J.B. Hunt Transport Services Inc. said its third quarter results were hampered by a continuing freight recession but the company's executives said the transportation company remains focused on the future.
During a conference call with analysts after market close Tuesday afternoon, Chief Executive Officer John Roberts said while the short term freight environment remains challenging, J.B. Hunt's strategy is controlling short term costs while it keeps its eyes on long term growth and success.
"I remain confident in the future growth of the company," he said.
Company President Shelley Simpson said a freight recession is being driven by excess inventory in the supply chain. She said things seem to be normalizing and while the freight recession isn't over, things seem to be looking up.
"It's not a matter of if but when we come out of the freight recession," she said.
The company said revenue in the third quarter was hampered by a decrease in revenue per load in its intermodal and truckload segments, a decrease in volume in its integrated capacity solutions segment, and a drop in stops in its final mile services segment. Lower revenue across all its segments, along with higher equipment and insurance costs, dragged down operating income, the company said.
The Lowell-based transportation company reported net income for the quarter ended Sept. 30 of $187.4 million or $1.80 per share compared to $269.4 million or $2.57 per share for the year ago period. A consensus estimate of 21 analysts put the company's earnings at $1.85 per share for the quarter, according to Yahoo Finance.
Third quarter revenue was $3.16 billion, down 18% from $3.84 billion last year Revenue for the quarter was predicted to be $3.19 billion according to a consensus of 17 analysts. Excluding fuel surcharges revenue was down 15%.
In a research brief issued to investors after J.B. Hunt released its earnings, Justin Long, an analyst with Stephens Inc., had predicted earnings per share of $1.83. He said the company's intermodal, dedicated contact services and final mile performance were all weaker than expected.
"The evidence is growing that tonnage hit bottom in April and continues its slow climb upwards," American Trucking Association Chief Economist Bob Costello said in a news release. "However, year-over-year comparisons remain difficult as tonnage peaked in September of last year. As a result, it is unlikely that tonnage turns positive compared with a year earlier for at least a month or two longer. Most recently, freight continues to be mixed, with consumer spending and factory output flat to down."
In September J.B. Hunt said its subsidiary J.B. Hunt Transport Inc., is buying the brokerage operations of BNSF Logistics. BNSF Logistics provides full truckload, flatbed, temp-controlled, drayage, expedited and less-than-truckload services to a variety of customers. BNSF Logistics's warehouse, retail specialty, heavy-haul and project services, are not part of the deal. BNSF Logistics is an affiliate of BNSF Railway Company, Inc. The terms of the deal were not released. J.B. Hunt will use cash to pay for the deal.
On Jan. 1, J.B. Hunt moved the majority of its company-owned trucking services to its dedicated contract services segment and transferred its less-than-truckload brokerage operations from its integrated contract services to its final mile services segment.
In the third quarter, J.B. Hunt's intermodal segment saw revenue of $1.56 billion, down 15% from last year. Operating income was $128 million, down 41%. The company said demand was up but the revenue per load was down due to changes in the types of freight, customer rates and fuel surcharges.
The company's dedicated contract services segment booked revenue of $892 million for the quarter, down 4% with operating income of $102.4 million, also down 4%. Operating income was impacted by higher equipment costs and insurance claims expenses, the company said.
J.B. Hunt's integrated capacity solutions, or asset-light brokerage segment, saw revenue of $298 million for the quarter, down 48% and an operating loss of $9.4 million. Overall volume was down 38% for the quarter and revenue per load was down 17% because of rates and customer freight mix.
The truckload segment brought in revenue of $196 million for the third quarter, down 17% and had operating income of $7.7 million, a decrease of 48% compared to last year. The segment saw its revenue drop primarily due to lower revenue per load, excluding fuel surcharges but it did see a 6% gain in load volume. The drop in revenue affected operating income, the company said.
The final mile services segment had revenue of $226 million for the quarter, down 15% with operating income of $13 million, up 33% when compared to the year ago period. The company credited the gains to better quality revenue and cost management offset somewhat by equipment costs and technology investments.
J.B. Hunt released its results after market close.
The company's shares fell 77 cents to close Tuesday at $196.01 in trading Tuesday on the Nasdaq. Shares have traded as low as $159.83 and as high as $209.21 over the past year.