J.B. Hunt Transport Services, Inc. Reports U.S. GAAP Revenues, Net Earnings and Earnings Per Share for the Second Quarter 2024

Rhea-AI Summary

J.B. Hunt Transport Services (NASDAQ: JBHT) reported a decline in financial performance for Q2 2024. Revenue decreased 7% to $2.93 billion, while operating income fell 24% to $205.7 million. Earnings per share dropped 27% to $1.32. The decline was primarily due to decreased revenue in Intermodal, Integrated Capacity Solutions, Truckload, and Dedicated Contract Services segments. Final Mile Services saw 5% revenue growth. The company faced challenges from a soft freight market, higher expenses, and underutilization of assets. Despite these headwinds, J.B. Hunt maintained a strong market position and continued to invest in its fleet, adding 1,862 new pieces of trailing equipment in Intermodal.

Positive

• Final Mile Services revenue grew 5% due to new contracts
• Added 1,862 new pieces of trailing equipment to Intermodal fleet
• Improved gross profit margins in Integrated Capacity Solutions segment to 14.8%
• Final Mile Services operating income increased 33%
• Maintained strong cash position with $54 million in cash and cash equivalents

Negative

• Overall revenue decreased 7% to $2.93 billion
• Operating income fell 24% to $205.7 million
• Earnings per share dropped 27% to $1.32
• Intermodal segment operating income decreased 31%
• Integrated Capacity Solutions reported an operating loss of $13.3 million
• Net interest expense increased 38% due to higher interest rates and debt balance

Insights

Financial Analyst

The financial results of J.B. Hunt Transport Services, Inc. for the second quarter of 2024 present several areas of concern and opportunity. Revenue decreased by 7%, from $3.13 billion to $2.93 billion and operating income dropped by an even steeper 24%. The decline in revenue across multiple segments highlights the overall soft market conditions.

One key point is the 27% drop in EPS, from $1.81 to $1.32, which signals weaker profitability. Seasonal demand was noted, but it wasn't sufficient to counterbalance the declines in key segments like Intermodal, Truckload and Dedicated Contract Services. Moreover, an increase in expenses, especially in insurance and claims, equipment and personnel-related costs, has squeezed margins further. This paints a picture of financial strain, mitigated slightly by cost management initiatives and improved gross profit margins in the ICS segment.

Investors should note that the company repurchased $203 million in shares, reflecting management’s confidence in long-term prospects. However, the increasing net interest expense due to higher interest rates and debt levels could pressure future earnings. Nonetheless, the reduction in net capital expenditures and the significant decrease in debt levels since December 2023 are positive signs of financial prudence.

Market Research Analyst

The decline in J.B. Hunt's various segments reflects broader market trends. The transport and logistics industry is experiencing a downturn, with a decrease in both volume and gross revenue per load in segments like Intermodal and Truckload. The 9% reduction in Truckload volume and 25% in Integrated Capacity Solutions indicate weaker overall market demand. Yet, the 5% growth in Final Mile Services (FMS) shows there are still pockets of resilience, driven by new contracts.

It's important for investors to understand that the soft freight market particularly affects the eastern network more than the transcontinental network. This is underscored by the 7% decrease in eastern network loads versus a 4% increase in transcontinental loads.

The challenges in the market are compounded by competitors who could be offering more competitive rates or services, pushing J.B. Hunt to adjust its pricing and business strategies accordingly. Additionally, the company's strategic adjustment to its carrier base within ICS, reducing it by 24% due to stricter qualification requirements, indicates a focus on quality and theft mitigation but also reflects a contraction in operational scale.

• Second Quarter 2024 Revenue: $2.93 billion; down 7%
• Second Quarter 2024 Operating Income: $205.7 million; down 24%
• Second Quarter 2024 EPS: $1.32 vs. $1.81; down 27%

LOWELL, Ark.--(BUSINESS WIRE)-- J.B. Hunt Transport Services, Inc. (NASDAQ: JBHT) announced second quarter 2024 U.S. GAAP (United States Generally Accepted Accounting Principles) net earnings of $135.9 million, or diluted earnings per share of $1.32 versus second quarter 2023 net earnings of $189.6 million, or $1.81 per diluted share.

Total operating revenue for the current quarter was $2.93 billion, compared with $3.13 billion for the second quarter 2023, a decrease of 7%. The decline in revenue was primarily driven by a 5% decrease in gross revenue per load in Intermodal (JBI) and a decline in load volume of 25% in Integrated Capacity Solutions (ICS), 9% in Truckload (JBT), and 9% in Dedicated Contract Services^® (DCS^®). These items were partially offset by Final Mile Services^® (FMS) revenue growth of 5%, primarily driven by new contracts implemented over the past year, and a 5% increase in revenue per load in ICS. Current quarter total operating revenue, excluding fuel surcharge revenue, decreased 6% versus the comparable quarter 2023.

Operating income for the current quarter decreased 24% to $205.7 million versus $270.7 million for the second quarter 2023. The decrease in operating income was primarily due to lower revenue, and higher insurance and claims, equipment-related, and certain personnel-related expenses. Operating income as a percentage of gross revenue decreased year-over-year as a result of the same aforementioned expense items, partially offset by lower rail and truck purchased transportation costs as a percentage of gross revenue.

Net interest expense for the current quarter increased approximately 38% from the second quarter 2023 due to higher effective interest rates and consolidated debt balance, partially offset by higher interest income.

The effective income tax rate was 26.8% in the current quarter compared to 26.0% in the second quarter 2023. We continue to expect our 2024 annual tax rate to be between 24.0% and 25.0%.

