LOWELL, Ark.--(BUSINESS WIRE)--J.B. Hunt Transport Services, Inc., (NASDAQ: JBHT) announced second quarter 2019 net earnings of $133.6 million, or diluted earnings per share of $1.23 vs. second quarter 2018 net earnings of $151.7 million, or $1.37 per diluted share.
Total operating revenue for the current quarter was $2.26 billion, compared with $2.14 billion for the second quarter 2018, an increase of 6%. Current quarter total operating revenue, excluding fuel surcharges, increased 6.5% vs. the comparable quarter 2018. Revenue growth was driven primarily by a 19% increase in revenue producing trucks and an 8% increase in truck productivity in Dedicated Contract Services (DCS), but partially offset by an 8% decline in volume in Intermodal (JBI), a 7% decline in volume in Integrated Capacity Solutions (ICS), and fewer tractors operating in Truck (JBT) compared to prior year.
The amount of ICS operating revenue executed through Marketplace for J.B. Hunt 360° increased to $222 million from $137 million in second quarter 2018. JBI executed approximately $41 million of third-party dray cost and JBT executed approximately $5 million of its independent contractor costs through the platform during this quarter.
Operating income for the current quarter totaled $193.1 million versus $214.8 million for the second quarter 2018. The benefits of customer rate increases and increases in revenue producing truck counts were partially offset by increases in insurance and claims costs (particularly a $20.0 million pre-tax charge, $0.14 per diluted share, in settlement of a DCS Final Mile claim), increases in rail purchased transportation costs, start-up costs associated with expansion and integration of DCS Final Mile network, higher driver wages and recruiting costs, increased technology costs for modernization and further development of J.B. Hunt 360°, and increased facility costs all compared to the same period 2018.
Interest expense in the current quarter increased due to higher debt levels compared to the same period last year. The effective income tax rate for the quarter was 25% versus 26.0% for the second quarter 2018.
Segment Information:
Intermodal (JBI)
- Second Quarter 2019 Segment Revenue: $1.15 billion; down 1%
- Second Quarter 2019 Operating Income: $124.4 million; down 7%
JBI load volumes declined 8% over the same period in 2018. Transcontinental loads decreased approximately 5% and Eastern network volumes declined 11% from second quarter 2018. A softer freight market limited the ability to offset rail network rationalization effects in the Eastern network though loads per workday trends improved throughout the quarter particularly in the Transcontinental network. Revenue decreased 1% reflecting the 8% volume decline and an approximate 7% increase in revenue per load, which is the combination of customer rate changes, fuel surcharges, and freight mix. Revenue per load excluding fuel surcharge revenue increased 8% from second quarter 2018.
Operating income decreased 7% from prior year. Benefits from customer rate increases were offset by the volume decline, higher rail purchased transportation costs, higher driver pay, retention and recruiting costs, increased technology modernization costs, and increased equipment and facilities ownership costs. The current period ended with approximately 96,700 units of trailing capacity and 5,640 power units assigned to the dray fleet.
Dedicated Contract Services (DCS)
- Second Quarter 2019 Segment Revenue: $680 million; up 28%
- Second Quarter 2019 Operating Income: $60.5 million; up 3%
DCS revenue increased 28% during the current quarter over the same period in 2018. Productivity, defined as revenue per truck per week, increased approximately 8% vs. 2018. Productivity excluding fuel surcharges increased approximately 9% over a year ago primarily from customer rate increases, improved integration of assets between customer accounts, and increased customer supply chain fluidity. Included in the DCS revenue growth, Final Mile Services (FMS) recorded an increase in revenue of $49 million (primarily from the February 2019 acquisition) compared to second quarter 2018. A net additional 1,755 revenue producing trucks, 259 net additions compared to first quarter 2019, were in the fleet by the end of the quarter compared to prior year. Approximately 44% of these additions represent private fleet conversions and 8% represent FMS versus traditional dedicated capacity fleets. Customer retention rates remain above 98%.
