J.B. Hunt Transport Services
), one of the largest U.S. truckload carriers, reported second
quarter 2012 earnings of 67 cents per share, in line with the Zacks
Consensus Estimate. Earnings per share increased 26.4% from 53
cents earned in the year-ago quarter on growth across most
Total revenue increased 9% year over year to $1.26 billion, but
missed the Zacks Consensus Estimate of $1.30 billion.
Operating income leaped 21% year over year to $137 million
attributable to higher shipments in Intermodal (JBI) and Integrated
Capacity Solutions (ICS) segments and lower fuel expenses in
Dedicated Contract Services (DCS) and Truck (JBT) segments that
compensated for higher transportation expenses.
reported revenue of $762 million, up 13% year over year driven by a
13% increase in load count. The growth was aided by moderation in
fuel cost and steady market demand. The average tractor count
increased to 3,379 from 2,830 in the year-ago quarter. Operating
income climbed 22% year over year to $93.4 million.
Dedicated Contract Services
revenues inched up 1% year over year to $267 million in the second
quarter. The average truck count was 4,900 as against 4,761 in the
year-ago quarter. Operating income shot up 21% year over year to
$33.2 million on increased asset utilization and lower fuel cost
partially offset by the increase in safety and maintenance costs as
well as toll charges.
revenues were down 3.0% year over year to $126 million in the
second quarter despite a 4.7% rise in load count. The average
tractor count fell to 2,461 from 2,513 in the year-ago quarter.
Rates from shippers continued to improve and registered a
year-over-year growth of 2.5%. The average length of haul declined
10.3%. Operating income upped 27% year over year to $8.8 million.
Tailwinds like freight mix, higher seasonal spot pricing, gradual
decline in fuel expenses and improvements in fuel efficiency
contributed to the segments profit, compensating for higher driver
wages, independent contractor costs, lower asset utilization as
well as increased empty miles.
Integrated Capacity Solutions
revenues grew 23.0% year over year to $109 million attributable to
a 16% increase in load volume, mostly on contractual businesses
that contributed over 60% of the shipments as opposed to 52% in the
year-ago quarter. Operating income plummeted 25% year over year to
$2.0 million given the decline in gross profit margin, which was
suppressed by higher purchased transportation cost due to
constraints in the truck supply market. On a year-over-year basis,
the carrier base rose 13.0% and employee count grew 7%.
At the end of the second quarter, cash and cash equivalents
increased to $5,887 million from $5,713 million in first quarter
2012 and $5,450 million at year-end 2011. Total debt amounted to of
$679 million on June 30, 2012 compared to $702 million in first
quarter 2012 and $749.0 million in fiscal 2011. However, total debt
increased year over year from $664 million in June 30, 2011,
resulting in higher interest expenses for the company. The
company's debt-to-equity ratio was 81.2% in the second quarter
versus 123.2% during year-end 2011.
Capital expenditures were $171 million in the past six months
compared to $211 million in the comparable year-ago period.
At the end of the second quarter, the company had a total share
repurchase authorization of $503 million.
We believe J.B. Hunt continues to gain market share across all
segments, particularly in Intermodal, Dedicated Contract Services
and Integrated Capacity Solutions. Further, effective cost control
with moderating fuel expense and continued freight rate gains also
However, the company faces intense competition from other
truckload carriers such as
YRC Worldwide Inc.
Old Dominion Freight Line Inc.
) due to its low barriers to entry. Additionally, significant
growth in transportation cost on tightening of capacity in the
truck market amid truck load conversion to rail intermodal may
affect the company's performance ahead.
Consequently, we are maintaining our long-term Neutral
J.B. Hunt. For the short term, the company holds a Zacks Rank #3
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