JB HUNT TRANSPORT SERVICES
The following discussion of our results of operations and financial condition
should be read in conjunction with our financial statements and related notes in
Item 8. This discussion contains forward-looking statements. Please see
"Forward-looking Statements" and "Risk Factors" for a discussion of items,
uncertainties, assumptions and risks associated with these statements.
CRITICAL ACCOUNTING POLICIES AND ESTIMATES
The preparation of our financial statements in accordance with U.S. generally
accepted accounting principles requires us to make estimates and assumptions
that impact the amounts reported in our Consolidated Financial Statements and
accompanying notes. Therefore, the reported amounts of assets, liabilities,
revenues, expenses and associated disclosures of contingent liabilities are
affected by these estimates. We evaluate these estimates on an ongoing basis,
utilizing historical experience, consultation with third parties and other
methods considered reasonable in the particular circumstances. Nevertheless,
actual results may differ significantly from our estimates. Any effects on our
business, financial position or results of operations resulting from revisions
to these estimates are recognized in the accounting period in which the facts
that give rise to the revision become known. We consider our critical accounting
policies and estimates to be those that require us to make more significant
judgments and estimates when we prepare our financial statements and include the
following:
Workers' Compensation and Accident Costs
We purchase insurance coverage for a portion of expenses related to employee injuries, vehicular collisions, accidents, and cargo damage. Certain insurance arrangements include a level of self-insurance (deductible) coverage applicable to each claim. We have umbrella policies to limit our exposure to catastrophic claim costs. We are substantially self-insured for loss of and damage to our owned and leased revenue equipment. The amounts of self-insurance change from time to time based on measurement dates, policy expiration dates, and claim type. For 2019 through 2021, we were self-insured for$500,000 per occurrence for personal injury and property damage and fully insured for workers' compensation claims for nearly all states. We have policies in place for 2022 with substantially the same terms as our 2021 policies for personal injury, property damage, workers' compensation, and cargo loss or damage. Our claims accrual policy for all self-insured claims is to recognize a liability at the time of the incident based on our analysis of the nature and severity of the claims and analyses provided by third-party claims administrators, as well as legal, economic, and regulatory factors. Our safety and claims personnel work directly with representatives from the insurance companies to continually update the estimated cost of each claim. The ultimate cost of a claim develops over time as additional information regarding the nature, timing, and extent of damages claimed becomes available. Accordingly, we use an actuarial method to develop current claim information to derive an estimate of our ultimate personal injury and property damage claim liability. This process involves the use of expected loss rates, loss-development factors based on our historical claims experience, and contractual premium adjustment factors, if applicable. In doing so, the recorded liability considers future claims growth and provides a reserve for incurred-but-not-reported claims. We do not discount our estimated losses. AtDecember 31, 2021 , we had an accrual of approximately$287 million for estimated claims. In addition, we record receivables for amounts expected to be reimbursed for payments made in excess of self-insurance levels on covered claims. AtDecember 31, 2021 , we have recorded$311 million of expected reimbursement for covered excess claims, other insurance deposits, and prepaid insurance premiums. Revenue Equipment We operate a significant number of tractors, trucks, containers, chassis, and trailers in connection with our business. This equipment may be purchased or acquired under lease agreements. In addition, we may rent revenue equipment from various third parties under short-term rental arrangements. Purchased revenue equipment is depreciated on the straight-line method over the estimated useful life to an estimated salvage or trade-in value. We periodically review the useful lives and salvage values of our revenue equipment and evaluate our long-lived assets for impairment. We have not identified any impairment to our assets atDecember 31, 2021 . 15
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We have agreements with our primary tractor suppliers for residual or trade-in
values for certain new equipment. We have utilized these trade-in values, as
well as other operational information such as anticipated annual miles, in
accounting for depreciation expense.
Revenue Recognition
We record revenues on the gross basis at amounts charged to our customers
because we control and are primarily responsible for the fulfillment of promised
services. Accordingly, we serve as a principal in the transaction. We invoice
our customers, and we maintain discretion over pricing. Additionally, we are
responsible for selection of third-party transportation providers to the extent
used to satisfy customer freight requirements.
