J.B. Hunt’s 4th quarter beats forecasts

Lowell trucker’s net income rises 6%; CEO praises workers for enduring 2020

J.B. Hunt Transport Services Inc. on Tuesday reported a fourth-quarter earnings increase, partially offset by rail challenges.

Net income rose more than 6% to $154 million during the three months that ended Dec. 31.

Results exceeded analyst expectations.

Revenue climbed 12% to $2.74 billion from a year ago. It was $2.55 billion, excluding fuel surcharges.

In a conference call after markets closed, John Roberts, J.B. Hunt’s president and chief executive, commended workers for their flexibility and patience during a year of unexpected market and pricing changes.

“2020, we will bid you farewell and good riddance,” Roberts said jokingly.

Overall, J.B. Hunt experienced a quarter of somewhat traditional demand cycles during the holidays. Roberts said most business segments held up well, the main blemish being in the company’s Intermodal, or rail segment.

Intermodal, accounting for about half of the business, grew in total volumes from a year ago, but was constrained by rail congestion and service issues as well as labor challenges in rail, truck and customer operations.

Revenue growth came from J.B. Hunt’s Integrated Capacity Solutions and Trucking segments, which grew 56% and 50%, respectively. Final Mile Services grew 30% from an acquisition in the previous year and the business contracts that come along with it.

John Kuhlow, J.B. Hunt’s chief financial officer, highlighted in the call that the company had spent about $5

million in paid time off costs related to the coronavirus for the quarter and expect these costs to continue.

During a quarter mired with labor challenges and elevated demand from the holidays, J.B. Hunt beat Wall Street expectations.

The Lowell carrier reported earnings per share of $1.44, up from a FactSet consensus of $1.30 and Stephens estimate of $1.31.

Stephens analyst Justin Long said in a research brief that the greatest upside came from Integrated Capacity Solutions, or the company’s brokerage segment, which wasn’t expected to be profitable until early summer.

With expected pricing tailwinds and strong sales on the horizon, Long said “we continue to find the fundamental set-up compelling headed into 2021.”

Operating income totaled $207.7 million, up 1% from fourth quarter 2019. Despite strong profits in Hunt’s trucking, brokerage and final-mile services, results were offset by a 16% decline in operating income for Intermodal.

For the 12 months that ended Dec. 31, J.B. Hunt reported a total revenue increase compared to last year as net income declined.

Net income fell 2% to $506 million this year over last.

Total revenue rose 5% to $9.64 billion. It was $9.17 billion, excluding fuel surcharges.

Hunt had total debt of $1.31 billion at the end of 2020, which is comparable to debt levels in the previous quarter and a year ago. Cash and cash equivalents totaled $313 million.

Net capital expenditures were $601 million compared with $688 million in the previous year.

Roberts said the company was excited for its leadership changes and a more settled freight environment heading into the new year.

“We have confidence that our experience will lead us in the right direction,” he said.

J.B. Hunt shares fell nearly 2%, or $2.99, to close Tuesday at $148.52 on the Nasdaq stock exchange.