J.B. Hunt profit slips 7 per­cent in quar­ter

Rev­enue rises, but short of pro­jec­tions

Northwest Arkansas Democrat-Gazette - - FRONT PAGE - DAL­TON LAFERNEY

Earn­ings data from J.B. Hunt Trans­porta­tion Ser­vices show freight vol­ume is ris­ing, but cus­tomers aren’t nec­es­sar­ily pay­ing more for its lo­gis­tics ser­vices.

“They don’t have to pay,” said Bob Wil­liams, se­nior vice pres­i­dent and man­ager of Sim­mons First In­vest­ment Group. “There’s enough com­pe­ti­tion right now, and enough over ca­pac­ity still avail­able, that it lim­its the abil­ity to raise prices.”

De­spite an over­all rev­enue in­crease this quar­ter, the com­pany’s profit fell by al­most 7 per­cent com­pared with the sec­ond quar­ter of 2016.

In the Low­ell-based com­pany’s sec­ond quar­ter earn­ings re­lease Mon­day, J.B. Hunt re­ported $97.8 mil­lion in profit, down from $105 mil­lion a year ago. Earn­ings per share were 88 cents this quar­ter, a drop from the same time last year, when in­vestors made about 92 cents per share.

The re­sults came up short of in­dus­try an­a­lysts’ pro­jec­tions. J.B. Hunt is the first pub­licly traded truck­load com­pany to re­port this quar­ter’s earn­ings which

could be a sign for what is to come for oth­ers in an in­dus­try try­ing to adapt to chang­ing con­sumer de­mands.

“It was a lit­tle dis­ap­point­ing,” Wil­liams said. “They missed both on the bot­tom line and on the top line.”

Whether cus­tomers will pay more for loads is a loom­ing ques­tion in the in­dus­try.

The rev­enue per load in the in­ter­modal seg­ment was rel­a­tively stag­nant from last year. With the ex­cep­tion of the truck­ing seg­ment, freight vol­umes are up across the com­pany. The in­ter­modal seg­ment car­ried about 24,940 more loads this quar­ter than sec­ond quar­ter 2016, lead­ing to about $1 bil­lion in rev­enue. That’s an in­crease from $933 mil­lion last year.

J.B. Hunt is the na­tion’s largest in­ter­modal ser­vice, and the seg­ment is re­spon­si­ble for about $109 mil­lion of the com­pany’s to­tal profit, dragged down by in­creased costs in equip­ment and wages and hir­ing ex­penses, the com­pany said.

Rev­enue from the in­te­grated ca­pac­ity so­lu­tions rose to $222 mil­lion from $203 mil­lion last year, but chang­ing de­mands from cus­tomers led to about a 102 per­cent de­crease in profit from last year. The num­ber of loads in this seg­ment was 240,069, up from 199,312 last year. But the rev­enue per load has gone down about $95 per load from last year.

Rev­enue per truck each week in the ded­i­cated ser­vices seg­ment was a lit­tle un­der $100 less this year than last.

The truck­ing seg­ment of­fers a pos­i­tive glimpse into cus­tomers’ will­ing­ness to pay more. The av­er­age haul dis­tance here shrank by about 6 per­cent, but its cus­tomers seem to be pay­ing more, as each truck brought in $99 more per week than last year. Still, profit from this seg­ment fell about 37 per­cent.

“The ben­e­fit from higher cus­tomer rates per mile was more than off­set by in­creased driver pay and hir­ing costs, higher in­de­pen­dent con­trac­tor cost per mile and de­creased trac­tor main­te­nance costs com­pared to the sec­ond quar­ter 2016,” the com­pany said in its re­port.

The com­pany is pay­ing more in fuel and fuel taxes this year, at about $79 mil­lion, a 9 per­cent in­crease from 2016. A no­table uptick in in­sur­ance claims took about 1.6 per­cent of the com­pany’s rev­enue, about $27 mil­lion. Salaries and wages grew by 9 per­cent, up to $871 mil­lion from $794 mil­lion last year. J.B. Hunt added 155 em­ploy­ees to its in­te­grated ser­vices di­vi­sion.

“It was a lit­tle dis­ap­point­ing. They missed both on the bot­tom line and on the top line.”

— Bob Wil­liams, se­nior vice pres­i­dent and man­ager of Sim­mons First In­vest­ment Group

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