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July 17, 2020 12:00 PM, EDT

J.B. Hunt Reports $121.7 Million in Net Earnings

J.B. Hunt truck on highway John Sommers II for Transport Topics

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J.B. Hunt Transport Services reported that second-quarter profits and revenue declined versus year-ago levels.

The Lowell, Ark.-based transportation and logistics company on July 16 posted Q2 net earnings of $121.7 million, or $1.14 per diluted share, for the three months ending June 30. That compared with $133.6 million, or $1.23 per diluted share, during the same time the previous year.

Total Q2 revenue decreased by 5% to $2.15 billion compared with $2.26 billion last year. Operating income for the second quarter fell 9% to $175.2 million compared with $193.1 million last year. The prior-year Q2 result included a $20 million pretax charge for settlement of a final-mile service claim.

 

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Revenue performance was primarily driven by a 2% volume decline in intermodal, an 11% volume decline in the Integrated Capacity Solutions segment and 5% fewer stops in the Final Miles Services segment. Those were all partially offset by a 17% increase in loads in the Truckload segment.

The company’s Q2 results outpaced expectations of investment analysts on Wall Street, who forecast EPS of 83 cents per share and quarterly revenue of $2.06 billion, according to Zacks Consensus Estimate.

“While still too early to call, at least we have some potential signs of inflection in the demand curve,” J.B. Hunt CEO John Roberts said during a July 16 conference call with investors. “Having said all that, we are cautious. Recent COVID case count expansion and the uncertainty of what that may present will drive us to hold back for now on any directional changes from the current state of conservative thinking.”

The Truckload segment saw Q2 revenue increase by 9% to $108.3 million from $100 million the previous year. Operating income for the segment was down 61% during the quarter to $3.5 million from $8.9 million last year. Final Miles Services revenue decreased 2% to $140 million from $143 million. Operating loss for the segment narrowed to $5.2 million from $15.8 million during the same time last year.

Revenue in the Integrated Capacity Solutions (ICS) segment decreased 9% to $304 million from $334 million. Q2 operating loss for the segment widened to $13.1 million from $600,000 last year.

The J.B. Hunt 360 Marketplace contributed significantly to the ICS segment — the report noted approximately $229 million of revenue was executed through the marketplace compared to $222 million in Q2 2019. J.B. Hunt 360 is a transportation management system that lets shippers quote, book and ship freight online, and helps carriers find loads.

The company’s Intermodal Segment saw Q2 revenue decrease by 7% to $1.07 billion from $1.15 million, during the same time the previous year. Operating income for the segment was down 14% to $107 million from $124 million last year.

Dedicated Contract Services revenue in Q2 decreased by 1% to $533 million from $536 million last year. Operating income for the segment was down 9% during the quarter to $76 million from $83.1 million.

“Clearly, we are off our original plans in many respects and comparisons to last year do not help illuminate much about where we find ourselves,” Roberts said. “What we do know is that during the quarter we saw a stable and steady cadence of demand, particularly in our Dedicated and Intermodal businesses.”

Wolfe Research analyst Scott Group noted that the company’s intermodal, dedicated and truckload segments outpaced expectations, as did earnings per share. As a result, Group raised his forecasts for the company.

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“Following its better than expected 2Q report, we are raising our 3Q EPS by $0.11 to $1.21 which is 12% above prior consensus,” Group said in a report. “Our higher estimates reflect better intermodal volumes and dedicated margins, offset partially by larger ICS losses.”

Roberts added during the call, “The second quarter has confirmed the comprehensive nature of the virus throughout the period. We immediately committed ourselves to the priorities of taking care of our people and delivering on the promises we have made to our customer. We are encouraged with our results in both areas through the second quarter.”

Roberts noted that with more than 75% of company employees unable to work from home due to job responsibilities, Hunt deployed safety practices and personal protective equipment early on and reviews information on the pandemic daily.

J.B. Hunt Transport Services Inc. ranks No. 4 on the Transport Topics Top 100 list of the largest for-hire carriers in North America. It also ranks No. 4 on the TT list of the 50 largest logistics companies in North America.

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