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J. B. Hunt Transport Services, Inc. Reports Record Revenues and Earnings for the Second Quarter of 2006

Posted on: Tuesday, 18 July 2006, 09:00 CDT

J. B. Hunt Transport Services, Inc. (NASDAQ:JBHT):

-- Second Quarter 2006 Revenue: $838 million; up 10% -- Second Quarter 2006 Operating Income: $95 million; up 3% -- Second Quarter 2006 EPS: 36 cents vs. 33 cents

J. B. Hunt Transport Services, Inc., (NASDAQ:JBHT) announced record second quarter 2006 net earnings of $55.3 million, or diluted earnings per share of 36 cents vs. 2005 second quarter earnings of $54.6 million, or 33 cents per diluted share.

Total operating revenue for the current quarter was $838 million, a 10% increase over the $759 million for the second quarter of 2005. This increase in operating revenue was primarily attributable to growth in the fleet from 11,597 trucks in second quarter 2005 to 11,993 in second quarter of 2006. Containers and trailers grew from 22,895 and 25,899, respectively, to 24,738 and 26,000 over the same period. The growth in the fleet was to support additional intermodal and dedicated business. Freight rates and fuel surcharges were also higher compared with a year ago.

Operating income for the current quarter increased slightly to $95 million vs. $93 million for the second quarter of 2005. Better Intermodal velocity offset lower productivity and a smaller fleet in Truck due to fewer available truck drivers. Several new Dedicated Contract Services (DCS) accounts, with their accompanying start-up costs, were implemented during the quarter. Cost increases continue to be covered by increasing freight rates across all of our business segments.

"This was another quarter of strong returns and excellent cash flow which we put to good use by repurchasing approximately 7.8 million shares of our stock. We continue to be encouraged by the operating results of all three of our business segments. SAFELY providing outstanding service using our integrated platform of services, our advanced technology, systems and processes, and our committed team of employees, makes us enthusiastic about our ability to bring value to our customers now and in the future. We remain steadfastly committed to our operating strategies," said Kirk Thompson, JBHT President and CEO.

Segment Information: Intermodal (JBI) -- Second Quarter 2006 Segment Revenue: $353 million; up 14% -- Second Quarter 2006 Operating Income: $43.4 million; up 13%

Intermodal continued a disciplined approach to growth with 5% more loads and price improvements of approximately 4% over the second quarter of 2005. Changes in rail schedules and consolidation of trains to fewer rail hubs have had a measurable positive impact on rail transit times and rail service over the past year. These changes have resulted in improved container utilization even though driver utilization and dray cost have been negatively impacted by the need to drive more miles to/from rail hubs. Rail purchased transportation cost increases are being recovered in higher rates as customer contract timing allows.

Dedicated Contract Services (DCS) -- Second Quarter 2006 Segment Revenue: $232 million; up 11% -- Second Quarter 2006 Operating Income: $25.9 million; down 4%

DCS continued to see strong demand for capacity and value added services in the quarter from both existing customers and from new accounts. Accordingly, we added a total of 150 trucks to our fleet during the second quarter of 2006, bringing the net increase in total trucks for the year to 232 incremental units compared with the same period last year. Revenue per truck increased 9%, as utilization remained consistent with the second quarter of 2005 and rates increased to offset rising costs. The comparison of operating results between the two periods is impacted by start-up costs associated with growing the fleet and the adverse settlement of two claims from prior years in the second quarter of 2006 and a positive settlement of a claim in the second quarter of 2005.

Truck (JBT) -- Second Quarter 2006 Segment Revenue: $258 million; up 5% -- Second Quarter 2006 Operating Income: $25.6 million; down 6%

Truck was able to maintain good operating profit in the quarter, despite significantly higher fuel prices and a worsening driver shortage, primarily because freight rates continue to rise. The continuing shortage of qualified drivers caused both a decline in utilization and a reduction in the fleet size of 129 tractors from the second quarter of 2005. Rates from consistent shippers improved by 5.6 cents per mile or approximately 4%, while rates from unplanned activity (spot pricing, back-up pricing and paid deadhead) improved 29 cents per mile or 15% compared to the second quarter of 2005. The rise in pricing in unplanned activity reflects a strengthening in demand in the market, particularly in the second half of the 2006 quarter.

