J.B. Hunt Lags Q1 Earnings - Analyst Blog
April 15 2014 - 9:00AM
Zacks
J.B. Hunt Transport
Services Inc. (JBHT), one of the largest U.S. truckload
carriers, reported first-quarter 2014 earnings of 58 cents per
share, missing the Zacks Consensus Estimate of 63 cents. The figure
also declined 4.9% from 61 cents earned in the year-ago
quarter.
Total revenue increased 9.3% year
over year to $1,407 million but fell marginally short of the Zacks
Consensus Estimate of $1,409 million.
Operating income for the quarter
declined 6.2% year over year to $117.31 million.
Segment
Results
Intermodal reported quarterly revenues of
$835.5 million, up 4.9% year over year. Volume growth in Eastern
and Transcontinental network aided revenue growth. However, rail
service disruptions and winter storms impacted the Midwest and
Northeast network volume growth over several weeks of the quarter.
The average tractor count increased to 4,250 from 3,665 in the
year-ago quarter. Operating income fell 3.7% year over year to
$93.2 million.
Dedicated Contract
Services revenues grew 15.4% year over year to
$322.05 million in the first quarter on higher number of
revenue-generating trucks from new accounts. The average truck
count stood at 6,491 against 5,322 in the year-ago quarter.
Operating income plunged 28.9% year over year to $15.6 million.
Higher equipment and maintenance costs, lower productivity and
severe weather conditions affected the operating performance of the
sector.
Integrated Capacity
Solutions revenues grew 33.0% year over year to
$162.6 million, attributable to a 3% increase in load volume and
29% growth in revenue per load. Operating income increased 18.4%
year over year to $6.1 million owing to higher revenues. On a
year-over-year basis, the carrier base rose 7% and employee count
grew 13%.
Truck
revenues dropped 9.2% year over year to $92.5 million due to a 9%
decline in fleet size, and decreased utilization per truck due to a
harsh winter spanning January and February. The average tractor
count reduced to 1,892 from 2,083 in the year-ago quarter. Rates
from shippers registered a year-over-year improvement of 1%. The
average length of haul decreased 9.1%.
The company reported an operating
profit of 2.45 million as against $1.1 million in the year-ago
quarter. The improvement can be attributed to increased rate per
loaded mile, a reduced trailer fleet, lower personal costs, and
profits from equipment sales. These tailwinds were offset by
increased driver hiring costs, higher driver and independent
contractor costs per mile, increased per unit maintenance and
equipment costs along with decreased productivity in January and
February.
Liquidity
At the end of the reported quarter,
cash and cash equivalents increased to $124.2 million from $5.8
million at end-2013. Long-term debt stood at $752.2 million as
against $458.0 million at the end of 2013.
Capital expenditure in
first-quarter 2014 was $158 million against $115 million at the end
of first-quarter 2013.
Share
Repurchase
As of Mar 31, 2014, the company had
approximately $338 million worth of shares remaining under its
repurchase authorization.
Our Analysis
We remain encouraged by the
enhanced equipment velocity, accelerated fleet conversion and
expansion of branches. We also appreciate the company’s efforts to
expand its brand to unexplored territories. However, a competitive
scenario, higher staff costs and a deteriorating truck business
limit its upside potential.
J.B. Hunt currently carries a Zacks
Rank #3 (Hold). However, better-ranked stocks worth considering
within the same sector are Roadrunner Transportation
Systems Inc. (RRTS), YRC Worldwide Inc.
(YRCW) and American Railcar Industries Inc.
(ARII), all with a Zacks Rank #2 (Buy).
AMER RAILCAR (ARII): Free Stock Analysis Report
HUNT (JB) TRANS (JBHT): Free Stock Analysis Report
ROADRUNNER TRAN (RRTS): Free Stock Analysis Report
YRC WORLDWD INC (YRCW): Free Stock Analysis Report
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