J.B. Hunt’s earnings throttle back in Q2

The Lowell, Ark.-based intermodal and trucking provider’s earnings per share of $0.88 for the quarter fell short of analyst expectations, but operating revenues rose 7 percent from the second quarter of 2016.    J.B. Hunt Transport Services, Inc. reported net earnings of $97.9 million for the second quarter of 2017, down 7 percent from the second quarter of 2016, according to the company’s latest financial statements.
   The Lowell, Ark.-based intermodal and trucking provider’s earnings per share (EPS) stood at $0.88 for the quarter, falling short of the Thompson Reuters estimate of $0.91 per share.
   Operating revenues for the quarter totaled $1.73 billion, rising 7 percent year-over-year. “Load growth of 5 percent in Intermodal (JBI), a 5 percent increase in revenue producing trucks in Dedicated Contract Services (DCS), and a 20 percent increase in volume in Integrated Capacity Solutions (ICS) contributed to the increase in consolidated revenue compared to the prior year,” J.B. Hunt said.
   In the JBI segment, revenues stood at $1 billion for the quarter, up 7 percent from the second quarter of 2016, reflecting 5 percent volume growth and an approximate 2 percent increase in revenue per load.
   The DCS segment posted $412 million in revenues for the quarter, up 8 percent year-over-year. “Increased revenue from better integration of assets between customer accounts and customer rate increases was partially offset by lower productivity at new contracts implemented during the current quarter,” the company said.
   Meanwhile, in the ICS segment, revenues reached $22 million for the quarter, up 9 percent from the second quarter of 2016, with volumes increasing 20 percent and revenue per load falling 9 percent.
   In the company’s truck segment, dubbed JBT, revenues for the quarter slipped 4 percent year-over-year to $95 million, with customer contract rates falling approximately 0.4 percent. At the end of the period, JBT operated 2,072 tractors, down 5 percent year-over-year.
   Commenting of J.B. Hunt’s second quarter results, investment bank and analyst Stifel said, “Results were weaker than expected and came in below Street consensus. Still, we believe the company’s legacy truckload business will eventually improve and create a slight boost to EPS in later years. We are reiterating our Hold rating and our target price of $88 (or 18.5x our 2019 EPS estimate of $4.75).”
   Stifel adjusted its EPS estimates for J.B. Hunt for 2017 from $3.80 per share to $3.75 per share; left the 2018 estimate unchanged at $4.25 per share; and for 2019, lowered it from $4.90 to $4.75 per share.
   “We are dropping our estimates to reflect the still challenging contract pricing environment, the uncertainty surrounding freight demand in the 2H17 and beyond, and the difficulty inherent in growing organically off such a large traffic base,” Stifel said.