Cash Flow and Capitalization:

During the second quarter of 2006, we repurchased approximately 7.8 million shares of our stock at a cost of slightly over $190 million. As previously announced, we have increased our borrowing capacity from $200 million to $400 million. It is our intention to efficiently and conservatively leverage our balance sheet to opportunistically improve returns to our shareholders. We believe paying a dividend similar to the average yield of the companies comprising the Standard & Poor's 500 and repurchasing our stock, as circumstances dictate, are currently the best ways to effectively execute our strategy. At the beginning of 2006 we owed $124 million on our credit facilities. As of June 30, 2006, we owed $217 million.

This press release contains 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, 2005. 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 related information will be available immediately to interested parties at our web site, www.jbhunt.com.

J.B. HUNT TRANSPORT SERVICES, INC. Condensed Consolidated Statements of Earnings (in thousands, except per share data) (unaudited) Three Months Ended June 30 --------------------------------- 2006 2005 ---------------- ---------------- % Of % Of Amount Revenue Amount Revenue ---------------- ---------------- Operating revenues, excluding fuel surcharge revenues $724,041 $686,758 Fuel surcharge revenues 114,213 72,448 -------- -------- Total operating revenues 838,254 100.0% 759,206 100.0% Operating expenses Salaries, wages and employee benefits 224,099 26.7% 213,655 28.1% Rents and purchased transportation 283,540 33.8% 253,299 33.4% Fuel and fuel taxes 115,202 13.8% 89,507 11.8% Depreciation and amortization 44,520 5.3% 40,109 5.3% Operating supplies and expenses 36,662 4.4% 31,210 4.1% Insurance and claims 15,338 1.8% 13,075 1.7% Operating taxes and licenses 8,677 1.0% 9,330 1.2% General and administrative expenses, net of gains 9,253 1.1% 10,738 1.4% Communication and utilities 5,554 0.7% 5,278 0.7% -------- ------- -------- ------- Total operating expenses 742,845 88.6% 666,201 87.7% -------- ------- -------- ------- Operating income 95,409 11.4% 93,005 12.3% Net interest expense 3,064 0.4% 1,529 0.2% Equity in loss of associated companies 1,634 0.2% 1,284 0.2% -------- ------- -------- ------- Earnings before income taxes 90,711 10.8% 90,192 11.9% Income taxes 35,377 4.2% 35,561 4.7% -------- ------- -------- ------- Net earnings $ 55,334 6.6%$ 54,631 7.2% ======== ======= ======== ======= Average diluted shares outstanding 154,619 163,483 ======== ======== Diluted earnings per share $ 0.36 $ 0.33 ======== ======== J.B

