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

J.B. Hunt Transport Services, Inc. Price, Consensus and EPS Surprise

J.B. Hunt Transport Services, Inc. price-consensus-eps-surprise-chart | J.B. Hunt Transport Services, Inc. Quote

Segmental Highlights

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.

You can see the complete list of today’s Zacks #1 Rank stocks here.

Upcoming Releases for the Truck Industry

Investors interested in the Zacks Transportation - Truck industry can also consider a few other stocks like Old Dominion Freight Line ODFL, Landstar System LSTR and Werner Enterprises WERN.

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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