JB Hunt Transport Services (90.50, -1.35) has given up 1.5% in pre-market after missing earnings expectations.
The logistics company reported below-consensus second quarter earnings of $0.88 per share on a 6.9% year-over-year increase in revenue to $1.73 billion, which was just shy of expectations.
When excluding the impact of fuel surcharges, revenue increased 5.0% year-over-year. Intermodal load growth (+5.0%), growth in revenue producing trucks (+5.0%), and volume growth in Integrated Capacity Solutions (+20.0%) fueled the year-over-year increase in revenue.
Intermodal segment revenue increased 7.0% to $1.00 billion, as load volumes grew 5.0%. Transcontinental loads increased 10.0% while Eastern network volumes declined 2.0%. The increase in revenue reflected 5.0% volume growth and a 2.0% increase in revenue per load, which resulted from customer rate changes, fuel surcharges, and freight mix. Revenue per load declined 1.0% year-over-year. Segment operating income increased 4.0% to $110 million, thanks to benefits from volume growth and day fleet productivity that were partially offset by higher retention costs, higher driver pay, and higher costs in rail purchased transportation.
Dedicated Contract Services revenue grew 8.0% to $412 million. Revenue per truck increased 2.0% and was flat when excluding fuel surcharges. Increased revenue from better integration of assets between customer accounts and higher customer rates were partially offset by lower productivity at new contracts implemented during the quarter. The company added 486 revenue producing trucks, 226 more than the number of trucks added in the previous quarter. Private fleet conversions represent about 71.0% of the reported additions. Segment operating income fell 4.0% to $49 million due to higher driver wages, higher insurance claim costs resulting from increased accident frequency, and higher start-up expenses for new customer contracts.
Integrated Capacity Solutions revenue grew 9.0% to $222 million. Volumes grew 20.0% and revenue per load declined 9.0% due to freight mix changes driven by customer demand. Spot volumes grew 20.0% while contractual volumes increased 22.0%. Contractual volumes made up 73.0% of total load volume (72.0% one year ago) and 58.0% of total revenue (65.0% one year ago).
Truck revenue fell 4.0% to $95 million. Rate per loaded mile, excluding fuel surcharges, increased 0.9% due to customer driven freight mix changes. Customer contract rates declined 0.4% year-over-year. The company had 2,072 tractors in operation at the end of the quarter, down from 2,186 one year ago. Segment operating income fell 37.0% to $5.60 million. Higher customer rates were outweighed by increased driver pay and hiring costs, higher independent contractor costs per mile, and increased tractor maintenance costs.