Roberts Enjoying Smooth Ride at J.B. Hunt

Editor’s Note: The following profiles are part of a series originally published by Arkansas Business highlighting the chief executive officers of the 17 publicly traded companies headquartered in the state. The Northwest Arkansas Business Journal is running the profiles of the CEOs whose companies are headquartered in our coverage area as a service to our readers.

When J.B. Hunt Transport Services Inc. began seeing softness in its revenue and income, in 2008 and 2009, the Lowell trucking company refocused its services and sought to reduce its exposure in a sector of its asset-based business, the truck part of the concern.

The strategy has worked well for the company.

For 2010, revenue was $3.79 billion, an 18 percent increase compared with full-year 2009. Operating income was up 40 percent over 2009, and profit was $199.6 million.

For 2011, revenue was $4.5 billion, a 19 percent increase. Operating income jumped another 28 percent in 2011 and profit reached $257 million.

This solid improvement in J.B. Hunt’s financials in 2010 occurred with Kirk Thompson in charge as president and CEO. The company, however, continued its upward trajectory under John N. Roberts III, 47, who assumed those roles on Jan. 1, 2011, while Thompson stayed aboard as chairman.

As Roberts and Thompson noted in their joint letter to stockholders in J.B. Hunt’s recently released annual report, “2011 proved to be a record year for our company in many ways. We reached new highs in load volumes for Intermodal (JBI), Dedicated Contract Services (DCS) and Integrated Capacity Solutions (ICS). Our Truck segment (JBT) activated more independent contractors than ever before, and our companywide third-party carrier base count eclipsed previous levels.”

J.B. Hunt announced in October 2010 that Roberts had been elected president and CEO, replacing Thompson, and that Thompson had been elected chairman of the board, replacing Wayne Garrison, who remained as a company director. Both Roberts’ and Thompson’s transitions took place at the beginning of 2011.

“With the company’s strategic positioning well established and operational execution at such a high level, this is the right time for me to step back from the day-to-day operations,” Thompson said in the October announcement. “We have an outstanding team of leaders that is both wide and deep. They are more than capable of taking the company to even greater heights in the future. I couldn’t be more confident in both the direction of the company and the leadership in place.

“John and I have worked together closely for the last 13 years after he was drafted to lead DCS in a ‘battlefield promotion.’ His response to that challenge and the challenges of growing a start-up business to almost $1 billion has been nothing short of outstanding. The Board and I are confident he will do a similarly outstanding job as the fourth CEO in J.B. Hunt Transport Services’ history,” Thompson said.

Roberts, a graduate of the University of Arkansas, joined the company in 1989 as a management trainee. Before becoming CEO, Roberts served the company as executive vice president and president of Dedicated Contract Services from 1997 to Dec. 31, 2010.

J.B. Hunt has four primary segments.

• Intermodal, or the rail-to-truck segment, has among the most extensive rail networks and largest privately owned container fleets in North America. JBI is J.B. Hunt’s largest business segment.

• The Dedicated Contract Services segment designs supply chain networks.

• Integrated Capacity Solutions, founded in 2007, seeks to connect shippers to carriers for efficient transportation of goods.

• The Truck segment, which probably is what most people think of when thinking of J.B. Hunt, provides truckload transportation of goods.

The company, which was founded in 1961 and went public in 1983, had 15,225 employees and 9,900 trucks as of last year and was the third-largest trucking company in Arkansas.

J.B. Hunt has received a number of honors within the last 12 months.

• Inbound Logistics named J.B. Hunt to its Top 75 Green Supply Chain Partners.

• Inbound Logistics also named the company as a 2011 Top 100 Motor Carrier.

• The company was recognized as a 2011 SmartWay Champion by the U.S. Environmental Protection Agency.

• Wal-Mart Stores Inc. of Bentonville chose J.B. Hunt as Wal-Mart’s 2011 Intermodal Carrier of the Year. Wal-Mart has chosen J.B. Hunt as Intermodal Carrier of the Year for 10 of the past 11 years.

And in November, J.B. Hunt announced it had awarded $1 million to Crystal Bridges Museum of American Art in Bentonville, founded by Wal-Mart heiress Alice Walton and funded in large part by the Walton Family Foundation. The gift was designated for the Next Generation Fund, an endowment that seeks to give members of the community increased access to the museum.

J.B. Hunt’s strong showing — even during the Great Recession, the company outperformed many other transportation concerns — helps explain Roberts’ robust compensation package for 2011.

