J.B. Hunt’s Q2 performance stumbles amid freight recession

Lowell-based carrier J.B. Hunt Transport Services Inc. missed expectations for earnings and revenue in the second quarter amid a freight recession. The earnings and revenue fell by double digits from the second quarter last year.

After the markets closed Tuesday (July 18), J.B. Hunt reported earnings declined by 25.8% to $189.55 million, or $1.81 per share, in the second quarter from $255.34 million, or $2.42 per share, in the same period last year. Revenue fell by 18.4% to $3.13 billion from $3.83 billion.

J.B. Hunt missed earnings per share of $1.92, based on a consensus of 20 analysts. The company missed revenue estimates of $3.31 billion.

In a report on the second-quarter results, analysts Justin Long and Jack Atkins and associates Brady Lierz and Grant Smith, all of Little Rock-based Stephens Inc., said while earnings missed Wall Street expectations, “it was roughly in line with our estimate of $1.80.” They also noted “weaker-than-expected results in intermodal and a higher tax rate were offset by better-than-expected results in dedicated and final mile.”

The company attributed declines in revenue and operating income to lower freight volumes and customer rates. Margins fell because of higher labor and equipment costs, partially offset by lower costs in rail and truck purchased transportation, and insurance and claims.

In the second-quarter earnings call, company executives discussed the continued freight recession and had yet to note a market inflection. However, executives said the company’s intermodal segment, which accounts for about half of total income and revenue, had the best quarter in terms of freight volumes in the second quarter of 2022 and that year-over-year comparisons should be easier for the remainder of this year. Company leaders also discussed controlling costs when possible while prudently investing in new equipment as it prepares for market improvements.

“I think we see short-term focused decisions yielding short-term results,” CEO John Roberts said. “Accordingly, we just are more focused on positioning for that future opportunity than dealing with the current conditions knowing that future opportunity will need us to be ready. It does remain a when, not if, question.”

President Shelley Simpson said the carrier’s dedicated segment had record operating income in the second quarter of 2023. Also, the carrier’s final mile segment was profitable in the period.

Total freight transactions in the Marketplace for J.B. Hunt 360 fell by 40% to $336 million in the second quarter from $556 million in the same period last year.

Through the first half of 2023, earnings declined by 22.3% to $387.32 million, or $3.70 per share, from $498.66 million, or $4.72 per share, in the same period last year. Revenue fell by 13.2% to $6.36 billion from $7.32 billion.

Shares of J.B. Hunt (NASDAQ: JBHT) closed Tuesday at $188.17, up $4.79 or 2.61%. In the past 52 weeks, the stock has ranged between $156.28 and $200.64.

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

INTERMODAL
Operating income decreased by 29.5% to $142.86 million from $202.52 million. The segment accounted for 53% of total operating income, down from 57% last year.

Revenue declined by 18.7% to $1.48 billion from $1.83 billion. The segment accounted for 48% of total revenue flat from last year.

DEDICATED CONTRACT SERVICES
Operating income rose by 20.7% to $113.61 million from $94.14 million. The segment accounted for 42% of operating income, up from 27% last year.

Revenue declined by 1.8% to $887.59 million from $903.92 million. The segment accounted for 28% of total revenue, up from 24% last year.

INTEGRATED CAPACITY SOLUTIONS (BROKERAGE
The segment reported an operating loss of $4.41 million from an operating income of $23.22 million. Revenue fell by 43.3% to $343.69 million from $605.6 million.

FINAL MILE SERVICES
Operating income increased by 11.9% to $14.82 million from $13.24 million. Revenue fell by 18.6% to $223.93 million from $274.99 million.

TRUCKLOAD
Operating income declined by 81% to $3.79 million from $20.02 million. Revenue fell by 15.8% to $191.8 million from $227.9 million.