J.B. Hunt quarterly income up 26%

Thanks to continued top-line growth in its intermodal segment, Lowell-based J.B. Hunt Transport Services posted second quarter income of $65.696 million, up 26% over the 2010 period.

For the first half of 2011, the transportation company has earned $115.791 million, up 29.2% compared to the 2010 period. Total revenue during the first half of 2011 was $2.15 billion, up 20.3% compared to the 2010 period.

“The second quarter of 2011 yielded record revenues and record earnings. We attribute the accomplishments to the intelligence and hard work of our people who make it happen every day, every stop, and every mile,” John Roberts, JBHT president and CEO, said in the earning statement issued after the close of markets on Thursday (July 14).

The company, which began in 1961 as a small and pure trucking operation, has matured into a transportation logistics company in which more than 80% of revenue comes from intermodal (JBI) and dedicated contract services (DCS) operations.

Diversity in the business model has helped the company remain profitable amidst a national freight recession that began in late 2006. The company posted 2010 revenue of $3.793 billion, up 18.4% compared to 2009.

“During lingering economic pressures and unsteadiness in the general freight markets, JBI and DCS once again revealed a higher degree of resiliency than that of traditional, full truckload transportation models,” Roberts noted in the report. “Additionally, we realized year-over-year improvement in ICS despite continued pressure on margins created from the lackluster macroeconomic environment.”

Also helping the company was its aggressive fuel surcharge model. The company posted fuel surcharge revenue of $394.346 million during the first half of 2011, up 65.28% compared to the 2010 period. However, fuel and fuel tax expenses during the same period totaled $229.251 million, up 39% compared to the 2010 period.

The per share second quarter earnings of 53 cents was on target with analysts estimates, and the revenue of $1.15 billion was higher than the market prediction of $1.11 billion.

SEGMENT INCOME
Hunt’s intermodal segment posted second-quarter operating income of $76.5 million, up 29% over the 2010 period. The company credited growth in its “eastern network load,” higher fuel surcharges and shortages in trucking capacity for the double-digit increase in operating income growth.

During the quarter, JBI added almost 2,000 net containers into the network, which boosted total containers to 50,189.

The DCS segment posted second quarter operating income of $27.4 million, up 23% compared to the 2010 period.

“The increase in revenue related to an increase in truck count and an approximate 2% increase in productivity (revenue per truck per week) vs. the same quarter 2010,” according to the company statement.

Hunt’s trucking segment delivered operating income of $6.9 million, down 3% and a reflection of what is happening to traditional trucking operations. The company was able to implement rate increases, but other costs countered any rate gains. The company has 2,508 tractors in the trucking segment, with 1,621 of those company owned and the remainder operated by independent contractors.

The company explained: “Current quarter operating income was favorably impacted by higher freight rates, favorable changes in freight mix and improved utilization. However, higher fuel costs, net of fuel surcharges, increases in driver compensation, partly related to a shortage in the supply of drivers, and higher insurance and claims costs reduced current quarter operating income.”

The integrated capacity solutions (ICS) segment saw second quarter operating income reach $2.6 million, up 20% compared to the 2010 period.

Shares of J.B. Hunt (NASDAQ: JBHT) closed Thursday at $47.71, down 26 cents. During the past 52 weeks the share price has ranged from a $49.12 high to a $32.05 low.