A J.B. Hunt Transport Services Inc. tractor trailer parked at a freight depot in Indianapolis, Indiana, U.S., on Saturday, Jan. 15, 2022.
Luke Sharrett | Bloomberg | Getty Images
Shares of J.B. Hunt tumbled over 10% on Wednesday after the trucking company announced it expects its third-quarter earnings to decline.
“We want to be transparent with investors and provide an update that, given these rising costs, we expect our Q2 to Q3 earnings to actually drop 5% to 10%,” CFO Brad Delco stated at the Morgan Stanley Industrials conference.
Delco noted that expenses related to recruiting, advertising, onboarding, training, and sign-on bonuses are expected to increase by approximately $25 million in the third quarter compared to the second. He stated that this indicates J.B. Hunt is “preparing for growth.”
However, he added that the company has also experienced “some of the most radical and abnormal swings” in fuel prices and record-high diesel prices, which are creating at least a $10 million headwind.
Delco added that he expects volumes to improve sequentially to offset these incremental pressures.
“It really is more of a timing issue,” he said. “I think you can look at a glass half-empty or a glass half-full. I am glad that we have visibility to these costs right now.”
Delco also noted that J.B. Hunt is working to repair its margins, though he believes the company still has a long way to go.
J.B. Hunt stock has risen nearly 100% over the past year.
