BALANCE SHEET
THANK YOU
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