We recognize revenue from customer contracts based on relative transit time in
each reporting period and as other performance obligations are provided, with
related expenses recognized as incurred. Accordingly, a portion of the total
revenue that will be billed to the customer is recognized in each reporting
period based on the percentage of the freight pickup and delivery performance
obligation that has been completed at the end of the reporting period.
Our trade accounts receivable includes accounts receivable reduced by an
allowance for uncollectible accounts. Receivables are recorded at amounts billed
to customers when loads are delivered or services are performed. The allowance
for uncollectible accounts is calculated over the life of the underlying
receivable and is based on historical experience; any known trends or
uncertainties related to customer billing and account collectability; current
economic conditions; and reasonable and supportable economic forecasts, each
applied to segregated risk pools based on the business segment that generated
the receivable. The adequacy of our allowance is reviewed quarterly.
Income Taxes
We account for income taxes under the liability method. Our deferred tax assets
and liabilities represent items that will result in a tax deduction or taxable
income in future years for which we have already recorded the related tax
expense or benefit in our statement of earnings. Deferred tax accounts arise as
a result of timing differences between when items are recognized in our
Consolidated Financial Statements and when they are recognized in our tax
returns. We assess the likelihood that deferred tax assets will be recovered
from future taxable income or the reversal of temporary timing differences. To
the extent we believe recovery does not meet the more-likely-than-not threshold,
a valuation allowance is established. To the extent we establish a valuation
allowance, we include an expense as part of our income tax provision.
Significant judgment is required in determining and assessing the impact of
complex tax laws and certain tax-related contingencies on our provision for
income taxes. As part of our calculation of the provision for income taxes, we
assess whether the benefits of our tax positions are at least more likely than
not to be sustained upon audit based on the technical merits of the tax
position. For tax positions that are not more likely than not to be sustained
upon audit, we accrue the largest amount of the benefit that is not more likely
than not to be sustained in our Consolidated Financial Statements. Such accruals
require us to make estimates and judgments, whereby actual results could vary
materially from these estimates. Further, a number of years may elapse before a
particular matter for which we have established an accrual is audited and
resolved. See Note 7, Income Taxes, in our Consolidated Financial Statements for
a discussion of our current tax contingencies.
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RESULTS OF OPERATIONS
The following table sets forth items in our Consolidated Statements of Earnings
as a percentage of operating revenues and the percentage increase or decrease of
those items compared with the prior year.
Percentage of Percentage Change
Operating Revenues Between Years
2021 vs. 2020 vs.
2021 2020 2019 2020 2019
Operating revenues 100.0 % 100.0 % 100.0 % 26.3 % 5.1 %
Operating expenses:
Rents and purchased
transportation 53.0 51.4 49.4 30.2 9.4
Salaries, wages and employee
benefits 22.7 24.4 23.7 17.6 8.3
Depreciation and amortization 4.6 5.5 5.4 5.6 5.7
Fuel and fuel taxes 4.4 3.7 5.1 48.4 (22.8 )
Operating supplies and expenses 3.0 3.5 3.6 10.5 0.4
General and administrative
expenses, net of asset
dispositions 1.5 1.8 2.1 8.6 (6.2 )
Insurance and claims 1.4 1.4 1.7 22.7 (14.5 )
Operating taxes and licenses 0.5 0.6 0.6 9.4 (1.8 )
Communication and utilities 0.3 0.3 0.4 4.0 (3.7 )
Total operating expenses 91.4 92.6 92.0 24.6 5.8
Operating income 8.6 7.4 8.0 46.6 (2.8 )
Net interest expense 0.4 0.5 0.6 (2.8 ) (11.0 )
Earnings before income taxes 8.2 6.9 7.4 50.1 (2.2 )
Income taxes 1.9 1.6 1.8 49.4 (2.8 )
Net earnings 6.3 % 5.3 % 5.6 % 50.3 % (2.0 )%
2021 Compared With 2020
Consolidated Operating Revenues
Our total consolidated operating revenues increased 26.3% to$12.17 billion in 2021, compared to$9.64 billion in 2020. This increase was primarily due to increased ICS and JBT revenue, higher JBI revenue per load, increased average revenue producing trucks and fleet productivity within DCS, and increased FMS stops and revenue per stop. Fuel surcharge revenues increased 65.5% to$1.25 billion in 2021, compared to$757 million in 2020. If fuel surcharge revenues were excluded from both years, our 2021 revenue increased 22.9% over 2020.
