J.B. Hunt (JBHT) Q3 Earnings Miss, Revenues Beat Estimates

J.B. Hunt Transport Services’ (NASDAQ:JBHT) third-quarter 2019 earnings of $1.4 per share missed the Zacks Consensus Estimate of $1.44. However, total operating revenues of $2,363.7 million surpassed the Zacks Consensus Estimate of $2,348.2 million and also increased 7% year over year. The top line benefited from the strong performance of the Dedicated Contract Services (DCS) segment.

Quarterly operating income (on a reported basis) rose 21% to $212.1 million. Also, operating ratio (operating expenses as a percentage of revenues) improved to 91% from 92.1% in the prior-year quarter despite operating expenses rising 5.7% year over year. Notably, effective tax rate increased to 24.3% from 20.4% recorded in the third quarter of 2018.

Segmental Performance

The Intermodal (JBI) division generated quarterly revenues of $1.24 billion, up 2% year over year. However, overall volumes in the segment were flat year over year. Meanwhile, revenue per load excluding fuel surcharge revenues climbed 5% on a year-over-year basis. Also, operating income increased 10% year over year.

Revenues at DCS rose 28% year over year to $696 million, courtesy of a 9% increase in truck productivity. Excluding fuel surcharges, productivity increased roughly 11% owing to the Cory 1st Choice Home Delivery acquisition and higher customer rates among other factors. Further, operating income soared more than 100% year over year to $78.3 million owing to the addition of trucks and ramped up productivity.

Integrated Capacity Solutions (ICS) revenues dipped 3% year over year to $337 million with volumes contracting 4%. Revenue per load, however, inched up 2% year over year owing to competitive pricing among other factors.

Truck (JBT) revenues declined 11% year over year to $94 million. At the end of the third quarter, total tractors were 1,896 (of which 859 were company-owned) compared with 1,972 in the year-ago quarter. Trailers increased to 6826 in the period compared with 6818 a year ago.
Meanwhile, operating income dropped 28% to $6.6 million due to decreased truck loads.

Liquidity & Buybacks

This Zacks Rank #3 (Hold) company exited the third quarter with cash and cash equivalents of $75 million compared with $7.6 million at the end of 2018. Long-term debt was $1.29 billion compared with $898.4 million at 2018 end. Net capital expenditures in the first nine months of 2019 totaled $586.61 million compared with $584.98 million in the prior-year period.

During the reported quarter, J.B. Hunt bought approximately 380,000 shares of its common stock for roughly $36 million. The company has approximately $145 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 (Strong Buy) stocks here.

Upcoming Releases

Investors interested in the Zacks Transportation sector are keenly awaiting third-quarter 2019 earnings reports from key players like United Parcel Service (NYSE:UPS) , Southwest Airlines (NYSE:LUV) and Canadian Pacific Railway Limited (NYSE:CP) . While UPS will release earnings results on Oct 22, Canadian Pacific and Southwest will report the same on Oct 23 and Oct 24, respectively.

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