Operating income increased 3% over the prior year quarter. Benefits from increased productivity, additional trucks under contract, and a $4.3 million reduction in salaries and wages accruals were partially offset by increased insurance and claims costs (primarily a $20.0 million pre-tax charge to settle a Final Mile claim), increased technology and facilities costs in the expanding FMS network, increased driver wages and recruiting costs, and an incremental $1.7 million in non-cash amortization expense attributable to the February 2019 acquisition compared to second quarter 2018.
Integrated Capacity Solutions (ICS)
- Second Quarter 2019 Segment Revenue: $334 million; down 4%
- Second Quarter 2019 Operating Loss: $(0.6) million; down 104%
ICS revenue was down 4% compared to the second quarter 2018. Volumes decreased 7% while revenue per load increased approximately 4%, primarily due to customer freight mix. Higher contractual truckload volume was offset by a 33% decrease in less-than-truckload shipments and weaker spot market activity compared to second quarter 2018. Contractual volumes represented approximately 68% of total load volume and 55% of total revenue compared to 68% and 45%, respectively, in second quarter 2018. Of the total reported ICS revenue, $222 million was executed through Marketplace for J.B. Hunt 360° compared to $137 million in second quarter 2018.
Operating income decreased approximately 104% from the same period 2018 primarily from lower gross profit margin, higher personnel costs, increased digital marketing costs, and higher technology development costs as investments continue to be made to expand capacity and functionality of Marketplace for J.B. Hunt 360°. Gross profit margins decreased to 13.4% in the current quarter versus 14.8% in the same period last year due to weaker spot market activity and lower contractual rates on committed business. The carrier base increased 26% and the employee count increased 15% from a year ago.
Truck (JBT)
- Second Quarter 2019 Segment Revenue: $99.6 million; down 2%
- Second Quarter 2019 Operating Income: $8.9 million; up 19%
JBT revenue decreased 2% from the same period in 2018. Revenue excluding fuel surcharges was flat compared to second quarter 2018 on flat load count. Revenue per load excluding fuel surcharges was up approximately 1% from a 4% increase in rates per loaded mile and a 3% decrease in length of haul compared to the same period in 2018. At the end of the period, JBT operated 1,879 tractors compared to 1,976 a year ago.
Operating income increased 19% compared to the same quarter 2018. The benefits from lower equipment ownership costs and decreased non-driver personnel expense were partially offset by higher driver and independent contractor costs per mile compared to the second quarter 2018.
Cash Flow and Capitalization:
At June 30, 2019, we had approximately $1.4 billion outstanding on various debt instruments compared to $1.0 billion at June 30, 2018 and $1.15 billion at December 31, 2018.
Our net capital expenditures for the six months ended June 30, 2019 approximated $475 million compared to $354 million for the same period 2018. At June 30, 2019, we had cash and cash equivalents of $6.9 million.
We purchased approximately 1.98 million shares of our common stock during the second quarter 2019 for approximately $190 million. At June 30, 2019, we had approximately $181 million remaining under our share repurchase authorization. Actual shares outstanding at June 30, 2019 approximated 106.8 million.
Conference Call Information:
The Company will hold a conference call today at 4:00 – 5:00 pm CDT to discuss the quarterly earnings. The call-in number for participants is (877) 369-5230, access code: 0620659##. A replay of the call will be posted on its website later this evening.
This press release may contain 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, 2018. 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 additional information will be available immediately to interested parties on our web site, www.jbhunt.com.