He received $5.35 million in total compensation during 2011, according to the company’s proxy filed March 15. The proxy broke down the compensation like this: $549,019 in salary, J.B. Hunt shares valued at $4.37 million, non-equity incentive plan compensation of $412,500 and other compensation of $12,917. That other compensation was further detailed as consisting of $4,395 in legal and accounting fees and $8,522 in club dues.

Roberts was not a “named executive officer” during 2010, so his compensation for that year was not detailed.

The proxy reported Roberts owning 274,364 shares of J.B. Hunt stock. At J.B. Hunt’s closing price of $54.64 as of March 16, that stock would be valued at a hair under $15 million.

 

Rebuilding Customer Base, Consolidation Keys at P.A.M.

Dan Cushman took on the job of president and CEO of P.A.M. Transportation Services Inc. of Tontitown in July 2009, shortly after the economy soured and the trucking company’s trajectory was descending from profitability.

P.A.M.’s income devolved from a profit of $2.7 million in 2007 to a net loss of $18.8 million in 2008.

Cushman led the company to a less devastating loss of $655,000 in 2010, but the red ink rose back to $2.86 million last year.

2011 was a hard year, Cushman said, because the company’s fleet of 1,750 trucks was aging and the company had struggled to maintain them. P.A.M. began replacing trucks last summer at a rate of 50 new vehicles per month, and will continue to keep a newer fleet.

Among P.A.M.’s weaknesses going into the recession, Cushman said, was that the company was seen in the industry as only an automotive carrier. The reality, however, was even harsher.

“It was worse than that. It was one customer,” Cushman said, declining to name the single company on which P.A.M. had become dependent.

Cushman’s immediate goal was to diversify P.A.M.’s customer base and reduce its heavy reliance on the faltering U.S. auto industry.

Cushman, 57, came to P.A.M. with more than 30 years of experience in the trucking industry. His total compensation in 2010 was $642,812.

The Chicago native gained his experience working for Roadway Express in Akron, Ohio; Triple Crown Services in Fort Wayne, Ind.; Werner Enterprises in Omaha, Neb.; and CRST International in Cedar Rapids, Iowa.

Cushman used his accumulated contacts and knowledge to lead in finding P.A.M. 200 new customers in 2010 and 200 more in 2011 in a variety of industries, including beverages, retail and consumer products.

A company with a strong customer base will still experience “smaller income in hard times, but … not a matter of being profitable or not profitable,” Cushman said.

To further strengthen the company, Cushman quickly developed a pricing and yield management department and a sales and marketing team for P.A.M.

In addition, Cushman took a look at P.A.M.’s acquisitions — Allen Freight Services in Jacksonville, Fla.; Decker Transport in New Jersey and Illinois; Choctaw Express in Oklahoma City; and East Coast Logistics in Paulsboro, N.J. — from five or so years before his arrival.

He chose to consolidate the operations to improve communications between operating divisions and clarify the company’s position as a national carrier rather than appear to be a collection of small, regional trucking companies. Cushman closed five offices and moved about 75 non-driving jobs to Tontitown.

“Our goal in the future is just to do a lot more with the national accounts that we brought on in the last few years,” Cushman said. “We’ve worked very hard to develop a sustainable profit model, and everything we’re doing is an attempt to have a sustainable profit model.”

— Kate Knable

 

No Crash for Car-Mart During Turbulent Economic Times

Growing up on a farm in Lonoke County, William “Hank” Henderson didn’t want a career as a farmer.

“I wanted to try my hand in business,” said the 48-year-old CEO of America’s Car-Mart Inc. of Bentonville.

After graduating from the University of Central Arkansas with a degree in business in the 1980s, Henderson went to work for a car rental and leasing company in Fort Worth, Texas.

“I didn’t like it out there, and came back [to Arkansas] and went to work at Car-Mart,” he said.

That was in 1987. And he’s been there ever since. He’s held positions of district manger, regional manager, general manager and chief operating officer. Henderson became Car-Mart’s CEO in October 2007, just in time for the Great Recession.

“Really for our customers … our company hasn’t been affected by the recession,” he said. “What we sell is basic transportation. And that is a need … and something that people [will] continue to buy.”

America’s Car-Mart not only sells used vehicles, but also provides the financing for their customers, too. With 112 dealerships in nine states, America’s Car-Mart has about 1,100 employees, making it the largest publicly held automotive retailer in the United States.

Henderson said his management philosophy is to have the right people in the right places and then let “them do their job.”

The strategy seems to be working. For the fiscal year that ended April 30, 2009, the first full year under Henderson, Car-Mart had $299 million in revenue. A year later, its revenue jumped 13.4 percent. And for the fiscal year that ended in April 2011, revenue was $379.25 million.

