J.B. Hunt shares dropped more than 10% after the trucking company warned that third-quarter earnings will fall 5% to 10% from the second quarter. The company's CFO pointed to rising hiring costs and unusually volatile fuel prices as the drivers behind the warning.
J.B. Hunt shares plunged more than 10% on Wednesday after the trucking company said it expects earnings to drop in the third quarter. CFO Brad Delco told investors at the Morgan Stanley Industrials conference that the company now expects Q2-to-Q3 earnings to fall 5% to 10%.
Delco attributed part of the drop to recruiting, advertising, onboarding, training and sign-on bonus costs, which he said will add about $25 million more in the third quarter compared with the second quarter. He said the added spending reflects the company positioning itself for growth.
Fuel costs added further pressure. According to CFO Brad Delco: "some of the most radical and abnormal swings" in fuel prices the company has ever seen, alongside record-high diesel prices, are causing at least a $10 million headwind. Still, Delco said he expects volumes to improve sequentially and framed the earnings pressure as more of a timing issue.
Delco also said J.B. Hunt is working to repair its margins, though he believes the company still has a long way to go. Despite Wednesday's drop, J.B. Hunt stock has risen nearly 100% over the past year.
Source: US Top News and Analysis
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