J.B. Hunt 1Q revenue, earnings fall

Lowell-based carrier J.B. Hunt Transport Services Inc. posted declines in earnings and revenue amid weaker freight volumes or revenues per load across its business segments, excluding Dedicated Contract Services. The latter segment helped to offset some of the declines.

After the markets closed Monday (April 17), J.B. Hunt reported first-quarter earnings declined by 18.7% to $197.76 million, or $1.89 per share, from $243.32 million, or $2.29 per share, in the same period last year. Revenue fell by 7.4% to $3.22 billion from $3.48 billion.

J.B. Hunt missed earnings expectations of $2.02 per share, based on a consensus of 20 analysts. It also missed revenue expectations of $3.4 billion.

In an earnings report, analysts Justin Long and Jack Atkins and associates Brady Lierz and Grant Smith, all of Little Rock-based Stephens Inc., said the results “were relatively in line with buy-side expectations. Results by segment were mixed given the weak freight market (widely known), and we were encouraged by margins in intermodal and dedicated holding up well despite the macro challenges.”

In the earnings call, J.B. Hunt executives noted the softness in the freight market and were uncertain as to when the demand might start to rise. President Shelley Simpson added that the freight market is in recession and was cautious about the outlook for 2023.

“It’s not really a question of if the freight demand will come back to normal. It’s really a question of when,” said CEO John Roberts, highlighting the experience of company executives, the challenges they’ve faced in previous freight cycles and how they’ve worked through them. “I’m aware of many efforts and elements that are ongoing today that will really continue to help us stay healthy while we get to that other side, which we know is not a question of if it will present itself but when. We just have to be patient and careful and thoughtful.”

Executives also noted that the company recently reallocated some of the business within its segments. Most of the operations of its company-owned trucks within its truckload segment were transferred to the dedicated segment, while the less-than-truckload business in brokerage was transferred to Final Mile. Executives explained the changes as better aligning business operations to the segment to which they were moved.

Chief operating officer Nick Hobbs explained how the company has been a leader in safety and that the company recently started to add driver-facing cameras to its truck fleet. He said this is expected to take about two years to complete.

According to the carrier, increases in wages, insurance-related costs, and equipment-related and maintenance expenses contributed to the first-quarter earnings decline. It also noted a $6 million net loss from the sale of equipment in the first quarter compared to a $17 million net gain in the same period last year.

Total freight transactions in the Marketplace for J.B. Hunt 360, the carrier’s technology platform, declined by 38% to $370 million in the first quarter from $600 million in the same period last year.

Shares of J.B. Hunt (NASDAQ: JBHT) closed Monday at $176.65, down 12 cents or 0.07%. In the past 52 weeks, the stock has ranged between $153.92 and $200.64.

Following are the first-quarter results by segment compared to the same period last year:

• Intermodal

Operating income fell by 16.1% to $168.65 million from $200.97 million. Revenue declined by 4% to $1.53 billion from $1.6 billion. The segment comprises 61% of operating income and 48% of total revenue for J.B. Hunt.

• Dedicated

Operating income increased by 28.7% to $102.56 million from $79.69 million. Revenue rose by 13.3% to $879.14 million from $776.12 million. The segment comprises 37% of operating income and 27% of total revenue for J.B. Hunt.

• Brokerage

The segment had an operating loss of $5.37 million compared to an operating income of $24.19 million. Revenue declined by 41.6% to $384.77 million from $658.87 million.

• Final Mile

Operating income rose by 1,021.9% to $6.61 million from $590,000. Revenue decreased by 4.2% to $225.07 million from $234.97 million.

• Truckload

Operating income fell by 82.7% to $4.99 million from $28.9 million. Revenue fell by 10.3% to $205.86 million from $229.52 million.