Consolidated Operating Expenses
Our 2021 consolidated operating expenses increased 24.6% from 2020, while year-over-year revenue increased 26.3%, resulting in a 2021 operating ratio of 91.4% compared to 92.6% in 2020.
Rents and purchased transportation costs increased 30.2% in 2021, primarily due
to increased third-party rail and truck purchased transportation rates in JBI
and ICS, increased ICS load volume, and an increase in the use of third-party
truck carriers by JBT and FMS during 2021. Salaries, wages and employee benefit
costs increased 17.6% in 2021 from 2020. This increase was primarily related to
increases in driver pay and office personnel compensation due to a tighter
supply of qualified drivers, a trend we anticipate continuing, and an increase
in the number of employees as well as an increase in incentive compensation
compared to 2020. Depreciation and amortization expense increased 5.6% in 2021,
primarily due to equipment purchases related to new DCS long-term customer
contracts, the addition of trailing equipment and scheduled turnover of tractors
within JBI, higher trailer counts in JBT, and increased capital investments in
information technology.
17-------------------------------------------------------------------------------- Fuel and fuel taxes expense increased 48.4% in 2021 compared with 2020, due primarily to an increase in the price of fuel during 2021 and increased road miles. We have fuel surcharge programs in place with the majority of our customers. These programs typically involve a specified computation based on the change in national, regional, or local fuel prices. While these programs may address fuel cost changes as frequently as weekly, most also reflect a specified miles-per-gallon factor and require a certain minimum change in fuel costs to trigger a change in fuel surcharge revenue. As a result, some of these programs have a time lag between when fuel costs change and when this change is reflected in revenues. Due to these programs, this lag negatively impacts operating income in times of rapidly increasing fuel costs and positively impacts operating income when fuel costs decrease rapidly. It is not meaningful to compare the amount of fuel surcharge revenue or the change in fuel surcharge revenue between reporting periods to fuel and fuel taxes expense, or the change of fuel expense between periods, as a significant portion of fuel cost is included in our payments to railroads, dray carriers and other third parties. These payments are classified as purchased transportation expense. Operating supplies and expenses increased 10.5% in 2021 compared with 2020, driven primarily by higher equipment maintenance costs, increased tire expense, increased tolls expense, higher travel and entertainment expense, and higher weather-related towing costs, partially offset by reduced operating supplies and building maintenance costs in response to COVID-19 compared to 2020. General and administrative expenses increased 8.6% from 2020, primarily due to higher advertising costs, increased technology spend, and increased driver hiring expenses, partially offset by a$5.7 million benefit from the reduction of a contingent liability in the FMS segment. Additionally, net losses from sale or disposal of assets were$5.5 million in 2021, compared to net losses of$4.4 million in 2020. Insurance and claims expense increased 22.7% in 2021, primarily due to higher incident volume and severity and increased insurance policy premium expenses, partially offset by a$3.2 million benefit from the net settlement of claims within the FMS segment. Net interest expense for 2021 decreased by 2.8% compared with 2020, due to lower effective interest rates on our debt. Income tax expense increased 49.4% in 2021, due primarily to increased taxable earnings in 2021. Our effective income tax rate was 23.9% in 2021 and 24.0% in 2020. Segments We operated five business segments during calendar year 2021. The operation of each of these businesses is described in our Notes to Consolidated Financial Statements. The following tables summarize financial and operating data by segment: Operating Revenue by Segment Years Ended December 31, (in millions) 2021 2020 2019 JBI $ 5,454$ 4,675 $ 4,745 DCS 2,578 2,196 2,128 ICS 2,538 1,658 1,348 FMS 842 689 567 JBT 796 463 389 Total segment revenues 12,208 9,681 9,177 Intersegment eliminations (40 ) (44 ) (12 ) Total$ 12,168 $ 9,637 $ 9,165 Operating Income by Segment Years Ended December 31, (in millions) 2021 2020 2019 JBI $ 603$ 428 $ 447 DCS 304 314 278 ICS 46 (45 ) (11 ) FMS 28 (1 ) (9 ) JBT 65 17 29 Total $ 1,046$ 713 $ 734 18
