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J.B. Hunt's (JBHT) Q3 Earnings Miss Estimates, Decline Y/Y

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

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

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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