J.B. Hunt Transport Services reported its best-ever quarterly results Oct. 18 but CEO John Roberts said today’s economy requires “an increased level of caution” and the company’s top intermodal executive said, “peak season this year just doesn't appear to be much of an event.”
Net income at Arkansas-based J.B. Hunt (No. 5 on the FleetOwner 500: For-Hire) for the three months ended Sept. 30 came in at $269 million, an increase of 35% from the same period of 2021. Total revenues rose 22% year over year to $3.8 billion, while operating revenues excluding fuel surcharges climbed 12% to nearly $3.2 billion. The company’s overall operating margin climbed to 9.4% from 8.7%, helped by solid growth at its two largest divisions, intermodal and dedicated.
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But despite those generally positive numbers—one exception being the company’s integrated capacity solutions group, which was down 11% year-over-year—the leaders of J.B. Hunt did their best to temper the company’s Q3 numbers and place them in the context of a slowing economy. Roberts, who has led the company since the beginning of 2011, said the beginnings of a market shift his team saw in the spring has progressed.
“Further evidence has presented itself over the course of the quarter that requires an increased level of caution and awareness on broader demand trends and economic activity,” he said on a conference call with analysts. “Data, experience, and frequent dialogue with our customers will continue to guide us in this area.”
On their call, Roberts and several other executives noted that a slowing of growth will give them a chance to slow their hiring pace and/or bring new equipment to market more steadily. Shelley Simpson, recently named J.B. Hunt’s president, said the company is looking to be flexible and “take a little more of a breath and be a little more structured” when it comes to spending on growth.
“For us, caution is just a readiness to pivot,” Simpson said in wrapping the call. “It's a readiness to be available for our customers and understanding what's happening in the market and how we can best prepare ourselves and be ready.”
Intermodal volumes grow
Despite the careful message conveyed by Roberts, Simpson, and others, there were also positive trends and data points for the J.B. Hunt team to note. On the intermodal front, division president Darren Field—who noted the lower-than-expected peak-season volumes—said demand has stayed strong, with volumes growing 4% overall and revenue per load (ex-fuel) climbing 17%.
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Importantly, he added that his team started to see significant improvements in the performance of rail partner Burlington Northern Santa Fe in mid-August. Those have endured since except for a dip in September when chatter about a possible broad rail strike spooked some customers. And that, Field said, lines up J.B. Hunt to benefit broadly.
“We have significant productivity and cost-saving opportunities that will present themselves in our dray operations as rail service quality makes further improvements,” Field said. “I look forward to discussing our progress in this area.”
J.B. Hunt’s dedicated division put up another strong quarter of growth, with revenue per truck per week jumping 14% from 2021’s Q3. It also added a net 1,836 trucks to its fleet year over year but group President Nick Hobbs said his team is seeing its backlog trend toward more normal levels after two years of very strong growth.
Shares of J.B. Hunt (Ticker: JBHT) rose nearly 3% to about $172.60 after hours on Oct. 18. Over the past six months, they are essentially flat.