Through the first three quarters of its current fiscal year, revenue was $316.7 million, up 14.8 percent from the same period a year ago.

“Our strong performance is the direct result of taking great care of our customers, one at a time,” Henderson said in a Feb. 15 news release about the third quarter results.

Henderson received a raise for the fiscal year that ended April 30, 2011, to $350,000, up from $300,000 the previous year. His total compensation was $450,000 for the fiscal year that ended April 30, but the previous year it was $3.55 million, thanks to $2.8 million in stock compensation.

He owns about 92,000 shares of the company, which was worth about $3.9 million as of April 19. The stock’s price has soared more than 300 percent since Henderson was promoted to CEO. It closed at $42.50 on April 19.

Henderson also started serving on the company’s board of directors in 2002. In 2004, he was named vice chairman of the board.

Away from the office, Henderson plays guitar in a band that performs a few shows a year. And in the winter, he can be found duck hunting.

— Mark Friedman

 

Beckham Remains Focused Despite Recession-Related Struggles

Starting in 2009, USA Truck Inc. of Van Buren has seen net income losses, dimming the gleam created by a profitable 2008, Cliff Beckham’s first full year as chief executive officer.

When Beckham became CEO of the company in August 2007, Robert Powell, USA Truck’s board chairman, described him as having “energy and vision” and as “squarely focused on building shareholder value, and he understands that motivated employees and satisfied customers are critical to achieving our goals.”

Beckham did see prompt results as CEO, but USA Truck experienced growing profitability only one year.

In fact, the company has struggled every year since that $3.14 million profit in 2008, and 2011 was the company’s worst yet under Beckham. The now 26-year-old company reported a net loss of $10.8 million last year.

Beckham has for several years acknowledged the troubling effects of the Great Recession. 

“The lack of freight demand has created excess tractor capacity industrywide,” he said in a 2009 press release.

In a Jan. 28, 2010, press release, he expressed some optimism.

“We believe industry conditions have bottomed,” he said. “We anticipate our first-quarter results will be similar to our recent quarters and there will likely be sequential downward pressure on industry pricing as lower-priced third- and fourth-quarter bids take effect. However, we also believe the imbalance between industry tractor capacity and freight demand will gradually improve throughout 2010 as businesses begin restocking inventories and as unsustainably low freight pricing and rising fuel prices begin thinning industry capacity.”

But USA Truck’s financials continued to disappoint in 2011, Beckham noted in a quarterly report earlier this year.

Among USA Truck’s 2011 troubles were “significant difficulties in implementing a new enterprise management software system. These difficulties caused a lack of visibility of freight in our system and numerous customer service disruptions,” Beckham stated. “The service failures and lack of confidence in booking freight caused us to lose a percentage of our loads with many customers, often the most operationally demanding, highest-paying loads.”

Beckham, 40, is a Fort Smith native. He graduated from Arkansas State University in 1994 with a bachelor’s degree in accounting. The same year he graduated from college, he began his career with USA Truck as a staff accountant.

In 2010, his base salary was $255,456 and his total compensation was $293,770. Beckham’s nearly 65,000 shares in USA Truck recently were valued at about $550,000.

Last fall, Celadon Trucking of Indianapolis acquired 658,000 shares of USA Truck stock and expressed an interest in acquiring the entire company. The unsolicited offer was rebuffed, and Celadon soon sold all of its USA Truck stock.

1. “The Celadon matter was a significant distraction for our team members, our customers and our board of directors,” Beckham wrote in an email. “Now that the matter has been resolved, we are focused completely on improving our operational execution.”        On April 19, USA Truck reported a wider first-quarter net loss as revenue per mile declined and the number of unmanned tractors increased in its trucking segment. The company said its first-quarter net loss reached $4.9 million or 47 cents per share, a bigger loss than the $2.7 million or 26 cents per share loss it reported during the same quarter last year.

Those results came on lower base revenue, $97.8 million versus $99.7 million during the same quarter last year.

Beckham called the company’s first-quarter results “mixed,” citing improvement in the company’s miles per tractor per week and loads per tractor per week, but also a spike in its unmanned tractor count, which rose “sharply” in February and March.

“All in all, the pace of improvement in our one-way domestic truckload business is behind our expectations,” Beckham said. “We are not yet achieving optimal operating efficiencies from our network, which we must attain in order to most effectively improve yield and profitability.”

Beckham said the company had noted its challenges and pushed expectations for improvement over 2011 into the second half of the year.

— Kate Knable