Another Quarter, Another Quarter Of Record Earnings For J.B. Hunt

Record quarterly earnings is becoming a common theme with Lowell-based J.B. Hunt Transport Services.

The large “multi-modal” transportation company posted record net income of $67.7 million during the first quarter, up from $50 million during the 2011 quarter. The per share earnings of 57 cents surpassed the consensus estimate of 52 cents.

Michael Baudendistel, an analyst with Stifel Nicolaus, is so impressed with what he sees that he already predicts record 2012 earnings for J.B. Hunt.

“We don’t see any reason why JBHT will not have another record for earnings in 2012 provided that the economy does not fall into a recession, which we view as the biggest risk to that outlook,” Baudendistel noted in an investors note prior to Thursday’s (April 12) earnings statement from J.B. Hunt.

Total revenue for the quarter was $1.165 billion, ahead of the $1 billion in the 2011 period.

Baudendistel credited some of the financial gains to better weather, “but the improvement is mostly due to improvement in the company’s fundamentals including higher freight volumes and better pricing.”

“Changes in packaging, fuel costs, inventory levels, replenishment and end consumer point of purchase behaviors, among others, have had an effect on how our customers manage logistics,” John Roberts, J.B. Hunt president and CEO, said in the earnings report. “We continue to operate under our long stated strategy of directing investments towards solutions that customers need and are willing to pay for with reasonable rates and structured contract terms. The results of the first quarter provide ongoing confirmation for this disciplined and balanced strategy.”

The company’s four segments posted gains in operating revenue.

• Intermodal
First quarter segment revenue totaled $694 million, up 20% compared to the 2011 period. Operating income for the largest segment within the company was $79.4 million, up 27%.

“The key segment to watch with JBHT is its intermodal segment (i.e., JBI) because that segment’s large size tends to drive the company’s overall performance,” Baudendistel noted. “We are expecting intermodal volume growth of 6.3% in 2012 and rate growth, including fuel surcharges, of 4.8%.”

• Dedicated Contract Services
First quarter segment revenue totaled $256 million, up 7% compared to the 2011 period. Operating income was $28.1 million, up 51%.

“Operating income increased by 51% from a year ago primarily due to the increase in revenue, productivity gains, lower safety expenses and the transfer of assets to more profitable accounts,” the company noted in the earnings report.

• Truck
First quarter segment revenue totaled $128 million, up 8% compared to the 2011 period. Operating income was $4.9 million, down 16%.

• Integrated Capacity Solutions
First quarter segment revenue totaled $97 million, up 30% compared to the 2011 period. Operating income was $4.1 million, up 58%.

“Despite our shorter term rating, if we had to own one company in the intermodal space for the next ten years, it would be this one (J.B. Hunt),” noted an April 5 report from Stifel Nicolaus about the U.S. transportation and logistics sector. “Intermodal is hitting its stride as service levels have greatly improved and the economic rationale for intermodal has strengthened along with increases in fuel prices, the worsening truckload driver shortage, and the attractive pricing differential which exists between truckload and intermodal services.”

Shares of J.B. Hunt (NASDAQ: JBHT) closed Thursday at $55.84, up $1.34 cents. The earnings report was issued after the markets closed. For the past 52 weeks, the share price has ranged from a $56.09 high to a $34.42 low.

Michael Tilley with our content partner, The City Wire, is the author of this report. He can be reached by email at [email protected].