J.B. HUNT TRANSPORT SERVICES, INC. |
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Condensed Consolidated Statements of Earnings |
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(in thousands, except per share data) |
||||||||
(unaudited) |
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|
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Three Months Ended June 30 |
||||||||
2019 |
|
2018 |
||||||
|
|
% Of |
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|
|
% Of |
||
Amount |
|
Revenue |
|
Amount |
|
Revenue |
||
|
|
|||||||
| Operating revenues, excluding fuel surcharge revenues | $ |
1,996,266 |
|
$ |
1,874,388 |
|
||
| Fuel surcharge revenues | 265,381 |
|
264,639 |
|
||||
| Total operating revenues | 2,261,647 |
100.0% |
2,139,027 |
100.0% |
||||
|
|
|||||||
| Operating expenses |
|
|
||||||
| Rents and purchased transportation | 1,086,416 |
48.0% |
1,073,164 |
50.2% |
||||
| Salaries, wages and employee benefits | 535,147 |
23.7% |
465,326 |
21.8% |
||||
| Depreciation and amortization | 123,995 |
5.5% |
107,423 |
5.0% |
||||
| Fuel and fuel taxes | 118,037 |
5.2% |
115,541 |
5.4% |
||||
| Operating supplies and expenses | 84,264 |
3.7% |
76,446 |
3.6% |
||||
| General and administrative expenses, net of asset dispositions | 46,539 |
2.1% |
37,306 |
1.7% |
||||
| Insurance and claims | 52,013 |
2.3% |
28,371 |
1.3% |
||||
| Operating taxes and licenses | 13,565 |
0.6% |
12,234 |
0.6% |
||||
| Communication and utilities | 8,578 |
0.4% |
8,404 |
0.4% |
||||
| Total operating expenses | 2,068,554 |
91.5% |
1,924,215 |
90.0% |
||||
| Operating income | 193,093 |
8.5% |
214,812 |
10.0% |
||||
| Net interest expense | 14,763 |
0.6% |
9,855 |
0.4% |
||||
| Earnings before income taxes | 178,330 |
7.9% |
204,957 |
9.6% |
||||
| Income taxes | 44,697 |
2.0% |
53,305 |
2.5% |
||||
| Net earnings | $ |
133,633 |
5.9% |
$ |
151,652 |
7.1% |
||
| Average diluted shares outstanding | 108,373 |
|
110,682 |
|
||||
| Diluted earnings per share | $ |
1.23 |
|
$ |
1.37 |
|
||
|
|
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|
|
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J.B. HUNT TRANSPORT SERVICES, INC. |
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Condensed Consolidated Statements of Earnings |
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(in thousands, except per share data) |
||||||||
(unaudited) |
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|
|
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Six Months Ended June 30 |
||||||||
2019 |
|
2018 |
||||||
|
|
% Of |
|
|
|
% Of |
||
Amount |
|
Revenue |
|
Amount |
|
Revenue |
||
|
|
|||||||
| Operating revenues, excluding fuel surcharge revenues | $ |
3,851,608 |
|
$ |
3,587,321 |
|
||
| Fuel surcharge revenues | 499,666 |
|
499,951 |
|
||||
| Total operating revenues | 4,351,274 |
100.0% |
4,087,272 |
100.0% |
||||
|
|
|||||||
| Operating expenses |
|
|
||||||
| Rents and purchased transportation | 2,086,305 |
47.9% |
2,038,057 |
49.9% |
||||
| Salaries, wages and employee benefits | 1,051,472 |
24.2% |
915,592 |
22.4% |
||||
| Depreciation and amortization | 243,924 |
5.6% |
213,006 |
5.2% |
||||
| Fuel and fuel taxes | 230,162 |
5.3% |
223,422 |
5.5% |
||||
| Operating supplies and expenses | 162,436 |
3.7% |
147,126 |
3.6% |
||||
| General and administrative expenses, net of asset dispositions | 91,578 |
2.1% |
69,630 |
1.6% |
||||
