Mixed results

J.B. Hunt Transport reports earnings down, revenue up.

J.B. Hunt Transport Services Inc. on Tuesday reported a mixed first quarter, with earnings of $104.8 million during a pandemic, down 12% from last year. Revenue was up, however.

Analysts had expected things to be worse, given the economic downturn created by the spread of the coronavirus, and lowered their estimates in recent weeks. J.B. Hunt notified shareholders in late March of one-time costs that would weigh on the quarter that ended March 30, such as arbitration fees, executive-level retirement payouts and bonuses to drivers and essential workers during the pandemic.

But the Lowell carrier posted earnings of 98 cents per share, beating some estimates while falling short of others. Stephens analysts recently lowered estimates almost 30% to 78 cents per share. A FactSet analyst consensus had J.B. Hunt coming in at 97 cents per share. A Yahoo Finance consensus estimated higher, about $1.26 per share.

Revenue climbed to $2.28 billion, up 9% from $2.09 billion a year ago. Excluding fuel surcharges, revenue rose 10% from a year ago. The increase came in part from additional loads carried, customer contracts

and growth in J.B. Hunt’s final-mile business from acquisitions last year. Revenue beat or fell in line with Stephens’ estimates, except for Hunt’s logistics business, which had operating margins that missed the mark.

Operating income was $1.54 million, down almost 8% from $1.68 million in the first quarter of 2019. J.B. Hunt’s railway business comprised 66% of the profits; followed by brokerage at 47%, and trucking, 1%. The company’s logistics and final-mile segments were in the red, attributed in part to higher expenses, personnel costs and coronavirus closures.

Intermodal, or rail freight, volumes increased overall by 7% compared with the first quarter of 2019. According to J.B. Hunt, railway operations were running smooth through February until coronavirus disruptions began to show in March and escalated through the end of the quarter.

The company’s Dedicated Contract Services, or brokerage, arm had more productive fleet activity this quarter over last because there were fewer weather-related expenses. J.B. Hunt reported 430 more trucks were added to the fleet this quarter.

Three one-time costs, totaling $23.9 million, included $12.3 million in bonuses to drivers and essential employees who continue to work during the pandemic; $8.2 million owed to partner BNSF Railway for 2019; and $3.4 million in payouts to retired executives. J.B. Hunt also spent more this quarter on rail purchase transportation rates, technology upgrades throughout the company, driver wages and salary and wage expenses for nondriving personnel.

The effective income tax rate rose to 26.5% compared with 22.7% in the first quarter of 2019.

J.B. Hunt shares rose $2.96, or 3.12%, to close Tuesday at $97.89.