J.B. Hunt Doubles Profit; Thompson Sees Tighter Shipping Capacity
J.B. Hunt Transport Services Inc. of Lowell brought more goods over the road and by rail for manufacturers and to stores.
The firm’s profit doubled when compared with this time last year.
J.B. Hunt reported its second quarter earnings after financial markets closed Thursday.
The transportation company reported $942.77 million in revenue for the second quarter ended June 30, about a 22 percent increase from the $769.78 million in revenue in the second quarter 2009.
“Demand for transportation services has increased fairly dramatically as we have emerged from a multi-year freight recession,” said Kirk Thompson, J.B. Hunt president and chief executive officer.
The transportation firm saw pricing improve in the second quarter, as rates for shipping goods through the intermodal segment increased 2.4 percent, according to a financial earnings release.
Intermodal uses trucks and rail cars to ship goods.
Pricing in the truck segment improved more, as it cost about 8.34 percent more to ship goods between April and June this year, the release stated. J.B. Hunt reported $52.1 million in second quarter earnings, or profit, a117 percent increase from the $24 million in the second quarter last year.
Stockholders earned 40 cents per share, a 110 percent increase from the 19 cents earned per share in the second quarter of 2009.
The 26 financial analysts surveyed by Thomson Reuters expected earnings of 36 cents per share. The lowest estimate was 30 cents per share and the highest was 40 cents per share, which J.B. Hunt matched.
J.B. Hunt is a primary player amid the early stages of improvement in domestic freight, said trucking analyst Jon A. Langenfeld with Robert W. Baird & Co.
“We believe J.B. Hunt is well positioned to capitalize on accelerating domestic demand,” Langenfeld said in a May 5 research note. “We remain buyers of the stock at current levels.”
Trucking firms have suffered throughout the recession as everyone, from home builders to retail companies to manufacturers, laid off workers, slacked production and ordered or shipped fewer goods.
However, Thompson is optimistic the economic recovery has begun, as shipping demand remained solid throughout the second quarter. He noted shipping capacity is again tightening, meaning there may be more goods to be shipped than there are carriers to deliver them.
“Shippers increasingly have exhibited concern about the supply/demand imbalance as their ability to secure adequate capacity has become more difficult,” Thompson said in the earnings release.
J.B. Hunt’s second quarter revenue included $130.74 million in fuel surcharges, nearly double the $66.8 million in fuel surcharges collected the second quarter of 2009.
Fuel surcharges allow a transportation firm to charge some shippers more for diesel, as fuel prices fluctuate. The surcharges recoup some, but rarely all, of the price changes.
Revenue for each J.B. Hunt segment includes:
• Intermodal – $526 million, a 24 percent increase from the second quarter of 2009. Intermodal loads increased 19 percent, as equipment shortages in the truck and intermodal markets brought J.B. Hunt more customers, a peak not seen since 2007.
A capacity tightness can indicate a recovery, but it also indicates that some trucking and transport firms couldn’t weather the recession and went out of business, sold tractors and trailers or cut other assets.
J.B. Hunt was among firms that sold tractors and trailers during the recession.
• Dedicated Contract Services – $229 million, a 31 percent increase from the second quarter of 2009. This segment uses trucks to ship goods under contract for customers, including retailers.
The average truck count increased 4 percent, to 4,436 trucks, when compared with the second quarter last year.
The increase came from certain accounts which needed added trucks, after cutting the number of trucks in 2009, the earnings release stated.
In addition, the segment got new contracts in the first six months this year.
• Truck – $125 million, a 15 percent increase from the second quarter last year. This increase came despite a 13 percent reduction in tractors.
The truck segment had 2,769 tractors as of June 30, compared with 3,169 in the same period last year.
However, trucks that were on the road operated more efficiently, with unpaid, empty miles down 14 percent when compared with 2009.
J.B. Hunt renegotiated contracts with some underperforming accounts.
“Many customers with inadequate pricing provisions agreed to modified contract terms in order to secure capacity, which was in ever-shorter supply as the quarter progressed,” the earnings release stated.
• Integrated capacity solutions – $70 million, a 3 percent increase from the second quarter of 2009.
This segment brokers freight loads to other parties for a fee. It is by far J.B. Hunt’s newest segment, operating for less than five years.
Integrated capacity solutions continues to open new branches and its customer base increased by 25 percent, the financial release stated.
However, the segment had 1 percent fewer employees this quarter compared with the same quarter last year.
Lana F. Flowers is a gifted Arkansas reporter who can handle news about Walmart and retail, movie and book reviews, human interest stories, features and anything else you'd care to mention. She lives in Rogers, Ark., with her husband Jesse, daughter Layla, cats Lottie Boots and Emmy, and dog Fuzzy. Send an email -- firstname.lastname@example.org