| Insurance and claims | 81,007 |
1.9% |
56,870 |
1.4% |
||||
| Operating taxes and licenses | 26,725 |
0.6% |
23,822 |
0.6% |
||||
| Communication and utilities | 16,777 |
0.4% |
16,153 |
0.4% |
||||
| Total operating expenses | 3,990,386 |
91.7% |
3,703,678 |
90.6% |
||||
| Operating income | 360,888 |
8.3% |
383,594 |
9.4% |
||||
| Net interest expense | 27,796 |
0.6% |
19,008 |
0.5% |
||||
| Earnings before income taxes | 333,092 |
7.7% |
364,586 |
8.9% |
||||
| Income taxes | 79,858 |
1.9% |
94,792 |
2.3% |
||||
| Net earnings | $ |
253,234 |
5.8% |
$ |
269,794 |
6.6% |
||
| Average diluted shares outstanding | 109,015 |
|
110,771 |
|
||||
| Diluted earnings per share | $ |
2.32 |
|
$ |
2.44 |
|
||
|
|
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|
|
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Financial Information By Segment |
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(in thousands) |
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(unaudited) |
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|
|
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Three Months Ended June 30 |
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2019 |
|
2018 |
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|
|
% Of |
|
|
|
% Of |
|||
Amount |
|
Total |
|
Amount |
|
Total |
|||
|
|
||||||||
| Revenue |
|
|
|||||||
| Intermodal | $ |
1,149,723 |
51% |
$ |
1,164,508 |
54% |
|||
| Dedicated | 679,871 |
30% |
529,982 |
25% |
|||||
| Integrated Capacity Solutions | 334,267 |
15% |
347,295 |
16% |
|||||
| Truck | 99,627 |
4% |
101,241 |
5% |
|||||
| Subtotal | 2,263,488 |
100% |
2,143,026 |
100% |
|||||
| Intersegment eliminations | (1,841) |
(0%) |
(3,999) |
(0%) |
|||||
| Consolidated revenue | $ |
2,261,647 |
100% |
$ |
2,139,027 |
100% |
|||
|
|
||||||||
|
|
||||||||
| Operating income |
|
|
|||||||
| Intermodal | $ |
124,357 |
64% |
$ |
133,993 |
62% |
|||
| Dedicated | 60,489 |
31% |
58,452 |
27% |
|||||
| Integrated Capacity Solutions | (570) |
(0%) |
14,934 |
7% |
|||||
| Truck | 8,889 |
5% |
7,484 |
4% |
|||||
| Other (1) | (72) |
(0%) |
(51) |
(0%) |
|||||
| Operating income | $ |
193,093 |
100% |
$ |
214,812 |
100% |
|||
|
|
||||||||
|
|
||||||||
Six Months Ended June 30 |
|||||||||
2019 |
2018 |
||||||||
% Of |
% Of |
||||||||
| Amount | Total |
Amount | Total |
||||||
| Revenue |
|
|
|||||||
| Intermodal | $ |
2,237,822 |
51% |
$ |
2,234,772 |
54% |
|||
| Dedicated | 1,281,783 |
29% |
1,024,462 |
25% |
|||||
| Integrated Capacity Solutions | 635,078 |
15% |
643,400 |
16% |
|||||
| Truck | 201,479 |
5% |
193,959 |
5% |
|||||
| Subtotal | 4,356,162 |
100% |
4,096,593 |
100% |
|||||
| Intersegment eliminations | (4,888) |
(0%) |
(9,321) |
(0%) |
|||||
| Consolidated revenue | $ |
4,351,274 |
100% |
$ |
4,087,272 |
100% |
|||
|
|
||||||||
|
|
||||||||
| Operating income |
|
|
|||||||
| Intermodal | $ |
227,674 |
63% |
$ |
248,235 |
65% |
|||
| Dedicated | 110,734 |
31% |
99,013 |
26% |
|||||
| Integrated Capacity Solutions | 6,395 |
2% |
23,810 |
6% |
|||||
| Truck | 16,128 |
4% |
12,614 |
3% |
|||||
| Other (1) | (43) |
(0%) |
(78) |
(0%) |
|||||
| Operating income | $ |
360,888 |
100% |
$ |
383,594 |
100% |
|||
|
|
||||||||
|
|
||||||||
| (1) Includes corporate support activity | |||||||||
| Operating Statistics by Segment | |||||
| (unaudited) | |||||
Three Months Ended June 30 |
|||||
2019 |
|
|
2018 |
||
