J.B. Hunt reports 2Q earnings, revenue both up

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J.B. Hunt Transport Services announced Monday, July 16, second-quarter 2007 net earnings of $63.9 million vs. 2006 second-quarter earnings of $55.3 million. Included in the second-quarter 2007 results is a benefit of $10.3 million, net of income taxes, resulting from the settlement of a proposed tax adjustment by the Internal Revenue Service.

Total operating revenue for the current quarter was $856 million, a 2 percent increase from the $838 million for the second quarter of 2006. The increase in operating revenue was attributable primarily to growth in the company’s Intermodal (JBI), Dedicated Contract Services (DCS) and Integrated Capacity Solutions (ICS) segments.

The combined tractor fleet declined from 11,993 in the second quarter of 2006 to 11,760 in the second quarter of 2007. Containers and trailers grew from 50,738 to 55,821 over the same period. The growth in the fleet, including containers and trailers, was primarily to support additional intermodal business, J.B. Hunt says.

Operating income for the current quarter increased slightly to $96.2 million vs. $95.4 million for the second quarter of 2006. Net interest expense increased significantly from $3.1 million in the second quarter of 2006 to $10.8 million in the current quarter, primarily due to higher levels of debt. These increased borrowings were related primarily to purchases of company stock, payment of the IRS tax settlement and purchases of trailing equipment off operating leases.

Also contributing to the higher net interest expense was about $3 million of additional accrued interest expense as a result of the settlement of a proposed IRS adjustment, the company says; this proposed income tax adjustment was related to a 1999 sale-and-leaseback transaction that had been disclosed previously. The additional interest expense was included, net of tax benefit, in the $10.3 million net benefit previously mentioned.

J.B. Hunt says its effective income tax rate for the current quarter decreased to 24.8 percent in 2007, from 39.0 percent in 2006, reflecting the settlement of the proposed IRS adjustment. The company expects its effective income tax rate to approximate 35.5 percent for the full calendar year 2007.

“Thanks to healthy growth in volumes and higher prices in our Intermodal segment, we were able to withstand slower net growth in our DCS segment, and stagnant freight volumes and lower prices in our Truck segment, to produce a solid operating performance for the second quarter of 2007,” says Kirk Thompson, president and chief executive officer of Lowell, Ark.-based J.B. Hunt.