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story.lead_photo.caption Graphs showing J.B. Hunt Transport Services Inc. third quarter information.

J.B. Hunt Transport Services Inc. on Tuesday reported a third-quarter profit that fell short of Wall Street estimates.

The Lowell-based transporter saw net income climb 15% to $151 million in the three months ending Sept. 30. Last year, J.B. Hunt posted a profit of $131 million.

Included in the 2018 results were after-tax charges of $31.1 million, or 28 cents per share, related to arbitration and other legal claims and a customer bankruptcy.

Revenue was $2.36 billion, up from $2.2 billion a year ago.

Over half of J.B. Hunt's 2019 third-quarter revenue came from its rail freight intermodal division. A third of the revenue came from its outsourcing group that offers fleet services to customers, known as dedicated contract services. The rest came mostly from its brokerage and logistics group, with 4% from trucks. Broken out -- intermodal generated $1.2 billion in revenue and dedicated contract services generated $696 million, both up from a year ago.

These segments were also J.B. Hunt's most profitable for the quarter. More than 60% of operating income came from rail freight operations and 37% came from dedicated contract services. About 3% came from trucking. Broken out -- intermodal generated $133 million in operating income and dedicated contract services made $78 million.

Meanwhile, profits from J.B. Hunt's brokerage and logistics group fell $5 million. The company said this was because of increased costs to expand business capacity. It also stemmed from competitive pricing and a softer spot market.

In a Stephens Inc. research brief, analyst Justin Long said that was the most notable item, citing logistics results that "were worse than feared," but overall, "we think the themes of this quarter are essentially in line with our preview."

The company reported quarterly operating income of $573 million, up from $558 million a year ago. Despite this gain, 2018 results included a $39 million pre-tax charge related to a "rail purchase transportation expense, insurance and claims costs and bad debt expense," the company said. Without those charges, operating income declined 1% from a year ago.

J.B. Hunt posted quarterly earnings per share of $1.40, up from $1.19 a year ago. Results missed both Wall Street and Stephens estimates of $1.44 and $1.41, respectively.

Long said the company's total intermodal volumes were down, and logistics and trucking revenue missed Stephens' estimates.

J.B. Hunt reported more than $2 billion in total operating expenses, up 5% from last year. This included gains in costs related to salaries, wages and employee benefits, and rent and purchased transportation.

Company shares rose $2.02, or almost 2%, to close Tuesday at $111.60.

Business on 10/16/2019

Print Headline: J.B. Hunt 3Q gains don't hit estimates

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