J.B. Hunt reports strong profit growth in Q1

J.B. Hunt Transport Services has announced its first quarter 2015 financial results. It reported revenue of $1.44bn, an increase of 2.13% over the first quarter of 2014. The company also recorded operating income of $155m, an increase of 32.48% year-on-year. Accordingly J.B. Hunt’s operating margin stood at 10.76%.

Q1 revenue, excluding fuel surcharges, actually increased 10% over the first quarter of 2014, a result driven by volume and rate growth in three of the company’s four divisions. The Intermodal division saw load growth of 6% over the levels of the first quarter 2014. The Dedicated Contract Services segment saw revenue increase by 7% over the prior year, primarily from rate increases and more activity at customer accounts. At Integrated Capacity Solutions load growth was 17% year-on-year, however lower revenue per load kept segment revenue flat from a year ago. In contrast the company’s Truck segment revenue decrease by 1% on lower revenue per tractor per week.

The improvement in operating income was driven by customer rate increases, improved asset utilization, lower equipment maintenance costs, improved equipment fuel economy and more effective use of third-party carriers. These factors more than offset increases in rail purchase transportation rates, driver wage increases, higher equipment depreciation, increased insurance rates, higher equipment storage costs and higher toll expenses across all business segments.

Intermodal operating income increased from first quarter 2014 primarily due to higher volumes and more efficient dray fleet operations. Dedicated Contract Services’ operating income increased from the same period 2014 primarily due to less reliance on third-party carriers and improved asset utilization. Integrated Capacity Solutions’ operating income increased primarily from improved gross profit margins. Finally the Truck segment saw operating income increase as a consequence of higher customer rates and more efficient operating costs for its newer equipment.