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J.B. Hunt (JBHT) Q2 Earnings Down Y/Y on Intermodal Woes

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J.B. Hunt Transport Services’ (JBHT - Free Report) 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.



Segmental Highlights

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.

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

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 - Free Report) , Landstar System (LSTR - Free Report) and Werner Enterprises (WERN - Free Report) . 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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