. HUNT TRANSPORT SERVICES, INC. Condensed Consolidated Statements of Earnings (in thousands, except per share data) (unaudited) Six Months Ended June 30 ------------------------------------- 2006 2005 ------------------ ------------------ % Of % Of Amount Revenue Amount Revenue ------------------ ------------------ Operating revenues, excluding fuel surcharge revenues $1,414,076 $1,338,758 Fuel surcharge revenues 204,078 129,626 ---------- ------- ---------- ------- Total operating revenues 1,618,154 100.0% 1,468,384 100.0% Operating expenses Salaries, wages and employee benefits 438,627 27.1% 414,538 28.2% Rents and purchased transportation 549,127 33.9% 492,375 33.5% Fuel and fuel taxes 219,784 13.6% 172,377 11.7% Depreciation and amortization 88,050 5.5% 79,341 5.4% Operating supplies and expenses 71,571 4.4% 62,864 4.3% Insurance and claims 27,800 1.7% 24,830 1.7% Operating taxes and licenses 17,092 1.1% 18,216 1.3% General and administrative expenses, net of gains 17,875 1.1% 20,526 1.4% Communication and utilities 11,431 0.7% 11,144 0.8% ---------- ------- ---------- ------- Total operating expenses 1,441,357 89.1% 1,296,211 88.3% ---------- ------- ---------- ------- Operating income 176,797 10.9% 172,173 11.7% Interest expense 3,570 0.2% 2,612 0.2% Equity in loss of associated companies 2,221 0.1% 2,135 0.1% ---------- ------- ---------- ------- Earnings before income taxes 171,006 10.6% 167,426 11.4% Income taxes 66,692 4.1% 65,296 4.4% ---------- ------- ---------- ------- Net earnings $ 104,314 6.5%$ 102,130 7.0% ========== ======= ========== ======= Average diluted shares outstanding 156,422 164,940 ========== ========== Diluted earnings per share $ 0.67 $ 0.62 ========== ========== Financial Information By Segment (dollars in thousands) (unaudited) Three Months Ended June 30 --------------------------------- 2006 2005 --------------- ------------- Revenue ------- Intermodal $ 352,907 $ 308,967 Dedicated 232,304 208,617 Truck 258,449 246,008 --------------- ------------- Subtotal 843,660 763,592 Intersegment eliminations (5,406) (4,386) --------------- ------------- Consolidated revenue $ 838,254 $ 759,206 =============== ============= Operating income ---------------- Intermodal $ 43,367 $ 38,498 Dedicated 25,926 26,988 Truck 25,558 27,111 Other (1) 558 408 --------------- ------------- Operating income $ 95,409 $ 93,005 =============== ============= Six Months Ended June 30 --------------------------------- 2006 2005 --------------- ------------- Revenue ------- Intermodal $ 676,831 $ 596,495 Dedicated 443,181 403,295 Truck 509,221 477,882 --------------- ------------- Subtotal 1,629,233 1,477,672 Intersegment eliminations (11,079) (9,288) --------------- ------------- Consolidated revenue $ 1,618,154 $ 1,468,384 =============== ============= Operating income ---------------- Intermodal $ 79,293 $ 73,026 Dedicated 48,760 47,112 Truck 47,843 51,468 Other (1) 901 567 --------------- ------------- Operating income $ 176,797 $ 172,173 =============== ============= (1) Includes corporate support activity. ---------------------------------------------------------------------- Operating Statistics by Segment ---------------------------------------------------------------------- (unaudited) Three Months Ended June 30 -------------------------- 2006 2005 ------------- ---------- Intermodal (JBI) ------------------ Loads 154,953 147,606 Length of haul 1,996 2,005 Revenue per load $ 2,278 $ 2,093 Average tractors during the period 1,469 1,223 Tractors (end of period) Company owned 1,506 1,234 Independent contractor 21 - ------------- ---------- Total tractors 1,527 1,234 Containers (end of period) 24,738 22,895 Average effective trailing equipment usage 24,307 22,602 Dedicated (DCS) ------------------ Loads 352,874 348,436 Length of haul 264 257 Revenue per truck per week (1) $ 3,521 $ 3,234 Average trucks during the period (2) 5,115 5,000 Trucks (end of period) Company owned 4,990 4,696 Independent contractor 122 177 Customer owned (DCS Operated) 89 96 ------------- ---------- Total trucks 5,201 4,969 Trailers (end of period) 6,519 6,255 Average effective trailing equipment usage 12,522 11,829 Truck (JBT) -------------- Loads 230,297 233,090 Length of haul 520 545 Loaded miles (000) 117,168 125,232 Total miles (000) 131,462 139,518 Empty