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J.B. Hunt (JBHT) Q4 Earnings Miss on Weak Truck Revenues

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J.B. Hunt Transport Services’ (JBHT - Free Report) fourth-quarter 2019 earnings of $1.35 per share missed the Zacks Consensus Estimate of $1.52. Total operating revenues of $2,450.3 million also lagged the Zacks Consensus Estimate of $2,454.2 million. The top line, however, improved 5.7% year over year, benefiting from impressive performance of the Dedicated Contract Services (DCS) and Integrated Capacity Solutions (ICS) segments.

Quarterly operating income (on a reported basis) rose 67% to $205.1 million. Also, operating ratio (operating expenses as a percentage of revenues) improved to 91.6% from 94.7% in the prior-year quarter despite operating expenses rising 2.3% year over year. Notably, effective tax rate increased to 24.8% from 20.5% recorded in the fourth quarter of 2018.

Segmental Performance

The Intermodal (JBI) division generated quarterly revenues of $1.27 billion, flat year over year. However, overall volumes in the segment were up 2% year over year. Meanwhile, revenue per load excluding fuel surcharge revenues was flat on a year-over-year basis. However, operating income skyrocketed 304% year over year.

Revenues at the DCS segment rose 20% year over year to $717 million, courtesy of 9% expansion in truck productivity. Excluding fuel surcharges, productivity jumped roughly 11% owing to the Cory 1st Choice Home Delivery acquisition and higher customer rates among other factors. Further, operating income surged 34% year over year to $79.6 million on addition of trucks and ramped-up productivity.

ICS revenues ascended 9% year over year to $377 million with volumes expanding 3%.  Revenue per load also climbed 5.5% on the back of changes in customer mix.

Truck (JBT) revenues plunged 20% year over year to $94 million due to lower loads and soft truck pricing. At the end of the fourth quarter, total tractors were 1,831 (of which 845 were company-owned) compared with 2,112 in the year-ago quarter. Trailers increased to 6,975 in the period compared with 6,800 a year ago. Meanwhile, operating income dropped 57% to $6.3 million due to decreased truck loads.

Liquidity & Buybacks

This Zacks Rank #3 (Hold) company exited the fourth quarter with cash and cash equivalents of $35 million compared with $7.6 million at the end of 2018. Long-term debt was $1.3 billion compared with $898.4 million at 2018 end. Net capital expenditures in 2019 totaled $688 million compared with $885 million in 2018.

During the reported quarter, J.B. Hunt bought approximately 441,000 shares of its common stock for roughly $50 million. The company has approximately $95 million remaining under its share repurchase authorization at the end of the fourth quarter.

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

Upcoming Releases

Investors interested in the broader Transportation sector are keenly awaiting fourth-quarter 2019 earnings reports from key players like United Parcel Service, Inc. (UPS - Free Report) , Union Pacific Corporation (UNP - Free Report) and Southwest Airlines Co. (LUV - Free Report) . While Union Pacific and Southwest will report earnings numbers on Jan 23, UPS will announce financial results on Jan 30.

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