Transportation and logistics earnings: J.B. Hunt., Werner report third quarter earnings are down
Despite losses, companies show sequential improvements
Jeff Berman, Group News Editor -- Logistics Management, 10/20/2009
WALTHAM, Mass.-With third quarter earnings season underway, two of the largest freight transportation and logistics services providers-J.B. Hunt and Transport Services and Werner Enterprises-both reported that market conditions are making a noted impact on the bottom line with quarterly earnings down at both companies.
But even though earnings were down, both companies' earnings per share exceeded Wall Street expectations, with JBH coming in at $.31 EPS ahead of Wall Street's $.28 EPS, and Werner at $.26 EPS compared to Wall Street estimates in the $.20 cent range.
At JBH, quarterly net earnings were $40.0 million, a 33.7 decline from last year's $60.3 million. Total operating revenue was $834 million, down 16 percent from last year's $996 million. Company officials said the decline in operating revenue was largely due to lower fuel surcharge revenues, which reflect significantly lower fuel costs during this year's third quarter. They also cited intermodal and truckload pricing declines for lower revenue, with quarterly operating revenue-excluding fuel surcharges-down 4 percent year-over-year.
With the fourth quarter underway, JBH officials added that freight shipment trends in the quarter will depend on the strength of consumer demand during the holiday season, with pricing remaining competitive due in large part to the high level of customer bid programs that occurred in the first half of this year.
"We have noted some recent signs of firming demand, however, the freight economy remains weak and we are not anticipating a rapid improvement," said JBH CEO Kirk Thompson in a statement. "Consequently, until freight rates start to return to a reasonable level, margins are unlikely to improve dramatically."
JBH's Intermodal business revenue and operating income at $456 million and $50 million were down 14 and 33 percent, respectively, for the quarter. Despite these declines its load volume was up 9 percent year-over-year and ahead of the 5 percent and 8 percent increases in the first and second quarter.
Quarterly net income for Werner was $19 million, down 15 percent from last year's $22.4 million, and operating revenue of $429.3 million was down 27 percent compared to last year's $584.1 million.
Werner officials said that the freight market continued to be challenging in the third quarter, but they pointed out that "freight volumes showed some encouraging seasonal improvement as the quarter progressed....[and] shipper destocking of inventory that occurred earlier this year has slowed and stabilized freight levels, which had a sequentially positive impact on freight shipments."
While earnings are down for both JBH and Werner and other industry players, industry analysts and shippers have told LM that earnings and market conditions may continue to appear to get sequentially better, but cautioned it will be a while before there is sustainable positive year-over-year growth, as consumers remain concerned about tight credit, unemployment, and keeping non-necessity spending down.
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