miles % 10.9% 10.2% Revenue per tractor per week (1) $ 3,771 $ 3,517 Average tractors during the period 5,330 5,430 Tractors (end of period) Company owned 4,269 4,471 Independent contractor 996 923 ------------- ---------- Total tractors 5,265 5,394 Trailers (end of period) 19,481 19,644 Average effective trailing equipment usage 13,671 14,387 (1) Using weighted workdays (2) Includes company owned, independent contractor and customer owned trucks Six Months Ended June 30 ------------------------- 2006 2005 ------------ ---------- Intermodal (JBI) ------------------- Loads 303,582 289,479 Length of haul 1,997 2,006 Revenue per load 2,229 2,061 Average tractors during the period 1,424 1,211 Tractors (end of period) Company owned 1,506 1,234 Independent contractor 21 - ------------ ---------- Total tractors 1,527 1,234 Containers (end of period) 24,738 22,895 Average effective trailing equipment usage 24,134 22,412 Dedicated (DCS) ------------------ Loads 673,615 667,150 Length of haul 267 263 Revenue per truck per week (1) $ 3,412 $ 3,133 Average trucks during the period (2) 5,062 5,016 Trucks (end of period) Company owned 4,990 4,696 Independent contractor 122 177 Customer owned (DCS Operated) 89 96 ------------ ---------- Total trucks 5,201 4,969 Trailers (end of period) 6,519 6,255 Average effective trailing equipment usage 12,444 11,791 Truck (JBT) -------------- Loads 452,156 452,798 Length of haul 538 547 Loaded miles (000) 238,583 245,586 Total miles (000) 267,002 273,371 Empty miles % 10.6% 10.2% Revenue per tractor per week (1) $ 3,665 $ 3,447 Average tractors during the period 5,423 5,419 Tractors (end of period) Company owned 4,269 4,471 Independent contractor 996 923 ------------ ---------- Total tractors 5,265 5,394 Trailers (end of period) 19,481 19,644 Average effective trailing equipment usage 13,708 14,513 (1) Using weighted workdays (2) Includes company owned, independent contractor and customer owned trucks J.B. HUNT TRANSPORT SERVICES, INC. Condensed Consolidated Balance Sheets (in thousands) (unaudited) ---------------------------------------------------------------------- June 30, 2006 December 31, 2005 ---------------------------------------------------------------------- ASSETS Current assets: Cash and equivalents $ 9,210 $ 7,412 Accounts receivable 325,305 343,501 Prepaid expenses and other 85,676 123,777 ---------------------------------------------------------------------- Total current assets 420,191 474,690 ---------------------------------------------------------------------- Property and equipment 1,678,977 1,591,561 Less accumulated depreciation 571,844 537,502 ---------------------------------------------------------------------- Net property and equipment 1,107,133 1,054,059 ---------------------------------------------------------------------- Other assets 17,200 20,125 ---------------------------------------------------------------------- $ 1,544,524 $ 1,548,874 ====================================================================== LIABILITIES & STOCKHOLDER'S EQUITY Current liabilities: Current debt $ 40,000 $ - Trade accounts payable 176,994 162,749 Claims accruals 13,192 15,651 Accrued payroll 44,113 61,001 Other accrued expenses 8,129 9,198 Deferred income taxes 7,166 27,487 ---------------------------------------------------------------------- Total current liabilities 289,594 276,086 ---------------------------------------------------------------------- Long-term debt 177,000 124,000 Other long-term liabilities 55,186 45,834 Deferred income taxes 300,852 285,929 Stockholders' equity 721,892 817,025 ---------------------------------------------------------------------- $ 1,544,524 $ 1,548,874 ====================================================================== Supplemental Data (unaudited) ---------------------------------------------------------------------- June 30, 2006 December 31, 2005 ---------------------------------------------------------------------- Actual shares outstanding at end of period (000) 147,357 153,813 ====================================================================== Book value per actual share outstanding at end of period $4.90 $5.31 ======================================================================

Source: Business Wire

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