First blush of J.B. Hunt’s quarter pretty good

J.B. Hunt truck on highway

Total revenue growth of 9% year-over-year to $2.28 billion led by increases in intermodal (+6%) and dedicated (+10%) are some of the highlights from the J.B. Hunt Transport Services (NASDAQ: JBHT) first quarter 2020 earnings report.

J.B. Hunt’s Key Performance Indicators (Consolidated)

Additionally, a 1% year-over-year decline in intermodal operating income may not be as bad as feared. The division reported a 7% year-over-year increase in volumes, 11% higher in transcontinental, during the period. Revenue per load was down 1% year-over-year, up less than 1% excluding fuel. The result included an $8.2 million accrual related to the division of revenue with rail partner BNSF Railway, a subsidiary of Berkshire Hathaway (NYSE: BRK.B), and $4 million in one-time bonus expenses for employees serving on the frontlines during the COVID-19 pandemic.

J.B. Hunt’s Key Performance Indicators (Intermodal)

In a March 26 8-k filing with the U.S. Securities and Exchange Commission, J.B. Hunt announced the “final award” in the company’s arbitration with BNSF Railway over the division of revenue under the revenue-sharing agreement between the two companies.

The press release noted COVID-19-related intermodal volume disruptions in March, which escalated through the end of the quarter.

The company reported earnings of $0.98 per share, $0.03 lower than the consensus estimate and $0.11 lower than the first quarter of 2019. These results were inclusive of the aforementioned $8.2 million accrual, a total of $12.3 million in one-time bonus payments and $3.4 million of stock compensation for executive retirements.

The company’s consolidated revenue result came in roughly $90 million ahead of forecasts.

Revenue growth of 10% to $542 million in the dedicated unit was attributed to a 430-truck increase and a 3% climb in revenue per truck per week excluding fuel. The 46% year-over-year increase in operating income in the division was the result of fleet growth and better productivity, rates and weather compared to last year.

J.B. Hunt’s Key Performance Indicators (Dedicated)

Marketplace for J.B Hunt 360° transactions increased to $294 million in the first quarter, $95 million higher than the 2019 quarter as brokered load volume was up 44% on the platform.

Total brokerage revenue increased 12% year-over-year to $335 million as volumes increased 2% and revenue per load climbed 9%. Contractual load volumes were up 600 basis points in the period versus 2019 at 74%. The division reported an $18.9 million loss as gross profit margins were 690 basis points lower year-over-year at 9.6%. The company noted a variety of cost increases, a competitive contractual business environment and tightening supply as the culprits.

J.B. Hunt’s Key Performance Indicators (Brokerage)

The company’s Dedicated Contract Services (DCS) segment was separated into two reportable segments – DCS and Final Mile Services (FMS). FMS is the nation’s largest final mile asset-based network, generating $566.6 million in revenue during 2019.

The division reported a 39% year-over-year increase in revenue to $154 million in the period. The growth was largely led by previous acquisitions. Increased costs from investments in expanding the network and work stoppages at some of its customer sites due to the outbreak drove a $3.3 million loss in the period.

J.B. Hunt’s Key Performance Indicators (Final Mile Services)

Revenue in the truck division was up 3% year-over-year to $105 million as load counts grew by 15% with a 10% decline in revenue per load. Revenue per loaded mile was down 6%, but contractual rates were only 1% lower compared to last year.

J.B. Hunt’s Key Performance Indicators (Truck)

On March 23, the company announced that it was paying a one-time $500 bonus to drivers and personnel supporting those drivers at company and customer facilities during the COVID-19 pandemic. J.B. Hunt incurred a $12.3 million pre-tax charge during the quarter for those payments.

Shares of JBHT are up 3% in after-hours trading.

The company hosts a conference call this evening and FreightWaves plans to provide commentary from the call in a later article.