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Operating Data by Segment
Years Ended December 31,
2021 2020 2019
JBI
Loads 1,984,834 2,019,391 1,979,169
Average length of haul (miles) 1,684 1,690 1,679
Revenue per load$ 2,748 $ 2,315 $ 2,397 Average tractors during the period(1) 5,904 5,530
5,635
Tractors (end of period) 6,194 5,663
5,559
Trailing equipment (end of period) 104,973 98,689
96,743
Average effective trailing equipment usage 98,798 90,514 86,836 DCS Loads 4,020,308 3,676,212 3,353,553 Average length of haul (miles) 161 160 168 Revenue per truck per week(2)$ 4,719 $ 4,373 $ 4,378 Average trucks during the period(3) 10,628 9,743
9,471
Trucks (end of period) 11,689 9,911
9,779
Trailing equipment (end of period) 28,822 27,290 27,015 ICS Loads 1,326,979 1,265,897 1,243,992 Revenue per load$ 1,912 $ 1,310 $ 1,084 Gross profit margin 11.8 % 9.9 % 13.1 % Employee count (end of period) 975 1,011
1,213
Approximate number of third-party carriers (end of period) 136,400 100,200
84,400
Marketplace forJ.B. Hunt 360 revenue (millions)$ 1,583.8 $ 1,142.2 $ 839.8 FMS Stops 6,413,680 5,771,533 4,432,591 Average trucks during the period(3) 1,520 1,405 1,254 JBT Loads 445,812 406,550 346,459 Loaded miles (000) 215,940 171,141 143,511 Nonpaid empty mile percentage 19.4 % 18.8 % 18.9 % Revenue per tractor per week(2)$ 4,791 $ 3,978 $ 3,917 Average tractors during the period(1) 1,899 1,837 1,958 Tractors (end of period) Company-owned 734 798 845 Independent contractor 1,501 971 986 Total tractors 2,235 1,769 1,831 Trailers (end of period) 11,172 8,567 6,975
(1) Includes company-owned and independent contractor tractors
(2) Using weighted workdays
(3) Includes company-owned, independent contractor, and customer-owned trucks
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--------------------------------------------------------------------------------JBI Segment JBI segment revenue increased 17% to$5.45 billion in 2021, from$4.68 billion in 2020. This increase in revenue was primarily a result of an 19% increase in revenue per load, which is the combination of changes in freight mix, customer rate changes, cost recovery efforts, and fuel surcharge revenue, partially offset by a 2% decrease in load volume. Eastern network load volumes increased 1% and transcontinental loads decreased 3% compared to 2020. Revenue per load excluding fuel surcharges increased 14% compared to 2020. Operating income of the JBI segment increased to$603 million in 2021, from$428 million in 2020. Benefits from increased revenue per load were partially offset by network inefficiencies caused by continued rail and customer fluidity challenges, higher rail and third-party dray purchased transportation expense, higher driver wages and recruiting costs, increased non-driver salary, wages, and incentive compensation, and higher equipment costs when compared to 2020. DCS Segment DCS segment revenue increased 17% to$2.58 billion in 2021, from$2.20 billion in 2020. Productivity, defined as revenue per truck per week, increased 8% compared to 2020. Productivity excluding fuel surcharge revenue increased 5% from 2020. The increase in productivity was primarily a result of contracted indexed-based price escalators and less unassigned idle equipment, partially offset by expected lower productivity within start-up accounts and an increase in open assigned trucks due to the tighter supply of qualified drivers and COVID-related labor disruptions. Customer retention rates remain above 98%. Operating income of our DCS segment decreased to$304 million in 2021, from$314 million in 2020. Higher revenues during the current year were more than offset by increases in driver wage and recruiting costs, increased non-driver salary, wages, and incentive compensation, increased casualty insurance and claims costs, higher group medical benefits, and additional costs related to the