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J.B. Hunt Misses Earnings on Soft Fuel-Surcharge Revenues - Analyst Blog

J.B. Hunt Transport Services Inc.JBHT performed disappointingly in the second quarter of 2015 missing on both earnings and sales. The transportation company reported earnings of 88 cents per share, which fell short of the Zacks Consensus Estimate of 90 cents. Earnings were, however, up 11.4% on a year-over-year basis. Lower-than-expected revenues contributed to the earnings miss.

JB Hunt Transport Services Inc. - Earnings Surprise | FindTheBest

Total operating revenues decreased 0.5% year over year to $1.54 billion and also missed the Zacks Consensus Estimate of $1.61 billion. A 35.8% decline in fuel-surcharge revenues coupled with lackluster customer freight demand was primarily responsible for the top line miss. Operating income in the quarter improved 9% year over year to $174 million. Customer rate increases contributed to the growth in operating income.

We remind investors that J.B. Hunt joined the S&P 500 index after the market closed on Jun 30, replacing Integrys Energy Group which was acquired by Wisconsin Energy Corp. resulting in the formation of the WEC Energy Group WEC .

Segment Results

The Intermodal (JBI) division reported quarterly revenues of $905 million, down 3% year over year. Segmental results were hurt by the lingering effects of disruptive shipping patterns following the West Coast port disturbances. Slow rail service recovery and weakness in consumer driven freight demand also hurt load volume growth. Meanwhile, operating income moved up 5% year over year to $118.6 million.

Dedicated Contract Services (DCS) revenues grew 5% year over year to $367 million in the second quarter on higher number of revenue-generating trucks. The average truck count stood at 6,921, up 5.9%. Operating income increased 34% year over year to $40.6 million.

Integrated Capacity Solutions (ICS) revenues inched up 0.6% year over year to $174 million. On a year-over-year basis, revenue per load fell 10% primarily due to lower fuel prices and weak transactional customer demand. Operating income declined 21% year over year to $4.9 million.

Truck (JBT) revenues declined 3.5% year over year to $98 million. At the end of the period, the company operated 2,073 tractors, up 11.4%. Lower utilization per tractor hurt segmental results. Operating income climbed 3% to $9.7 million.

Liquidity

At the end of the reported quarter, cash and cash equivalents was $5.59 million compared to nearly $6 million at 2014-end. Long-term debt stood at $643.2 million as against $683.5 million at the end of 2014. Capital expenditure (net) stood at $319.3 million as on Jun 30, 2015. The comparable figure at the end of the first half of 2014 was $352.8 million.

View Revised

The company now expects the JBI, DCS, ICS and JBT segments to contribute 59%, 23%, 12% and 6% respectively to total revenue in 2015. Previously, the segments were expected to contribute 61%, 21%, 12% and 6% respectively to the company's top line in 2015.

Zacks Rank

Currently, J.B. Hunt has a Zacks Rank #3 (Hold). Better-ranked stocks in the transportation space are Deutsche Lufthansa Aktiengesellschaft DLAKY and SkyWest Inc. SKYW . Both Lufthansa and SkyWest hold a Zacks Rank #2 (Buy).

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HUNT (JB) TRANS (JBHT): Free Stock Analysis Report

WEC ENERGY GRP (WEC): Free Stock Analysis Report

SKYWEST INC (SKYW): Free Stock Analysis Report

LUFTHANSA -ADR (DLAKY): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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