J.B. Hunt (JBHT) Q2 Earnings Down Y/Y on Intermodal Woes
J.B. Hunt Transport Services’ JBHT second-quarter 2020 earnings of $1.14 per share surpassed the Zacks Consensus Estimate by 31 cents. The bottom line, however, declined 16.8% year over year due to the disappointing performance of its intermodal (JBI) unit. Moreover, total operating revenues decreased 5.1% to $2,145.6 million. Revenues, however, beat the consensus mark of $2,060.9 million.
The earnings and revenue beat, however, pleased investors. Consequently, the stock gained in after-market trading on Jul 16.
Total operating revenues excluding fuel surcharge revenues dipped 0.5% year over year. The top line was hurt by 2% and 11% volume declines in the JBI and Integrated Capacity Solutions (ICS) units, respectively, apart from 5% fewer stops in Final Miles Services (FMS). However, the 17% increase in loads at Truckload (JBT) was a bright spot.
Quarterly operating income (on a reported basis) declined 9.3% to $175.2 million, hurt by the $4.6-million additional charges for uncollectible customer accounts. Operating expenses fell 4.6% year over year, primarily due to lower insurance and claims costs, and reduced expenses on travel and entertainment costs.
J.B. Hunt Transport Services, Inc. Price, Consensus and EPS Surprise
The Intermodal division generated quarterly revenues of $1.07 billion, down 7% year over year. Segmental volumes were hurt by coronavirus-related disruptions, particularly in April. Moreover, operating income dropped 14% to $107 million due to lower volumes, higher rail purchased transportation costs and inefficiencies in the network.
Revenues at the Dedicated Contract Services (DCS) segment slipped 1% year over year to $533 million. However, operating income rose 9% year over year to $83.1 million owing to lower driver turnover, travel and entertainment, and safety related expenses.
Integrated Capacity Solutions (ICS) revenues declined 9% year over year to $304 million due to the double-digit volume contraction. However, revenue per load inched up 2%. The segment’s operating loss in the quarter widened year over year to $13.1 million.
Truck (JBT) revenues were up 9% to $108.3 million, primarily due to 17% increase in load count. At the end of the second quarter, total tractors were 1,897 (of which 800 were company owned) compared with 1,879 in the year-ago period. Meanwhile, operating income plunged 61% to $3.5 million due to escalated costs pertaining to purchased transportation, increased investments in technology among other factors.
FMS revenues slid 2% to $140 million due to coronavirus-induced disruption in operations. The segment’s operating loss narrowed from $15.8 million a year ago to $5.2 million owing to the absence of the $20-million pre-tax claim settlement incurred in 2019.
Liquidity & Buybacks
The currently Zacks Rank #3 (Hold) company exited the second quarter with cash and cash equivalents of $275 million compared with $35 million at the end of 2019. Long-term debt was $1.3 billion compared with $1.29 billion at 2019 end. Net capital expenditures in the first half of 2020 were $265 million compared with $475 million in first-half 2019.
During the reported quarter, J.B. Hunt did not buy back any shares. The company has approximately $520 million remaining under its share repurchase authorization at the end of the second quarter.
Upcoming Releases for the Truck Industry
J.B. Hunt is the first company to have reported second-quarter 2020 results from the Zacks Transportation - Truck industry. Investors will keenly await results from other industry players like Old Dominion Freight Line ODFL, Landstar System LSTR and Werner Enterprises WERN. While the presently Zacks #3 Ranked Old Dominion as well as Landstar System will release second-quarter 2020 results on Jul 30 and Jul 22, respectively, Werner, carrying a Zacks Rank #2 (Buy), currently, will announce earnings on Jul 29.
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