implementation of new, long-term customer contracts. ICS Segment ICS segment revenue increased 53% to$2.54 billion in 2021, from$1.66 billion in 2020. Revenue per load increased 46% when compared to 2020, primarily due to higher spot and contractual customer rates within the truckload business and changes in customer freight mix when compared to 2020. Overall volumes increased 5%, with truckload volumes increasing 13% when compared to 2020. Contractual business was 51% of the total load volume and 39% of the total revenue in the 2021, compared to 60% of the total load volume and 43% of the total revenue in 2020. ICS segment had operating income of$46 million in 2021, compared to an operating loss of$45 million in 2020. The increase in operating income was primarily due to increased revenue and higher gross profit margins, partially offset by higher personnel incentive compensation, and increased technology costs. Gross profit margin increased to 11.8% in the current year versus 9.9% last year. Approximately$1.58 billion of ICS revenue for 2021 was executed through the Marketplace forJ.B. Hunt 360 compared to$1.14 billion in 2020. ICS's carrier base increased 36% when compared to 2020. FMS Segment FMS revenue increased 22% to$842 million in 2021 from$689 million in 2020, primarily due to the addition of multiple customer contracts implemented during the current year and 2020 including temporary suspension of operations at several customer sites as a result of the COVID-19 pandemic. Stop count for 2021 increased 11%, while productivity, defined as revenue per stop, increased 10% compared to 2020. The increase in productivity was primarily due to a shift in the mix of business between asset and asset-light operations and the implementation of higher rates. FMS segment had operating income of$28 million in 2021 compared to an operating loss of$1 million in 2020. The increase in operating income was primarily due to increased revenues, a$5.7 million benefit from the reduction of a contingent liability, and a$3.2 million benefit from the net settlement of claims. These items were partially offset by higher implementation costs related to new long-term contractual business, higher third-party contract carrier costs, lower volumes with certain customers related to product availability because of supply chain disruptions, and higher personnel salary, wages, and incentive compensation. 20
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JBT Segment JBT segment revenue increased 72% to$796 million in 2021, from$463 million in 2020. Excluding fuel surcharges, revenue for 2021 increased 70% compared to 2020, primarily due to a 10% increase in load volume and a 55% increase in revenue excluding fuel surcharge revenue per load compared to 2020. The 2021 growth in load count was primarily due to the continued expansion ofJ.B. Hunt 360box which leverages the J.B. Hunt 360 platform to access drop trailer capacity for customers across our transportation network. At the end of 2021, JBT operated 2,235 tractors and 11,172 trailers compared to 1,769 and 8,567 at the end of 2020. JBT segment had operating income of$65 million in 2021 compared with$17 million in 2020. The increase in operating income was driven primarily by increased load counts and revenue per load during 2021, which were partially offset by increases in purchased transportation expense, higher costs to attract and retain drivers, higher non-driver salary, wages, and incentive compensation, and additional costs from further investments in the trailer network and technology related to the continued expansion ofJ.B. Hunt 360box. 2020 Compared With 2019
Consolidated Operating Revenues
Our total consolidated operating revenues increased 5.1% to$9.64 billion in 2020, compared to$9.17 billion in 2019, primarily due to increased ICS revenue per load, theDecember 2019 acquisition and new contractual business onboarded throughout 2020 in FMS, and increased load volumes in JBT and DCS. The increase in revenue was partially offset by a decrease in JBI revenue per load. Fuel surcharge revenues decreased 27.4% to$757 million in 2020, compared to$1.04 billion in 2019. If fuel surcharge revenues were excluded from both years, our 2020 revenue increased 9.3% over 2019.
