Hunt sees 1st-quarter income dip

Bad weather cited for loss in trucker’s key segment

Arkansas Democrat Gazette/RACHEL CHANEY- 04/04/2014 - J..B. Hunter intermodal shipping containers pass under a railroad overpass April 4, 2014, in Tulsa, Okla.
Arkansas Democrat Gazette/RACHEL CHANEY- 04/04/2014 - J..B. Hunter intermodal shipping containers pass under a railroad overpass April 4, 2014, in Tulsa, Okla.

J.B. Hunt Transport Services Inc. reported a decline in operating income for the first quarter of 2014, the company’s first dip in profit since the final quarter of 2009.

Earnings for the first three months of 2014 totaled $117 million with revenue of $1.41 billion. Revenue was up 9 percent from the same period in 2013, but costs affiliated with winter weather left earnings per share at 58 cents, down from 61 cents a year ago.

Intermodal segment costs affiliated with the weather totaled $9 million, and the company’s dedicated contract services segment reported an $8 million loss because of declines in productivity and increased expenditures on equipment, maintenance and safety.

Even with J.B. Hunt’s strong financial performance the past 16 quarters, Stephens Inc. analyst Brad Delco said the dip in earnings was not a surprise. J.B. Hunt stock did not decline in the wake of Monday’s news, and its stock ended the day trading at $74.29, up $2.78.

“I think by and large investors very much anticipated a rocky start to the year, given the amount of weather we saw in Midwest and the Northeast,” Delco said. “Given the size of J.B. Hunt’s intermodal business, any sort of winter disruptions would clearly have an impact.”

Intermodal, which depends heavily on railroad transport, has been a strength for J.B. Hunt, but income declined by 4 percent in the segment to $93.2 million. Revenue was up to $835 million, an increase of 5 percent from the same quarter of 2013.

Income was down 29 percent to $15.6 million in the company’s dedicated contract services segment. Revenue was reported at $322 million, up 15 percent from the same time period in 2013.

J.B. Hunt’s integrated capacity solutions, the company’s freight brokerage division, was the only segment to report gains in income and revenue. Revenue was up 33 percent to $163 million and operating income was reported at $6.1 million, a bump of 198 percent.

Income was up 124 percent to $2.4 million in the company’s trucking segment because of an increased rate per mile, lower personnel costs and gains on equipment sales. Revenue declined 9 percent to $92 million because of a reduction in fleet size and winter weather. Costs associated with the business increased about 9 percent, the company said.

In December, Shelley Simpson was named president of trucking and integrated capacity solutions.

Profit has been on the rise at J.B. Hunt since the first quarter of 2010, when the company reported a gain of 18 percent. Losses came in each quarter of 2009, including a 50 percent decline in the second quarter.

Chief Executive Officer and President John Roberts remained optimistic about the remainder of 2014. Rate increases will help the company make up for additional expenses the rest of the year, he said.

“Feedback from our customers about their business expectations for the remainder of the year gives us encouragement that growth should return to our previously announced ranges,” Roberts said in a news release. “While additional costs incurred this quarter due to the severity of the winter weather should become less pronounced, increases in driver costs, equipment and insurance costs are more likely to persist and must be recovered from the marketplace through revenue management in the bid cycles and customer contract discussions.”

Business, Pages 25 on 04/15/2014

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