J.B. Hunt reports record first quarter earnings

Trucking and intermodal services bellwether J.B. Hunt (JBH) kicked off the first quarter earnings season in style with record net earnings of $50.1 million or $0.40 per share compared to net earnings of $37.5 million and $.029 per share a year ago.

Operating revenue—at $1 billion—was up 18 percent compared to last year’s $845 million, and operating income—at $90 million—was up 33 percent compared to last year’s $67 million.

Among the drivers cited by JBH officials for its strong quarterly performance were operating revenue increases for its four segments: Dedicated Contract Services (DCS) up 1 percent at $18.6 million; Truck up 6 percent at $5.8 million; Intermodal up 32 percent at $62.6 million; and Integrated Capacity Solutions up 126 percent at $2.6 million.

“Our blend of complementary and diversified services resulted in a 34% increase in earnings over the same period last year and a record high for any first quarter,” said John N. Roberts, JBHT President and CEO, in a statement. “We leveraged our ability to create value for our customers by continuing the cost effective assignment of assets and services. With the effects of winter weather and rapidly rising fuel costs, it was a tough quarter to get through as well as we did.”

Company officials said that the first quarter bid season “showed indications of continued strong growth in JBI, as well as favorable pricing results,” with first quarter bids being implemented in the second quarter and pricing results for the second quarter currently are showing a 4 percent year-over-year increase in base prices.

Intermodal strength at JBH is not surprising, given the company’s market share and 48,300 containers and trailers and more than 2,600 company-controlled dray fleet units in stock at the end of the first quarter. Officials also noted that the JBH intermodal service network is constantly being reviewed and improved to show improvement in both productivity and safety

Intermodal load growth was up 15 percent annually, with JBH pointing to higher fuel prices and tight trucking capacity driving Eastern network growth up by nearly 30 percent and transcontinental growth up 10 percent.

At the 2010 NASSTRAC conference, JBH Director of Intermodal Chad Thomas said that mode conversion—to intermodal—is garnering a lot of attention as a way to reduce costs and be more environmentally-conscious, among other drivers.

“Clearly mode conversion is a big opportunity for shippers out there, and there continues to be a big opportunity for shippers to look over the highway to consider rail and intermodal,” Thomas. “Price stability is an option when converting to rails and there may be some savings in lanes when converting.

On the trucking side, JBH said that demand grew during each month of the first quarter, with harsh winter weather contributing to tight capacity resulting in unexpected costs that impacted operating income for the company’s trucking segment. But they added that its rate per loaded mile, excluding fuel surcharges, was up 9 percent annually, with length of haul up 4 percent, and rates from “consistent shippers” up 4 percent.

Robert W. Baird analyst Jon Langenfeld wrote in a research note that pricing should remain strong for JBH in the coming months.

“We expect domestic industry pricing fundamentals to continue to strengthen in 2011, as tight capacity supports higher transactional pricing and contractual rate gains through the year,” wrote Langenfeld. “JB Hunt’s best-in-class Intermodal franchise continues to capture market share, aided by increased shipper receptivity to the mode as competing truckload rates face upward pressure.”

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