J.B. Hunt returns to its roots by expanding service to poultry industry

Diversity is usually a good business strategy and one to which execs at J.B. Hunt Transport have in recent decades wholeheartedly subscribed. Whether it’s delivering big screen televisions directly to a home with their “Final Mile” service or hauling live chickens to a slaughter house, J.B. Hunt Transport’s Dedicated Contract Services (DCS) segment has been configured to handle a wide range of business.

Jim Crowell, director of the Supply Chain Management Research Center at the University of Arkansas, said Hunt continues to add services that go well beyond the scope of transportation provider helping transform the company into a full-solution, logistics leader.

Hunt’s burgeoning intermodal division and its growing brokerage operation garner most of the headlines for this logistics carrier. But driving the back roads in Benton and Washington counties you don’t have too look far to see J.B. Hunt trucks hauling live poultry – an indication the giant has not strayed too far away from its roots.

POULTRY PARTNERS
Serving the local poultry industry was the bread and butter of J.B. Hunt’s young trucking firm. He and his wife Johnelle bootstrapped he business in 1961 with loans secured by local poultry pioneers Bill Simmons, Red Hudson, Gene George, Lloyd Peterson and Don Tyson.

Johnelle Hunt, recently shared her gratitude regarding the help the company received from the local poultry industry all those years ago. She said Northwest Arkansas people invested in J.B. Hunt and it will never be forgotten.

Over the past several months Hunt’s Agri Transportation Services division, which is part of the Dedicated Contract Services segments, began converting the private fleet an of unnamed poultry company. The City Wire has learned that is Tyson Foods. Hunt also mentioned other fleet conversions in two past earnings announcements.

Tyson Foods did not respond to a request for comment. Sources close to Tyson told The City Wire that Tyson recently began using J.B. Hunt Agri Transport for part of its live haul. Growers confirmed Tyson is in the midst of converting its live haul, feed and hatchery deliveries to J.B. Hunt. The sources said Tyson expects the transition to take several more months.

Hunt notes on its website that its agricultural service offers experienced, drivers and management. They deliver to farms, mills, or retailers, saying no transportation need is too difficult or complex.

Cargill said they also use J.B. Hunt’s agri services.

“They move provide transport for all aspects of our turkey business,” said Michael Martin, spokesman for Cargill Meat Solutions.

Todd Simmons, CEO of Simmons Foods, said they and several other poultry companies use J.B. Hunt Agri Transport to haul feed for them.

One new live haul contract for J.B. Hunt won’t likely move the needle in terms of annual earnings but it’s interesting to see a business relationship come full circle over three decades.

In the early years Hunt hauled rice hulls from eastern Arkansas to local poultry farms. The rice hulls were used as bedding in the chicken houses. Today Hunt delivers feed to the local mills that finds its way to grower farms and now with live haul it’s picking up the grown chickens and hauling them to slaughter.

EARNINGS FORECAST
J.B. Hunt Transport is slated to report first quarter earnings on Monday (April 14). Several analysts have already warned that the company’s growth was likely tempered by an unusually hard winter.

Wall Street consensus is 63 cents per share on revenue of $1.41 billion as sales are expected to rise 9.3% from a year ago. Consensus net income projections are $74.9 million, up 2% from a year ago.

Stephens Inc. still ranks J.B. Hunt shares as a “buy” with a target price of $87. On Thursday, shares (NASDAQ: JBHT) closed well off that mark at $71.96, down 1.18%. Wall Street’s consensus target price is $82.41.

“We are lowering our first quarter estimates based on weather related service disruptions that we believe are having a meaningful impact on JBHT's intermodal (IMC) operations,” noted Brad Delco, a transportation industry analyst with Stephens Inc. (Stephens conducts investment banking services for J.B. Hunt Transport and is compensated accordingly.)

The Stephens first quarter estimate is 60 cents a share, lowered from 70 cents.

“While lower than expected first quarter results will make it difficult for Hunt to finish the year near the higher end of previously announced guidance ranges … we believe that the long-term secular growth story remains intact.,” Delco said.

He expects to see more load conversion into intermodal and DCS to pick up more new contracts based on increased regulations and tightening capacity. Delco said the company’s restructuring of its truckload division should help this laggard segment.