J.B. Hunt's belt tightening yields big Q3 beat

JB Hunt Transport Services reported a significant increase in revenue despite a slight drop in revenue in the third quarter. The multimodal transportation provider had already outlined a $100 million cost-cutting program, the fruits of which have been showing up dramatically in the recent period.

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JB Hunt (NASDAQ: JBHT ) saw consolidated revenue fall less than 1% year-over-year to $3.05 billion in the third quarter (the consensus estimate was $3.02 billion). However, operating income rose 8% year over year and earnings per share rose 18% to $1.76 (30 cents more than analysts’ expectations).

(The lower tax rate compared to the third quarter of 2024 was 3 cents higher than EPS.)

Shares in JB Hunt jumped 12 percent in after-hours trading on Wednesday after the better-than-expected report.

The company has reviewed more than 100 expense lines and found ways to improve efficiency and better use of its assets. It cut $20 million in costs in the third quarter, and said the total annual savings could be “well in excess of $100 million” over time.

Table: JB Hunt Key Performance Indicators – Consolidated

Intermodal’s fate will not be determined by the rail merger

JB Hunt management said on a call with analysts Wednesday evening that it will not be forced to move eastern intermodal traffic to CSX (NASDAQ: CSX ) if the Union Pacific (NYSE: UNP )-Norfolk Southern (NYSE: NSC ) merger is approved. Contrary to current market speculation, it could continue to use both Eastern Railways. The company plans to negotiate with all rail providers to find the best line solutions for its customers.

Table: Key performance indicators of JB Hunt – Intermodal

Intermodal revenue fell 2% year-over-year to $1.52 billion as both freight and revenue each fell roughly 1%. A 6% decrease in intercontinental loads was largely offset by a 6% increase in eastern loads. By month, loads were 3 percent annualized in July, 2 percent in August and flat in September. The eastward mixing shift affected the interfacial efficiency during this period due to the shorter transport length.

(Both shipments and earnings per shipment improved 3% sequentially from the second quarter.)

The peak ocean shipping season began earlier this year as shippers moved inventory ahead of the tariffs. However, management said most of its customers are still waiting for the peak ground shipping season because many goods landed in the United States are still near ports and distribution centers.

The intermodal segment posted an operating ratio (inverse of operating margin) of 91.8%, which was 100 basis points better than the prior-year quarter and 150 basis points better than the second quarter. Improved drag efficiency, improved grid balance, and fewer empty moves.

SONAR: Outbound domestic rail container volume index for 2025 (blue shaded area), 2024 (green line) and 2023 (pink line). Daily volume of multimodal containers moving in the United States, Canada and Mexico. This indicator is a 7-day moving average calculated using the date that containers arrived at an origin point. Multimodal trailers (trailers on cars or TOFCs) are excluded. Click here to learn more about SONAR.

Attrition of dedicated customers ends

The company reiterated that full-year operating income in its proprietary unit is expected to be flat. The beginning of the year called for little growth.

Owned revenue rose 2% year over year to $864 million in the quarter as average trucks in service fell less than 1% and weekly revenue per truck rose 3%. The service sold 280 trucks in the quarter. Net customer attrition halted in July and JB Hunt reiterated its long-term annual target of net fleet growth of between 800 and 1,000 trucks.

This segment recorded an OR of 87.9%, which was 80 bps better annually (100 bps sequentially better).

Table: JB Hunt Key Performance Indicators – Proprietary

Brokerage losses are reduced

The brokerage unit posted an operating loss of $752,000 in the third quarter, marking 11 consecutive losses. However, this was the smallest cycle.

Table: Key performance indicators of JB Hunt – ICS

Revenue fell less than 1 percent year-over-year as a 9 percent decline in loads was nearly offset by a 9 percent increase in revenue per load. The division’s gross margin fell 290 bps to 15%, but labor utilization improved (runs per employee increased 4%).

Shares of JBHT rose 12.4 percent in after-hours trading on Wednesday. The stock fell 5.2 percent in the week leading up to the report as analysts cut estimates amid weak demand ahead of the peak season.