J.B. Hunt sees decline in 1Q revenue

J.B. Hunt Transport Services Inc. on Tuesday reported declines in both revenue and income for the first quarter of 2024 as it deals with continued freight industry challenges.

During a conference call with analysts and investors after market close Tuesday, Chief Executive Officer John Roberts said the current freight environment has been persistently challenging and lasted longer than predicted.

The Lowell-based transportation company reported net income of $127.5 million, or $1.22 per share for the quarter, compared to the first quarter 2023 net earnings of $197.8 million, or $1.89 per share.

Roberts said the company has faced challenges and taken calculated risks that he believes will positively affect the company and future growth.

“What I remain confident in is those strategic decisions, direction and (the) course we are on is well charted,” he said.

Despite the confidence in future plans, Roberts did comment on the company’s poor financial performance.

“It is hard to see that in light of what I would characterize as a disappointing financial performance against our standards,” he said.

The company’s total operating revenue for the quarter was $2.94 billion, compared to $3.23 billion for the first quarter of 2023, which is a 9% decrease.

Operating income for the quarter dropped by 30% from $277.5 million in 2023 to $194.4 million for the current quarter.

The declines were driven by lower yields in the company’s segments and inflationary pressures on costs.

President Shelley Simpson, who will succeed Roberts as CEO in the summer, said the market remains challenging but the company will continue to focus on what it can control.

“The challenge we face today as an organization is managing the business to best prepare us for future growth, while balancing the need to manage and control costs in the near term,” she said.

Analysts had predicted a decline in Hunt’s quarterly earnings, but the results fell below predictions.

Zacks Equity research predicted the company to post revenue of $3.14 billion, down

2.83% compared to 2023.

The company was also predicted to post earnings per share of $1.57 for the first quarter, which would have been a 16.9% decrease compared to 2023.

J.B. Hunt’s’s intermodal operation saw its segment revenue drop by 9% to $1.40 billion. Intermodal volume was flat, when compared to the same period in 2023, but transcontinental network loads increased by 5% while eastern network loads decreased by 7%.

The company said intermodal service was weaker than expected because of competition from over-the-road truck options in the eastern network.

J.B. Hunt’s dedicated contract services segment generated revenue of $860 million, which was down 2% compared to the same quarter in 2023. Operating income for the segment was also down to $93.6 million, a decrease of 9%.

The decrease in the services was attributed to a decline of 1% in average trucks combined with a 1% decline in productivity. On a net basis there were 71 fewer revenue producing trucks in the fleet by the end of the quarter compared to the prior year, according to the company.

Customer retention rates are approximately 91%, reflecting the downsizing of fleets and, to a lesser extent, account losses.

The integrated capacity solutions segment saw a fourth quarter revenue of $285 million, down 26% when compared to the same quarter in 2023.

The segment’s overall volume decreased by 22% and revenue per load decreased by 5%, when compared to the prior year, because of lower contractual and transactional rates along with changes in customer freight mix.

J.B. Hunt’s final mile services revenue was $229 million, up 2% when compared to last year, and saw operating income of $15.1 million, which was up 128%.

The increase was primarily attributed to multiple new contracts implemented over the past year and efforts to improve the overall revenue and quality of the business.

The company’s truckload segment posted revenue of $178 million, down 13% compared to the same quarter in 2023. The operating income showed a loss of $1.2 million which is a 75% decrease compared to the previous year.

The decline came from a 9% decrease in revenue per load and a 5% decrease in load volume.

J.B. Hunt shares fell $2.11, or 1.14%, to close Tuesday at $182.99. The shares have traded between $219.51 and $164.39 in the past 52 weeks.