J.B. Hunt Reports In Line EPS

Zacks

J.B. Hunt Transport Services (JBHT), the fourth-largest U.S. truckload carrier, reported fourth quarter 2012 earnings of 70 cents per share, which came in line with the Zacks Consensus Estimate. Earnings per share grew 11.1% from adjusted earnings of 63 in the year-ago quarter on higher revenues and effective cost controls measures.

For the full year, the company reported earnings of $2.59, up 22.7% year over year.

Total revenue increased 11.1% year over year to $1.34 billion, beating the Zacks Consensus Estimate of $1.30 billion. The year-over-year growth was aided by higher shipment in most of the segments alongside continued growth in fuel surcharge revenues. Revenue for the year increased 11.7% year over year to $5.1 billion.

Operating income for the quarter leaped 17.2% year over year to $143.3 million attributable to strong profits in three segments –– Intermodal, Dedicated Contract Services and Integrated Capacity Solutions. For full-year 2012, operating income increased 19.4% year over year to $530.2 million

Segment Results

Intermodal reported quarterly revenues of $821 million, up 13% year over year driven by an 11% increase in load count. The average tractor count increased to 3,582 from 3,109 in the year-ago quarter. Operating income climbed 24% year over year to $104.2 million

Dedicated Contract Services revenues grew 9% year over year to $284 million in the fourth quarter. The average truck count was 5,294 against 4,915 in the year-ago quarter. Operating income upped 7% year over year to $29.4 million on increased asset utilization and productivity gains.

Truck revenues plunged 12.0% year over year to $133 million. The average tractor count reduced to 2,258 from 2,597 in the year-ago quarter. Rates continued to improve and registered a year-over-year growth of 8.9% in the quarter. The average length of haul decreased 10.7%. Operating income decreased 27% year over year to $5.2 million.
    
Integrated Capacity Solutions revenues grew 30.0% year over year to $129 million attributable to a 47% increase in load volume and higher pricing, mostly on transactional businesses. Operating income increased 13% year over year to $4.6 million. On a year-over-year basis, the carrier base rose 12.2% and employee count grew 18%.

Liquidity

At the end of 2012, cash and cash equivalents increased to $5,589 million from $5,450 million at year-end 2011. Total debt was $585 million compared with $699.2 million at the end of 2011. Capital expenditures in 2012 were $369.7 million compared with $446 million at the end of 2011.

Share Repurchase

At the end of 2012, the company has a total share repurchase authorization of $453 million.

Other Stocks

Other stocks worth considering within the sector are Marten Transport Ltd. (MRTN), which holds a Zacks Rank #1 (Strong Buy), Covenant Transportation Group, Inc. (CVTI) and Forward Air Corp. (FWRD). Both these stocks have a Zacks Rank #2 (Buy).

Our Analysis

We believe J.B. Hunt continues to gain market share across all segments, particularly in Intermodal, Dedicated Contract Services and Integrated Capacity Solutions that delivered strong results. Further, effective cost control and continued freight rate gains remain encouraging.

However, the company faces intense competition. Additionally, tightening of capacity in the Truck market amid truckload conversion to rail intermodal may affect the company’s performance ahead.

J.B. Hunt currently has a Zacks Rank #3 (Hold).

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