| Intermodal | |||||
| Loads | 480,938 |
520,341 |
|||
| Average length of haul | 1,660 |
1,634 |
|||
| Revenue per load | $ |
2,391 |
$ |
2,238 |
|
| Average tractors during the period * | 5,652 |
5,496 |
|||
| Tractors (end of period) | |||||
| Company-owned | 4,969 |
4,873 |
|||
| Independent contractor | 668 |
666 |
|||
| Total tractors | 5,637 |
5,539 |
|||
| Net change in trailing equipment during the period | 847 |
1,082 |
|||
| Trailing equipment (end of period) | 96,659 |
90,575 |
|||
| Average effective trailing equipment usage | 82,367 |
86,451 |
|||
| Dedicated | |||||
| Loads | 915,033 |
731,137 |
|||
| Average length of haul | 169 |
179 |
|||
| Revenue per truck per week** | $ |
4,915 |
$ |
4,565 |
|
| Average trucks during the period*** | 10,710 |
8,973 |
|||
| Trucks (end of period) | |||||
| Company-owned | 10,311 |
8,526 |
|||
| Independent contractor | 41 |
57 |
|||
| Customer-owned (Dedicated operated) | 462 |
476 |
|||
| Total trucks | 10,814 |
9,059 |
|||
| Trailing equipment (end of period) | 27,882 |
25,501 |
|||
| Average effective trailing equipment usage | 28,357 |
26,540 |
|||
| Integrated Capacity Solutions | |||||
| Loads | 306,817 |
331,278 |
|||
| Revenue per load | $ |
1,089 |
$ |
1,048 |
|
| Gross profit margin | 13.4% |
14.8% |
|||
| Employee count (end of period) | 1,198 |
1,043 |
|||
| Approximate number of third-party carriers (end of period) | 80,000 |
63,500 |
|||
| Marketplace for J.B. Hunt 360°: | |||||
| Approximate carrier tractor count (end of period) | 600,600 |
412,100 |
|||
| Revenue (millions) | $ |
222.4 |
$ |
136.8 |
|
| Truck | |||||
| Loads | 87,994 |
88,301 |
|||
| Average length of haul | 418 |
433 |
|||
| Loaded miles (000) | 36,744 |
38,221 |
|||
| Total miles (000) | 45,155 |
45,468 |
|||
| Average nonpaid empty miles per load | 95.6 |
82.1 |
|||
| Revenue per tractor per week** | $ |
3,940 |
$ |
3,935 |
|
| Average tractors during the period * | 1,973 |
2,003 |
|||
| Tractors (end of period) | |||||
| Company-owned | 946 |
1,262 |
|||
| Independent contractor | 933 |
714 |
|||
| Total tractors | 1,879 |
1,976 |
|||
| Trailers (end of period) | 6,829 |
6,928 |
|||
| Average effective trailing equipment usage | 6,580 |
6,497 |
|||
| * Includes company-owned and independent contractor tractors | |||||
| ** Using weighted workdays | |||||
| *** Includes company-owned, independent contractor, and customer-owned trucks | |||||
| Operating Statistics by Segment | |||||
| (unaudited) | |||||
Six Months Ended June 30 |
|||||
2019 |
|
|
2018 |
||
| Intermodal | |||||
| Loads | 940,862 |
1,016,105 |
|||
| Average length of haul | 1,656 |
1,648 |
|||
| Revenue per load | $ |
2,378 |
$ |
2,199 |
|
| Average tractors during the period * | 5,656 |
5,495 |
|||
| Tractors (end of period) | |||||
| Company-owned | 4,969 |
4,873 |
|||
| Independent contractor | 668 |
666 |
|||
| Total tractors | 5,637 |
5,539 |
|||
| Net change in trailing equipment during the period | 1,757 |
1,965 |
|||
| Trailing equipment (end of period) | 96,659 |
90,575 |
|||
| Average effective trailing equipment usage | 82,798 |
86,858 |
|||
| Dedicated | |||||
| Loads | 1,740,207 |
1,419,487 |
|||
| Average length of haul | 171 |
180 |
|||
| Revenue per truck per week** | $ |
4,757 |
$ |
4,453 |
|
| Average trucks during the period*** | 10,522 |
8,906 |
|||
| Trucks (end of period) | |||||
| Company-owned | 10,311 |
8,526 |
|||
| Independent contractor | 41 |
