06:43 AM EDT, 10/16/2024 (MT Newswires) -- J.B. Hunt Transport Services (JBHT) shares spiked early Wednesday as the transportation and logistics company reported better-than-expected third-quarter results despite a challenging freight market.

Net earnings dropped to $1.49 per share for the September quarter from $1.80 the year before, the company said late Tuesday. The consensus on Capital IQ was for EPS of $1.41. Revenue decreased 3% year over year to $3.07 billion, but topped the Street's view for $3.01 billion. The stock rose 7.1% in premarket activity.

The group attributed the decrease in revenue mainly to declines in gross revenue per load in its intermodal and truckload segments. The result was also impacted by a fall in load volume in the integrated capacity solutions and dedicated contract services units.

"We saw our volumes on a sequential basis outperform normal seasonality, particularly in (intermodal), but also in our highway services business, which includes both (integrated capacity solutions) and (truckload)," Chief Financial Officer John Kuhlow said during an earnings call, according to a Capital IQ transcript. "That said, overall yield pressure in these areas continue to put pressure on margins and our overall profitability."

Revenue in the intermodal business remained flat at $1.56 billion as a 5% gain in volume was offset by a decrease of the same percentage in gross revenue per load, resulting from changes in customer rates, fuel surcharge revenue and mix of freight, according to the company. Dedicated contract services sales were down 5% to almost $846 million amid 3% declines in both average trucks and productivity.

In the integrated capacity solutions unit, revenue fell 7% to $278.2 million as volume slid 10% year over year. Truckload sales fell 12% to $173.2 million, while the final mile services segment decreased 3% due to weakening demand across many of the company's end markets.

Operating income fell 7% to $224.1 million due to lower revenue across the majority of segments and higher personnel-related, insurance and claims and equipment-related expenses. Operating expenses fell to $2.84 billion from $2.92 billion in the prior-year quarter, the company said.

"We have made significant improvements across the business to rightsize our cost structure mostly evidenced in our highway services businesses as both (truckload) and (integrated capacity solutions) improved their operating margins compared to the prior year period," Kuhlow said on the call.

J.B. Hunt now expects net capital expenditures to be at roughly $625 million for 2024, down from its previous guidance range of $650 million to $700 million, according to Kuhlow. "Our update from the prior quarter largely reflects the sale of all the chassis that we acquired from Walmart (WMT), which will not fit the containers we've purchased following a retrofitting of those assets," the CFO added.

J.B. Hunt continues to face a challenging freight environment and is focusing on controlling costs, Chief Executive Shelley Simpson said on the call.

Price: 187.80, Change: +13.15, Percent Change: +7.53