J.B. Hunt Transport Services (JBHT 112.98, +1.45, +1.30%) opened
higher by 1.3% after beating earnings estimates for the third quarter.
The freight carrier reported above-consensus third quarter earnings of $1.47 per share on a 19.9% year/year increase in revenue to $2.21 bln, which was just shy of expectations.
Operating income grew 5.9% year/year to $174.7 mln due to higher customer rates, which were partially offset by higher driver wages and recruiting costs, above-average implementation expenses for new long-term contracts, increased rail purchase transportation and third-party dray rates, and higher spending on technology.
Looking at the segment breakdown, Intermodal revenue grew 16% to $1.22 bln while volume grew 1%. Revenue per load increased 15% due to higher customer rates and a favorable freight mix. Loads in the Eastern network increased by 9.5% while Transcontinental load volume declined 5% year/year. Segment operating income rose 10% to $120.3 mln as benefits from higher rates were partially offset by higher driver recruitment costs and costs from inefficiencies resulting from rail congestion. The company ended the quarter with 93,000 units of trailing capacity and 5,600 power units assigned to the dray fleet.
Dedicated Contract Services revenue jumped 24% to $543 mln while productivity improved by 7%. Excluding fuel surcharges, productivity improved by 4% due to higher customer rates and improved integration of assets between customer accounts. Customer retention rate remained above 98%. Segment operating income fell 18% to $35 mln, primarily due to a previously-announced $8.4 mln charge to insurance and claims costs and $4 mln in implementation costs for new contracts in early stages of operation.
Integrated Capacity Solutions revenue grew 28% to $346 mln while volume increased 41%. Revenue per load declined 9% due to a higher mix of contractual less-than-truckload volume. Contractual volumes made up 72% of total load volume and 49% of total revenue. One year ago, contractual volumes accounted for 65% of total load volume and 48% of total revenue. Segment operating income grew 40% to $10.2 mln due to a higher gross margin (15.5% versus 12.8% one year ago) and improved operating leverage in older branches.
Truck revenue grew 14% to $106 mln while revenue excluding fuel surcharge increased 13%. The growth was mostly due to a 19% rise in rates per loaded mile, which was partially offset by a 5% decline in length of haul. Comparable contractual customer rates grew 13% year/year. The quarter ended with 1,972 tractors in operation, down from 2,040 one year ago. Segment operating income jumped 61% to $9.20 mln due to favorable changes from higher rates and lower equipment ownership costs.
The company repurchased $50 mln worth of its shares during the quarter with room to repurchase another $421 mln under its current authorization.
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