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J.B. Hunt (JBHT) Stock Gains on Q3 Earnings & Revenues Beat

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J.B. Hunt Transport Services (JBHT - Free Report) reported better-than-expected third-quarter 2021 results. Quarterly earnings of $1.88 per share surpassed the Zacks Consensus Estimate of $1.77. The bottom line surged 59.3% year over year on the back of higher revenues across all segments.

Total operating revenues of $3144.8 million outperformed the Zacks Consensus Estimate of $3002.1 million and improved 27.2% year over year. Total operating revenues, excluding fuel surcharges, rose 22.6% year over year. The strong earnings report naturally pleased investors. Thereby, the stock gained in pre-market trading.

Quarterly operating income (on a reported basis) climbed 56% to $273.8 million despite a lack of network fluidity. Meanwhile, operating expenses escalated 25% primarily due to rising wage and truck purchase transportation costs.

Segmental Highlights

Intermodal division generated quarterly revenues of $1.41 billion, up 17% year over year. Revenue per load climbed 24% in the quarter under discussion. Volumes decreased 6% year over year. Eastern network loads and transcontinental loads declined 2% and 9%,respectively. Management stated labor shortages across the industry in both rail and truck networks and at customer warehouses are at the core of the supply-chain fluidity challenges hindering the company’sasset utilization and capacity. Operating income increased 52% year over year to $165.1 million driven by higher customer rate and cost recovery efforts.

Dedicated Contract Services segment revenues rose 20% from the year-ago period to $665 million owing to fleet productivity improvement and increase in average revenue producing trucks. The company’s fleet at the end of the quarter had 1,527 more revenue producing trucks (on a net basis) versus a year ago. However, operating income decreased3% to $78.1 million.

Integrated Capacity Solutions revenues increased 55% year over year to $666 million. Segmental volumes climbed 4% from the year-ago period with truckload volumes increasing 14%. Revenue per load surged 48% owing to favorable customer freight mix, andhigher contractual and spot rates. The segment’s operating income was $14.7 million in the reported quarter, against an operating loss of $18.3 million in the third quarter of 2020.

Final Mile Services revenues improved 13% year over year to $206 million due to the addition of multiple customer contracts implemented over the last year. The segment’s operating income was $1.3 million in the reported quarter, down 39%. The metricwas hurt by headwinds like higher personnel expenses pertaining to salary, wages and incentive compensation and group medical costs. Supply chain disruptions also hurtoperating income in the reported quarter.

Truckload revenues soared 87% to $204 million. Excluding fuel surcharge revenues, segmental revenues rose 85% year over year due to 65% increase in revenue per load (excluding fuel surcharge revenue) and 12% rise in load count. At the end of the third quarter, total tractors and trailers were 1,965 and 9,906, respectively, compared withthe year-ago quarter’s figures of 1,713 and 8,245, respectively. Meanwhile, operating income skyrocketed more than 300% to $14.7 million on the back of increased load counts and revenue per load.

Liquidity & Buyback

This Zacks Rank #3 (Hold) company exited the third quarter with cash and cash equivalents of $529.6 million compared with $313.3 million at the end of 2020. Long-term debt was $944.9 million compared with $1.31 billion at 2020-end. Net capital expenditures at the end of the first nine months of 2020 amounted to $511.1 million approximately compared with $448.7 million at the end of the same period in 2020.

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

During the reported quarter, J.B. Hunt repurchased around 286,000 shares for approximately $50 million. The trucking company had approximately $366 million remaining under its share repurchase authorization at the end of the third quarter.

Upcoming Releases

Investors interested in the Zacks Transportation - Truck industry are looking forward to third-quarter 2021 earnings reports from Knight-Swift Transportation (KNX - Free Report) , Landstar System (LSTR - Free Report) and Old Dominion Freight Line ((ODFL - Free Report) ). While Knight-Swift and Landstar will release earnings numbers on Oct 20, Old Dominion will report the same on Oct 27.