Consolidated Operating Expenses
Our 2020 consolidated operating expenses increased 5.8% from 2019, while year-over-year revenue increased 5.1%, resulting in a 2020 operating ratio of 92.6% compared to 92.0% in 2019.
Rents and purchased transportation costs increased 9.4% in 2020, primarily due to increased load volume and third-party rail and truck purchased transportation rates in JBI and ICS and an increase in the use of third-party truck carriers by FMS and JBT during 2020, partially offset by JBI 2019 rail purchased transportation costs including a$26.8 million charge resulting from the issuance of an award regarding our arbitration with BNSF. Salaries, wages and employee benefit costs increased 8.3% in 2020 from 2019. This increase was primarily related to increases in driver pay and office personnel compensation due to a tighter supply of qualified drivers and an increase in the number of employees as well as higher cost of employee group medical benefits compared to 2019. In addition, 2020 included a$12.3 million one-time COVID-19 related bonus paid to employee drivers and other key field personnel. Depreciation and amortization expense increased 5.7% in 2020, primarily due to equipment purchases related to new DCS long-term customer contracts and the addition of standard and specialized trailing equipment within our JBI segment.
Fuel and fuel taxes expense decreased 22.8% in 2020 compared with 2019, due primarily to a decrease in the price of fuel during 2020.
21
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Operating supplies and expenses were virtually flat in 2020 compared with 2019,
driven primarily by higher operating supplies and building maintenance costs in
response to COVID-19, increased toll costs, and higher equipment maintenance
costs, offset by reduced travel and entertainment expenses. General and
administrative expenses decreased 6.2% from 2019, primarily due to decreased
professional fees, lower advertising costs, lower driver hiring expenses and,
decreased net loss from the sale or disposal of assets, partially offset by
increased technology spend on the J.B. Hunt 360 platform and legacy system
upgrades, higher bad debt expenses, and increased building rental expenses.
Additionally, net losses from sale or disposal of assets were $4.4 million in
2020, compared to net losses of $13.1 million in 2019. Insurance and claims
expense decreased 14.5% in 2020, primarily due to the absence of a $20 million
FMS claim settlement charge and $17.4 million in reserve charges in 2019 for
arbitration related legal fees, cost and interest claimed by BNSF, partially
offset by an increase in insurance premiums in 2020.
Net interest expense for 2020 decreased by 11.0% compared with 2019, due to
lower effective interest rates on our debt. Income tax expense decreased 2.8% in
2020, due primarily to decreased taxable earnings in 2020. Our effective income
tax rate was 24.0% in 2020 and 24.2% in 2019.
JBI Segment
JBI segment revenue decreased 1% to $4.68 billion in 2020, from $4.74 billion in
2019. This decrease in revenue was primarily a result of a 3% decrease in
revenue per load, which is the combination of changes in freight mix, customer
rates, and fuel surcharge revenue, partially offset by a 2% increase in load
volume. Eastern network load volumes decreased 1% and transcontinental loads
increased 4% compared to 2019. Average length of haul increased 1% in 2020 when
compared to 2019. Revenue per load excluding fuel surcharges increased
approximately 1% compared to 2019.
Operating income of the JBI segment decreased to $428 million in 2020, from $447
million in 2019. Benefits from increased load volume in 2020 were more than
offset by higher rail purchased transportation costs, COVID-19 related network
inefficiencies, higher personnel costs, which included a one-time COVID-19
related bonus paid to employee drivers and other key field personnel, and higher
dray costs resulting from disruptions in rail capacity and a constricted labor
and truck capacity environment. Operating income for JBI in 2019 was impacted by
a $26.8 million charge to rail purchase transportation expense resulting from
the issuance of a final award regarding our arbitration with BNSF and a $17.4
million charge to insurance and claims expense, for arbitration related legal
fees, cost and interest claimed by BNSF.
DCS Segment
DCS segment revenue increased 3% to $2.20 billion in 2020, from $2.13 billion in
2019. Productivity, defined as revenue per truck per week, remained flat when
compared to 2019. Productivity excluding fuel surcharge revenue increased 2%
from 2019. The increase in productivity was primarily a result of better
utilization of assets between customer accounts, contracted customer rate
increases, and increased customer supply chain fluidity. Customer retention
rates remain above 98%.
