J.B. Hunt’s Q3 earnings drop by 30.4% amid lingering freight market challenges

Lowell-based carrier J.B. Hunt Transport Services Inc. posted double-digit declines in earnings and revenue in the third quarter amid continued softness in the freight market.

After the markets closed Tuesday (Oct. 17), J.B. Hunt reported earnings decreased by 30.4% to $187.43 million, or $1.80 per share, from $269.38 million, or $2.57 per share, in the same period last year. Revenue fell by 17.6% to $3.16 billion from $3.83 billion.

J.B. Hunt missed earnings expectations of $1.83 per share, based on a consensus of 21 analysts. The carrier also missed revenue expectations of $3.19 billion.

In a research brief, analysts Justin Long and Jack Atkins and associates Brady Lierz, Grant Smith and Collin Nieman, all of Little Rock-based Stephens Inc., said the operational miss was largely offset by a lower-than-expected tax rate. By segment, the carrier’s results were weaker than expected in intermodal, dedicated, brokerage and final mile. That was slightly offset by better-than-expected results in truckload.

Still, the analysts noted that intermodal volumes rose by 1.2% in the third quarter from the same period last year. However, that is expected to be overshadowed by intermodal margins that were 8.2%, and dedicated margins that were 11.5%, down 1.4 and 1.3 percentage points, respectively, from the second quarter.

In the quarterly conference call, J.B. Hunt executives discussed the continuing freight recession and the inventory destocking that contributed to it. They noted the destocking started to moderate in June and continues to moderate. Still, executives said the recovery is not an if but a when.

“To be clear on the overall environment, we are not at a point yet to say we’re out of the freight recession,” President Shelley Simpson said. “But we do feel like we’re coming out of it. Directionally, we are seeing signs of things moving in a positive direction.”

Also on the call, CEO John Roberts highlighted the carrier’s long-term investments and growing partnership with Fort Worth, Texas-based BNSF Railway Co., including a recent deal to acquire assets of an affiliate of the rail company.

On Sept. 14, J.B. Hunt announced acquiring the brokerage operations of BNSF Logistics. The deal closed Sept. 30, and the results of the acquired operations will be reflected in the carrier’s brokerage segment in the fourth quarter.

Through three quarters, J.B. Hunt’s earnings declined by 25.2% to $574.75 million, or $5.50 per share, from $768.04 million, or $7.28 per share, in the same period last year. Revenue fell by 14.7% to $9.52 billion from $11.16 billion.

Shares of J.B. Hunt (NASDAQ: JBHT) closed Tuesday at $196.01, down 77 cents or 0.39%. In the past 52 weeks, the stock has ranged between $159.83 and $209.21.

Following are the carrier’s business segment results in the third quarter compared to the same period last year:

• Intermodal

Operating income fell by 41% to $127.97 million from $216.99 million. Revenue decreased by 15.3% to $1.55 billion from $1.83 billion. The segment comprised 53% of the carrier’s operating income and 49% of its revenue in the third quarter.

• Dedicated

Operating income declined by 4.4% to $102.43 million from $107.18 million. Revenue fell by 4.2% to $892.25 million from $930.94 million. The segment comprised 42% of operating income and 28% of revenue.

• Brokerage

The segment reported an operating loss of $9.37 million compared to net income of $13.35 million. Revenue fell by 48.2% to $298.01 million from $575.28 million.

• Final Mile Services

Operating income rose by 32.8% to $12.97 million from $9.77 million. Revenue fell by 14.8% to $225.92 million from $265.05 million.

• Truckload

Operating income declined by 48.3% to $7.71 million from $14.92 million. Revenue decreased by 17% to $196.33 million from $236.62 million.