57 |
|||
| Customer-owned (Dedicated operated) | 462 |
476 |
|||
| Total trucks | 10,814 |
9,059 |
|||
| Trailing equipment (end of period) | 27,882 |
25,501 |
|||
| Average effective trailing equipment usage | 27,977 |
26,804 |
|||
| Integrated Capacity Solutions | |||||
| Loads | 595,750 |
582,799 |
|||
| Revenue per load | $ |
1,066 |
$ |
1,104 |
|
| Gross profit margin | 14.9% |
14.6% |
|||
| Employee count (end of period) | 1,198 |
1,043 |
|||
| Approximate number of third-party carriers (end of period) | 80,000 |
63,500 |
|||
| Marketplace for J.B. Hunt 360°: | |||||
| Approximate carrier tractor count (end of period) | 600,600 |
412,100 |
|||
| Revenue (millions) | $ |
408.9 |
$ |
233.2 |
|
| Truck | |||||
| Loads | 172,922 |
169,800 |
|||
| Average length of haul | 427 |
443 |
|||
| Loaded miles (000) | 73,712 |
75,146 |
|||
| Total miles (000) | 90,852 |
89,313 |
|||
| Average nonpaid empty miles per load | 99.3 |
83.5 |
|||
| Revenue per tractor per week** | $ |
3,913 |
$ |
3,857 |
|
| Average tractors during the period* | 2,024 |
1,973 |
|||
| Tractors (end of period) | |||||
| Company-owned | 946 |
1,262 |
|||
| Independent contractor | 933 |
714 |
|||
| Total tractors | 1,879 |
1,976 |
|||
| Trailers (end of period) | 6,829 |
6,928 |
|||
| Average effective trailing equipment usage | 6,583 |
6,529 |
|||
| * Includes company-owned and independent contractor tractors | |||||
| ** Using weighted workdays | |||||
| *** Includes company-owned, independent contractor, and customer-owned trucks | |||||
| J.B. HUNT TRANSPORT SERVICES, INC. | ||||||||
| Condensed Consolidated Balance Sheets | ||||||||
| (in thousands) | ||||||||
| (unaudited) | ||||||||
| June 30, 2019 | December 31, 2018 | |||||||
| ASSETS | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ |
6,875 |
$ |
7,600 |
||||
| Accounts Receivable, net | 1,040,153 |
1,051,698 |
||||||
| Prepaid expenses and other, net | 337,336 |
443,683 |
||||||
| Total current assets | 1,384,364 |
1,502,981 |
||||||
| Property and equipment | 5,635,867 |
5,329,243 |
||||||
| Less accumulated depreciation | 1,957,782 |
1,884,132 |
||||||
| Net property and equipment | 3,678,085 |
3,445,111 |
||||||
| Other assets, net | 358,290 |
143,555 |
||||||
$ |
5,420,739 |
$ |
5,091,647 |
|||||
| LIABILITIES & STOCKHOLDERS' EQUITY | ||||||||
| Current liabilities: | ||||||||
| Current debt | $ |
- |
$ |
250,706 |
||||
| Trade accounts payable | 640,324 |
709,736 |
||||||
| Claims accruals | 277,669 |
275,139 |
||||||
| Accrued payroll | 59,282 |
80,922 |
||||||
| Other accrued expenses | 84,247 |
35,845 |
||||||
| Total current liabilities | 1,061,522 |
1,352,348 |
||||||
| Long-term debt | 1,372,143 |
898,398 |
||||||
| Other long-term liabilities | 175,656 |
96,056 |
||||||
| Deferred income taxes | 676,062 |
643,461 |
||||||
| Stockholders' equity | 2,135,356 |
2,101,384 |
||||||
$ |
5,420,739 |
$ |
5,091,647 |
|||||
| Supplemental Data | ||||||||
| (unaudited) | ||||||||
| June 30, 2019 | December 31, 2018 | |||||||
| Actual shares outstanding at end of period (000) | 106,768 |
108,711 |
||||||
| Book value per actual share outstanding at end of period | $ |
20.00 |
$ |
19.33 |
||||
Six Months Ended June 30 |
||||||||
2019 |
|
|
|
2018 |
||||
| Net cash provided by operating activities (000) | $ |
606,661 |
$ |
529,033 |
||||
| Net capital expenditures (000) | $ |
475,331 |
$ |
354,131 |
||||