Operating income of our DCS segment increased to $314 million in 2020, from $278
million in 2019. The increase is primarily due to increased fleet productivity,
the absence of significant new customer implementation costs throughout the
majority of the year, lower driver related turnover costs, and lower travel and
entertainment expenses. Operating income was partially offset by higher
non-driver personnel costs, a one-time COVID-19 related bonus and higher
equipment ownership costs when compared to 2019.
ICS Segment
ICS segment revenue increased 23% to $1.66 billion in 2020, from $1.35 billion
in 2019. Overall volumes increased 2%, with truckload volumes increasing 15%
when compared to 2019. Revenue per load increased 21% when compared to 2019
primarily due to customer mix changes and higher spot and contractual pricing.
Contractual business was approximately 60% of the total load volume and 43% of
the total revenue in the 2020, compared to 65% of the total load volume and 49%
of the total revenue in 2019.
ICS segment incurred an operating loss of $45 million in 2020, compared to
operating loss of $11 million in 2019. The increase in operating loss was
primarily due to lower gross profit margins and increased technology spending as
the Marketplace for J.B. Hunt 360 continues to expand in functionality and
capacity. Gross profit margin decreased to 9.9% in 2020 versus 13.1% last year
primarily due to a more competitive pricing environment and constricted supply
dynamics compared to 2019. Approximately $1.14 billion of ICS revenue for 2020
was executed through the Marketplace for J.B. Hunt 360 compared to $840 million
in 2019. ICS's carrier base increased 19%.
22
--------------------------------------------------------------------------------FMS Segment FMS revenue increased 22% to$689 million in 2020 from$567 million in 2019, primarily due to two business acquisitions completed in 2019 and an increase in new customer contracts throughout 2020, partially offset by the temporary suspension of operations at various customer sites in 2020 as a result of the effects of the COVID-19 pandemic. Stop count for 2020 increased 30%, and productivity, defined as revenue per stop, decreased 7% compared to 2019. The reduction in productivity was primarily due to a change in the mix of service methods to a more asset-light model resulting from the 2019 business acquisitions and a shift in the mix of services provided during 2020 as customers were affected by COVID-19 within our FMS network. FMS segment had an operating loss of$1 million in 2020 compared to an operating loss of$9 million in 2019. The current period operating loss was primarily due to increased costs to expand and improve, through service quality performance controls, the FMS network, lost revenue resulting from the temporary suspension of operations at several customer sites in response to COVID-19, higher bad debt expense, higher personnel costs, which included a one-time COVID-19 related bonus, higher COVID-19 related operating supplies expense an increase in noncash amortization expense attributable to the 2019 business acquisitions. FMS segment operating loss for 2019 included a$20 million insurance claim settlement charge. JBT Segment JBT segment revenue increased 19% to$463 million in 2020, from$389 million in 2019. Excluding fuel surcharges, revenue for 2020 increased 23% compared to 2019, primarily due to a 17% increase in load volume and a 5% increase in revenue excluding fuel surcharge revenue per load compared to 2019. The 2020 growth in load count was partially due to the continued expansion ofJ.B. Hunt 360box which leverages the J.B. Hunt 360 platform. At the end of 2020, JBT operated 1,769 tractors and 8,567 trailers compared to 1,831 and 6,975 at the end of 2019.
JBT segment had operating income of
23
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LIQUIDITY AND CAPITAL RESOURCES
Net cash provided by operating activities totaled
Net cash used in investing activities totaled$877 million in 2021, compared with$613 million in 2020. The increase resulted primarily from an increase in equipment purchases, net of proceeds from the sale of equipment in 2021.
