J.B. Hunt Reports Revenue Declined to $3.3 Billion for Q4
[Stay on top of transportation news: Get TTNews in your inbox.]
J.B. Hunt Transport Services Inc. reported a decline in fourth-quarter earnings as a result of weaker performance across its segments and rising insurance costs, the company reported Jan. 18.
The Lowell, Ark.-based transportation and logistics company posted net income of $153.5 million, or $1.47 a diluted share, for the three months ending Dec. 31. That compared with $201.3 million, or $1.92, during the same time the previous year. Total revenue decreased by 9% to $3.3 billion from $3.65 billion.
“We remain long-term focused and we’ll continue to do so while being disciplined in our approach,” said J.B. Hunt CEO John Roberts. “I’m a believer in taking the bad with the good and the good with the bad.”
Roberts pointed to several challenges both his company and the trucking industry broadly faced during the quarter: insurance prices and inflationary cost headwinds. He said the industry has seen unprecedented pressure on insurance claims, costs and jury settlements, while simultaneously confronting cost pressures on wages, health care benefits and equipment.
“We incurred $53 million of additional costs in the quarter, largely related to higher claims cost and exceeding coverage limits in certain insurance layers,” Roberts said. He noted that despite 2023 being the company’s best year on record for safety — as measured by its lowest-ever Department of Transportation preventable accidents per million miles — its insurance rates continued to increase “as the industry experiences higher [jury] verdicts.”
Results were mixed when it came to expectations from Wall Street analysts, who had been looking for EPS of $1.74 per share and quarterly revenue of $3.24 billion, according to Zacks Consensus Estimate.
Results were mixed when it came to expectations from Wall Street analysts, who had been looking for EPS of $1.74 per share and quarterly revenue of $3.24 billion, according to Zacks Consensus Estimate.
The J.B. Hunt truckload segment saw Q4 revenue decline 19% to $195.4 million compared with $242.7 million the prior year. The segment reported an operating loss of $39,000, compared with a gain of $12.9 million during the year-ago quarter. The company attributed the decrease primarily to a 13% decline in revenue per load and a 7% decline in load volume. These declines were partially offset by a 13% increase in average length of haul. Total average effective trailer count increased by approximately 4% year-over-year. The segment results also included $9.3 million in pretax charges for insurance-related items.
Revenue in the Final Mile Services segment decreased 9% to $243.2 million from $267.4 million the prior year. Operating income declined 5% to $12.3 million from $13 million. The declines were primarily driven by general weakness in demand across many of the markets the company serves, in addition to efforts to improve the overall business portfolio. On the plus side, the company noted that the segment also has experienced improved revenue quality for underperforming accounts and has implemented multiple new customer contracts over the past year.
The Integrated Capacity Solutions segment saw Q4 revenue decrease 25% to $363.7 million from $483.6 million the prior year. The segment also reported an operating loss of $24.9 million, compared with a loss of $3.2 million the prior year. Overall segment volumes decreased 12% versus the prior-year period. Revenue per load decreased 15% due to lower contractual and transactional rates and changes in customer freight mix. Contractual volume represented approximately 59% of total load volume and revenue.
Dedicated Contract Services segment revenue declined 3% in Q4 to $883.9 million compared with $913.1 million. Operating income increased 8% to $86.1 million from $79.8 million. There were 122 fewer revenue-producing trucks in the fleet by the end of the quarter compared with the prior year, but segment income saw a year-over-year improvement thanks to pretax charges for insurance-related items during the prior-year quarter.
The intermodal segment saw revenue decrease 7% to $1.62 billion compared with $1.75 billion the prior year, and operating income fell 28% to $129.9 million from $179.5 million. Intermodal volume increased 6% year-over-year, as transcontinental network loads rose 13% while eastern network loads fell 2%. Year-over-year demand trends for intermodal service improved throughout the quarter, even as income suffered from charges for insurance-related items and lower yields.
TD Cowen analyst Jason Seidl in a report noted that while Hunt beat expectations when excluding the one-time insurance-related costs, he also warned that headwinds will continue to be plentiful in the year ahead. “Core results still show material margin pressure across business units, and [management] was hesitant to offer any yield outlook within intermodal; we continue to see rate pressure through [the first half of the year] at a minimum, hingeing on an inflection in [over-the-road] rates,” Seidl wrote.
J.B. Hunt Transport Services Inc. ranks No. 3 on the Transport Topics Top 100 list of the largest for-hire carriers in North America. It also ranks No. 5 on the TT Top logistics companies list.
Want more news? Listen to today's daily briefing below or go here for more info:
