2020 fiscal year income down 1% for J.B. Hunt Transport, revenue up 5%

Lowell-based J.B. Hunt Transport Services ended fiscal 2020 on a high note with better-than-expected net income in the fourth quarter and revenue growth of 12% from a year ago.

The transport and logistics company reported earnings per share of $1.44, up 7% from a year ago and a solid beat over the consensus estimate of $1.29 per share. For the full year, Hunt earned $4.74 per share, down 1% from the prior year, but better than the $4.58 forecast by industry analysts.

Revenue grew 12% in the fourth quarter to $2.74 billion and beat the consensus estimate of $2.57 billion. For the year, revenue totaled $9.64 billion, up 5% from a year ago and higher than the $9.45 billion forecast by analysts. The company attributed fourth-quarter revenue growth to gains in the brokerage and trucking segments which were up 56% and 50%, respectively, from the prior-year period.

Operating income in the quarter totaled $207.7 million, up from $205.1 million a year ago. The company said it benefited from increased revenue was offset with cost increases in rail and other third-party purchase transportation costs such as higher driver wages, recruiting costs, rising medical costs, and increased spend on new applications and technology. The company said it incurred $5 million in COVID-19 costs in the quarter making the total cost for the year at $34 million. The company said it will spend around $850 million this year in capital expenditures.

CEO John Roberts said during the earnings call the company was glad to bid 2020 farewell and he looks to 2021 with confidence and opportunities for growth. He said the robust demand from 2020 has carried into this year and some of the challenges in rail and driver shortages will also likely continue.

Shelley Simpson, chief commercial officer, said 2020 was by the far the most challenging she has witnessed in her 30-year career. She said broad inventory shortfalls and high supply chain demand will take time to recover to more normal levels.

The earnings growth was not a surprise to Stephens Inc  analysts Justin Long and Jack Atkins who forecast Hunt to outperform in the quarter behind strong results from the company’s growing Integrated Capacity Solutions brokerage business. Credit Suisse analysts also upgraded J.B. Hunt shares early Tuesday ahead of the earnings release. The analysts raised Hunt to “outperform” from ’neutral” and lifted the price target to $175, much higher than the Wall Street consensus average of $146.13 per share.

Shares of J.B. Hunt Transport (NASDAQ: JBHT) closed Tuesday at $148.52, down $2.99. During the past 52 weeks, the share price has ranged between $156.74 and $75.29.

SEGMENT PERFORMANCE
• Intermodal (JBI)
Fourth quarter segment revenue totaled $1.25 billion, down 1%, while operating income fell 16% to $110.8 million from the year-ago period. Volumes rose 1% from a year ago. Volumes were contained by rail congestion and service issues from elevated demand that escalated into and during December.

• Dedicated Contract Services (DCS)
Fourth quarter segment revenue rose 3% to $568 million. Operating income was up 4% to $77.6 million from a year ago. Productivity (revenue per truck per week) increased about 1% compared to 2019. The company said customer retention rates remain above 98%. The company added 132 revenue producing trucks in the fourth quarter.

• Integrated Capacity Solutions (ICS)
Fourth quarter brokerage segment revenue rose to $587 million up 56% from a year ago. Operating Income totaled $5.6 million; compared to $(11.8) million operating loss in the year-ago period. Revenue growth came from a 39% increase in revenue-per- load compared to the same quarter last year. Volumes increased 13% with truckload volumes increasing at a rate greater than 20% in the quarter versus a year ago. Of the total reported ICS revenue, approximately $387 million was executed through the Marketplace for J.B. Hunt 360° compared with $225 million in fourth quarter 2019.

• Final Mile Services (FMS)
Fourth quarter segment revenue was $213 million, up 30% from a year ago. Operating income rose 12% to $5.5 million. It was a record quarter for the segment behind the December 2019 acquisition of RDI Last Mile and the addition of more new accounts.

Truck (JBT)
Fourth quarter segment revenue was $140 million; up 50% from the prior year. Operating Income rose to $8.4 million, up 32% compared to the fourth quarter of 2019. The revenue excluding fuel surcharge revenue increased 58% as a result of a 23% increase in load count. The company said the higher load count relates to the expansion of the company’s 360° platform. Revenue per loaded mile excluding fuel surcharge revenue increased approximately 19% year over year. At the end of the period, JBT operated 1,769 tractors and 8,567 trailers compared to 1,831 and 6,975 one year ago, respectively.