Net cash used in financing activities was
Our dividend policy is subject to review and revision by the Board of Directors, and payments are dependent upon our financial condition, liquidity, earnings, capital requirements, and other factors the Board of Directors may deem relevant. We paid a$0.26 per share quarterly dividend in 2019, a$0.27 per share quarterly dividend in 2020, a$0.28 per share quarterly dividend in the first quarter of 2021, and a$0.30 per share quarterly dividend in the last three quarters of 2021. OnJanuary 20, 2022 , we announced an increase in our quarterly cash dividend from$0.30 to$0.40 per share, which was paidFebruary 18, 2022 , to stockholders of record onFebruary 4, 2022 . We currently intend to continue paying cash dividends on a quarterly basis. However, no assurance can be given that future dividends will be paid. Liquidity Our need for capital has typically resulted from the acquisition of containers and chassis, trucks, tractors and trailers required to support our growth and the replacement of older equipment as well as periodic business acquisitions. We are frequently able to accelerate or postpone a portion of equipment replacements or other capital expenditures depending on market and overall economic conditions. However, we do anticipate that the current challenges related to timely delivery of ordered equipment will continue due to supply chain challenges impacting production. In recent years, we have obtained capital through cash generated from operations, revolving lines of credit and long-term debt issuances. We have also periodically utilized operating leases to acquire revenue equipment. For our senior notes maturing in 2022, it is our intent to pay the entire outstanding balances in full, on or before the maturity dates, using our existing cash balance, senior revolving line of credit or other sources of long-term financing. We believe our liquid assets, cash generated from operations, and revolving line of credit will provide sufficient funds for our operating and capital requirements for the foreseeable future. AtDecember 31, 2021 , we had a cash balance of$356 million and we had no outstanding balance on our revolving line of credit, which authorizes us to borrow up to$750 million under a senior revolving line of credit, and is supported by a credit agreement with a group of banks that expires inSeptember 2023 . This senior credit facility allows us to request an increase in the total commitment by up to$250 million and to request a one-year extension of the maturity date. The applicable interest rate under this agreement is based on either the Prime Rate, the Federal Funds Rate or LIBOR, depending upon the specific type of borrowing, plus an applicable margin based on our credit rating and other fees. We continue to evaluate the possible effects of current economic conditions and reasonable and supportable economic forecasts on operational cash flows, including the risks of declines in the overall freight market and our customers' liquidity and ability to pay. We regularly monitor working capital and maintain frequent communication with our customers, suppliers and service providers. A large portion of our cost structure is variable. Purchased transportation expense represents more than half of our total costs but is heavily tied to load volumes. Our second largest cost item is salaries and wages, the largest portion of which is driver pay, which includes a large variable component. Our senior notes consist of three separate issuances. The first is$250 million of 3.85% senior notes dueMarch 2024 , which was issued inMarch 2014 . Interest payments under this note are due semiannually in March and September of each year, beginningSeptember 2014 . The second is$350 million of 3.30% senior notes dueAugust 2022 , issued inAugust 2015 . Interest payments under this note are due semiannually in February and August of each year, beginningFebruary 2016 . The third is$700 million of 3.875% senior notes dueMarch 2026 , issued inMarch 2019 . Interest payments under this note are due semiannually in March and September of each year, beginningSeptember 2019 . We may redeem for cash some or all of the notes based on a redemption price set forth in the note indenture. We currently have an interest rate swap agreement which effectively convert our$350 million of 3.30% fixed-rate senior notes dueAugust 2022 to a variable rate, resulting in an interest rates of 1.51% atDecember 31, 2021 . The applicable interest rate under this swap agreement is based on LIBOR plus an established margin. 24
-------------------------------------------------------------------------------- Our financing arrangements require us to maintain certain covenants and financial ratios. AtDecember 31, 2021 , we were well above compliance with all covenants and financial ratios, and we fully intend and expect to emerge from the current COVID-19 related economic environment with our investment-grade rating intact. In addition, we do not anticipate the future international transitioning from LIBOR to alternative rates to have a material impact on our financial statements. We are currently committed to spend a total of approximately$1.88 billion , net of proceeds from sales or trade-ins, during 2022 and 2023, which is primarily related to the acquisition of tractors, containers, chassis, and other trailing equipment.
Off-Balance Sheet Arrangements
We had no off-balance sheet arrangements, other than our net purchase
commitments of
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