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

J.B. Hunt Transport ServicesJBHT 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, Union Pacific Corporation UNP and Southwest Airlines Co. LUV. While Union Pacific and Southwest will report earnings numbers on Jan 23, UPS will announce financial results on Jan 30.

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