J.B. Hunt Hits Targets

The shipping company says yields improve on the truck side.
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J.B. Hunt (JBHT) - Get Report rose 4% Monday after the trucking company posted a strong fourth quarter.

The Lowell, Ark., company made $65 million, or 41 cents a share, up from the year-ago $20 million, or 12 cents a share. Revenue rose to $858 million from $771 million a year earlier.

Intermodal revenue, excluding fuel surcharges, was up 2% over the comparable quarter of 2004. Rate per loaded mile, excluding fuel surcharges, was also up 2%. Rate comparisons for the current quarter were affected by the implementation of peak season rate surcharges for the first time in the fourth quarter of 2004.

"While these surcharges have continued during 2005, the comparisons for the fourth quarter of 2005 are more difficult," the company said. "Due to increasing rail costs, higher driver pay, increasing equipment prices, and other cost increases, one of our focus items for 2006 will be obtaining the necessary higher freight rates to offset these increases. Rate increases are currently being proposed to our customers as their contracts come up for renewal."

Slower rail transit times and a shorter and more pronounced peak season demand hurt driver productivity and trailing equipment in the quarter. To meet peak season demand and compensate for slower transit times, the company increased its fleet by more than 4,000 relatively high-cost containers and trailers from temporary sources during the quarter. The temporary equipment was reduced to less than 1,400 at the end of December and approximately 300 currently. The temporary containers were primarily made up of rail controlled equipment rented and used on a one way basis that the Company turns back to the railroad at the end of the trip. J.B. Hunt said it plans to increase container and chassis purchases in 2006 to avoid the costly use of leased and temporary assets in the future. It is also in the process of adding company tractors that will reduce even further the reliance on temporary outside dray purchases which contributed to higher costs in 2005. The additions are also planned to support expected 2006 volume growth.

In the truck segment, rate yields continued to improve as the loaded rate per mile during the latest quarter, excluding fuel surcharges, increased 6.9% or 12 cents per mile relative to a year ago.

Driver and independent contractor availability continues to be a serious concern for the segment, as well as the industry, the company said. J.B. Hunt said it continues to see no signs of fundamental improvement in driver or independent contractor availability for the foreseeable future. Therefore, it does not anticipate significant capacity additions in the truckload marketplace in the near-term. The average number of trucks in the segment was 5,474 for the fourth quarter of 2005 vs. 5,359 a year ago. The slight capacity increase is temporary, due to the timing of tractor trade-ins.

On Monday, J.B. Hunt rose 86 cents to $23.48.