Monday, JB Hunt Transport Services Inc. (JBHT), a surface transportation company, reported decreased first quarter earnings as revenues slipped year-on-year owing to weak demand brought about by current economic recession. However, earnings topped the Street estimate.
The Lowell, Arkansas-based company's net income declined to $30.76 million or $0.24 per share for the first quarter from $36.41 million or $0.28 per share for the prior-year period. Eighteen analysts polled by Thomson Reuters expected the company to earn $0.22 per share. Analysts' estimates typically exclude special items.
Total operating revenues dipped 18% to $722.84 million from $878.38 million for the same period last year. Twelve analysts estimated revenues of $791.43 million for the quarter. Operating revenue, excluding fuel surcharges, decreased 8% to $663.65 million from $724.17 million a year ago.
The company attributed the decrease in operating revenue to lower fuel surcharge revenues, which reflect significantly lower fuel costs in the first quarter of 2009. Higher Intermodal segment volumes and significant growth in Integrated Capacity Solutions segment partially offset lower volumes in Dedicated Contract Services segment and in Truck segment. Truck revenues declined significantly a result of the ongoing long-term strategy to reduce the size of the segment's tractor fleet and due to weaker demand brought about by the current economic recession.
The lingering freight recession, now estimated to be in the third year, is the longest and deepest in modern transportation history. Our diversification strategy initiated several years ago and our best-in-class intermodal and dedicated services have helped sustain our earnings in these turbulent times, said Kirk Thompson, JBHT president and chief executive officer.
Operating income for the quarter was $57.0 million, down 21% from $72.1 million for the first quarter 2008. Operating income declined year-on-year due primarily to a drop in Intermodal operating income and an operating loss in the Truck segment. The operating income declined in both segments reflecting lower demand.
Our two biggest segments, Intermodal and DCS, which make up 79% of our total revenues, continue to differentiate us from other generic transportation offerings. Despite a weak economy and lower demand, both Intermodal and DCS have shown great resilience in profitability in the face of serious negative macroeconomic conditions, Thompson added.
Segment wise, Intermodal segment had revenues of $391.47 million for the quarter, down 10% from $436.8 million in the comparable period last year because of the reduction in fuel costs and the resulting reductions in fuel surcharge revenue. This segment's operating income slipped 20% to $41.3 million.
Dedicated Contract Services segment had revenues of $179 million, a 21% decline from $228.36 million in the year-ago comparable period. Operating income dipped 5% to $17.4 million year-over-year. Truck revenue slipped to $102 million, down 45% from $184.98 million in the prior-year quarter, as the company continued to right size the tractor fleet according to customer demand.
Meanwhile, Integrated capacity solutions revenue surged 51% to $56 million, and operating income more than doubled to $4.1 million, compared to the same period last year.
JB Hunt's net capital expenditures amounted to approximately $55 million in the quarter, compared to $60 million a year ago. As on March 31, 2009, the company had cash and cash equivalents of $3.6 million.
JBHT closed Monday's trading down $0.27 or 1.00% at $26.69 on a volume of about 2.52 million shares. In the after hours, the shares gained $0.11 or 0.41% at $26.80.
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