J.B. Hunt Transport Services, Inc. Reports Revenues and Earnings for the Third Quarter 2010

Total operating revenue for the current quarter was $986 million, an 18% increase over the $834 million reported for the third quarter 2009. The increase in operating revenue was primarily attributable to higher Intermodal segment volumes, significant growth in our Dedicated Contract Services (DCS) segment and revenue growth in our Truck segment. Utilization of equipment also improved significantly as did pricing in the Truck segment. Current quarter operating revenue, excluding fuel surcharges, increased 15% vs. comparable quarter 2009.

Operating income for the current quarter increased to $91.5 million vs. $71.0 million for third quarter 2009. This increase was primarily due to a 22% increase in Intermodal operating income, a 17% increase in DCS operating income and positive Truck operating income vs. a loss last year.

“Load volume in our DCS segment, which we believe is a strong indicator of current customer demand and the general direction of the freight economy, continues to point toward steady business activity. Contract pricing, reflecting improvement in supply and demand balance, in both Intermodal and Truck, rose sequentially from this year’s second quarter and from the same period a year ago. Assuming demand remains near current levels, we expect to see freight rates continue to rebound from the unsustainable lows we saw during the recession.

“During the current quarter we reactivated and increased certain compensation and benefit programs for our great team of employees who sacrificed during the downturn. We were able to make these moves as profits rebounded quicker than we had anticipated going into 2010. Also during the current quarter, we were proud to make a $5.0 million commitment to Arkansas Children’s Hospital (ACH). ACH is among the leading pediatric critical care facilities in the country treating children from an average of 45 states and from countries all over the world. We are honored to be able to participate in a major expansion that will greatly improve the quality of services they provide,” stated Kirk Thompson, President and CEO.

JBI load count was up 17% in the current quarter compared to a year ago. Demand was generally strong across the country as our eastern network grew 26% and transcontinental business grew 13% over the same period 2009. To support this growth we transferred 1,000 trailers from our Truck business unit and added approximately 900 net containers during the current period to end the quarter with approximately 43,000 units of trailing capacity.

Demand off the west coast was particularly strong, driving the need for significant increases in empty repositions. Base rates were approximately 2% higher than a year ago and 1% higher vs. second quarter 2010. A general rate increase of 5% became effective for non-contract customers on September 10, 2010.

Equipment utilization improved 5% over year ago levels and was mostly driven by higher demand and assisted by consistent service levels provided by our rail partners.

DCS revenue increased 18% while revenue, excluding fuel surcharges, increased 16%. Revenue in our delivery channel, defined as delivering product to its point of consumption, increased 66% vs. third quarter 2009. Some examples of operations in our delivery channel include delivering to and installing product in single family homes, delivering food to restaurants and animal feed to farms. Revenue in our replenishment channel increased 13%. An example of our replenishment channel is delivering product to a retail store where it will be purchased and consumed elsewhere. Revenue in our capacity channel, which has more traditional truckload characteristics, decreased 20% vs. third quarter 2009. We intend to continue redeploying our assets away from business that is highly competitive and easily replicated into new business with potentially higher returns.

Operating income increased 17% vs. third quarter 2009. The increase in operating income primarily related to revenue growth and a 13% increase in productivity vs. third quarter 2009. We define productivity as revenue per truck per week, excluding fuel surcharges.

JBT revenue for the current quarter increased 4% vs. third quarter 2009. Excluding fuel surcharges, JBT revenue increased 2% despite a 13% reduction in tractor count. At the end of the current quarter, our tractor count was 2,793 vs. 3,227 in 2009. JBT’s operating income was $6.5 million in current quarter 2010 vs. a loss of $(0.4) million in third quarter 2009.

Rates continued to improve in the current quarter, gaining nearly 9% over the same period last year and 3% from the second quarter of this year. In addition, our average length of haul in 2010 was 8% longer than a year ago, amplifying the effect of the rate change. Our rate gain can be attributed mainly to a comprehensive review of approximately 200 underperforming accounts and improving supply and demand.

ICS revenue increased 14% vs. third quarter 2009. Our gross profit (gross revenue less purchased transportation expense) declined 2% to $11 million and our gross profit margin decreased to 14.3% in the current quarter vs. 16.5% last year, partly due to a tighter market balance of supply and demand for transportation services. However, our gross profit increased 13% vs. second quarter 2010 due to increased contract pricing.

We continue to incur start-up expenses associated with establishing new branch locations. Our customer base increased 5%, our third party carrier base increased 18% and our employee count increased 9% during the current quarter vs. third quarter 2009.

At September 30, 2010, we had a total of $649 million outstanding on various debt instruments compared to $626 million at September 30, 2009 and $565 million at December 31, 2009. We issued $250 million of 3.375% publicly-registered notes during the current quarter which mature in 2015.

Our net capital expenditures for the nine months ended September 30, 2010 approximated $145 million vs. $209 million for the same period 2009. At September 30, 2010, we had cash and cash equivalents of $68.6 million.

During the current quarter we used $25 million to purchase approximately 746,000 shares of our common stock. At September 30, 2010, we had approximately $325 million remaining under a previously announced $500 million share repurchase authorization. Actual shares outstanding at September 30, 2010 were approximately 123 million.

Average tractors during the period*

Average tractors during the period*

Average tractors during the period*