J.B. Hunt's (JBHT) Q3 Earnings Miss Estimates, Decline Y/Y
J.B. Hunt Transport Services’ JBHT reported mixed third-quarter 2020 results, with earnings missing estimates while revenues beating the same. Quarterly earnings of $1.18 per share fell short of the Zacks Consensus Estimate of $1.26. Moreover, the bottom line declined 15.7% year over year due to the disappointing performance of its intermodal (JBI) unit.
Total operating revenues increased 4.6% to $2,472.5 million. Revenues also beat the consensus mark of $2,345.2 million.
Total operating revenues, excluding fuel surcharge revenues, grew 9% year over year. The top line was driven by a 25% increase in revenue per load in Integrated Capacity Solutions (ICS), 34% improvement in the number of stops in Final Mile Services (FMS), 9% rise in loads in Dedicated (DCS) and 14% growth in loads in Truck (JBT).
Both quarterly operating income (on a reported basis) and operating expenses rose 5% and 4.6% on a year over year basis, respectively.
J.B. Hunt Transport Services, Inc. Price, Consensus and EPS Surprise
The JBI division generated quarterly revenues of $1.2 billion, down 2% year over year. Even though segmental volumes grew 2%, volumes in the quarter were heavily constrained by rail congestion and service issues. Moreover, operating income grew 22% to $108.4 million.
Revenues at the DCS segment inched up 1% year over year to $553 million. Moreover, operating income rose 5% year over year to $80.4 million owing to increased productivity of assets, reduced driver turnover, fewer start-up costs, lower travel and entertainment expenses.
ICS revenues increased 28% year over year to $431 million owing to higher contractual and spot rates compared to the third quarter of 2019. Moreover, revenue per load grew 25%. The segment’s operating loss in the quarter widened year over year to $18.3 million.
FMS revenues increased 22% to $182 million since stop count within the segment improved 34% during the September quarter. The segment’s operating income rose 13% year over year, driven by an increase in revenues from both the December 2019 acquisition and the addition of multiple customer contracts throughout 2020.
JBT revenues were up 16% to $109 million, primarily due to a 14% increase in load count. At the end of the third quarter, total tractors were 1,713 (of which 800 were company-owned) compared with 1,896 in the year-ago period. Meanwhile, operating income plunged 55% to $2.9 million due to escalated costs pertaining to purchased transportation and increased investments in technology, among other factors.
Liquidity & Buybacks
This currently Zacks Rank #1 (Strong Buy) company exited the third quarter with cash and cash equivalents of $318.5 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 nine months of 2020 were $448.7 million compared with $586.6 million in the first nine months of 2019.
During the reported quarter, J.B. Hunt did not buy back any shares. The company had approximately $520 million remaining under its share repurchase authorization at the end of the third quarter.
Upcoming Releases for the Truck Industry
Old Dominion currently carries a Zacks Rank #2 (Buy) and will announce earnings on Oct 27. Landstar and Werner sport a Zacks Rank #1 and will release their third-quarter results on Oct 21 and Oct 28, respectively.
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