Segment Information:

Intermodal (JBI)

• Second Quarter 2024 Segment Revenue: $1.41 billion; down 5%
• Second Quarter 2024 Operating Income: $99.2 million; down 31%

Intermodal volume decreased 1% over the same period in 2023. Transcontinental network loads increased 4%, while eastern network loads decreased 7% compared to the second quarter 2023. While experiencing some seasonal build in demand through the quarter, overall performance continued to be pressured by the soft freight market and its impact on over-the-road truck competition in the eastern network. Segment gross revenue decreased 5% from the prior-year period, reflecting the 1% decrease in volume and a 5% decrease in gross revenue per load, resulting from changes in customer rates, fuel surcharge revenue, and the mix of freight. Revenue per load excluding fuel surcharge revenue decreased 4% year-over-year.

Operating income decreased 31% compared to the second quarter 2023 primarily from a combination of lower yields and the underutilization of assets in the network. JBI segment operating income as a percentage of segment gross revenue declined versus the prior-year period as a result of increases in professional driver and non-driver wages and benefits, ownership costs of underutilized equipment, higher equipment and maintenance expenses, and higher insurance and claims expense, as a percentage of gross revenue. During the period, we onboarded 1,862 new pieces of trailing equipment. We ended the quarter with approximately 121,200 containers and 6,200 power units in the dray fleet.

Dedicated Contract Services (DCS)

• Second Quarter 2024 Segment Revenue: $851 million; down 4%
• Second Quarter 2024 Operating Income: $96.4 million; down 15%

DCS revenue decreased 4% during the current quarter over the same period 2023 driven by a 1% decline in average trucks combined with a 3% decline in productivity (revenue per truck per week). Productivity excluding fuel surcharge revenue decreased 3% from a year ago driven primarily from lower utilization and increases in idled equipment, partially offset by contracted indexed-based price escalators. On a net basis, there were 339 fewer revenue-producing trucks in the fleet by the end of the quarter compared to the prior-year period and 365 fewer versus the end of the first quarter 2024. Customer retention rates are approximately 88%, largely reflecting downsizing of fleets and to a lesser extent account losses, as compared to the prior-year period.

Operating income decreased 15% from the prior-year quarter primarily from lower revenue, higher insurance and claims, equipment-related and bad debt expenses and higher new account start-up costs as compared to the prior-year period. These items were partially offset by lower maintenance costs and the maturing of new business onboarded over the past trailing twelve months.

Integrated Capacity Solutions (ICS)

• Second Quarter 2024 Segment Revenue: $270 million; down 21%
• Second Quarter 2024 Operating Loss: $(13.3) million; vs. $(4.4) million in Q2’23

ICS revenue declined 21% during the current quarter versus the second quarter 2023. Overall segment volume decreased 25% versus the prior-year period. Revenue per load increased 5% compared to the second quarter 2023 due to increases in both contractual and transactional rates as well as changes in customer mix. Contractual volume represented approximately 61% of the total load volume and 59% of the gross segment revenue in the current quarter compared to 66% and 64%, respectively, in second quarter 2023.

Operating loss was $13.3 million compared to an operating loss of $4.4 million in the second quarter 2023. The increase in operating loss was largely driven by a $4.9 million decrease in gross profit, higher insurance and claims costs, and integration and transition costs related to the purchase of the brokerage assets of BNSF Logistics. These items were partially offset by lower personnel-related expenses and reduced technology costs. Gross profit declined 11% versus the prior-year period as a result of lower revenue, despite gross profit margins improving to 14.8% compared to 13.0% in the prior-year period. This reflects intentional yield management and discipline during bid season and better execution on capacity procurement. The ICS carrier base decreased 24% year-over-year, largely driven by changes to carrier qualification requirements to mitigate cargo theft.

Final Mile Services (FMS)

• Second Quarter 2024 Segment Revenue: $235 million; up 5%
• Second Quarter 2024 Operating Income: $19.8 million; up 33%

FMS revenue increased 5% compared to the same period 2023. The increase was primarily driven by multiple new contracts implemented over the past year. This was partially offset by ongoing efforts to improve revenue quality and profitability across various accounts which resulted in some loss of business in addition to general weakness in demand across some of the end markets served.

Operating income increased 33% compared to the prior-year period. Second quarter 2024 included a $1.1 million net benefit from two offsetting claim settlements. Excluding this impact, operating income increased primarily from higher revenue and lower personnel, equipment-related, and bad debt expenses compared to the prior-year period. These items were partially offset by higher building maintenance expense and loss on sale of equipment as compared to the prior-year period.

Truckload (JBT)

• Second Quarter 2024 Segment Revenue: $168 million; down 12%
• Second Quarter 2024 Operating Income: $3.5 million; down 7%

JBT revenue decreased 12% compared to the same period in the previous year. Revenue excluding fuel surcharge revenue decreased 13% due to a 9% decline in load volume and a 4% decline in revenue per load excluding fuel surcharge revenue. Total average effective trailer count decreased by approximately 500 units, or 4% versus the prior-year period. Trailer turns in the quarter were down 5% from the prior period primarily due to weaker overall market demand compared to the second quarter 2023.

JBT operating income decreased 7% to $3.5 million compared to the second quarter 2023. The decrease in operating income was primarily driven by the decline in revenue. JBT segment operating income as a percentage of segment gross revenue improved slightly year-over-year as a result of overall cost management initiatives, partially offset by higher third-party capacity cost and insurance and claims expense as a percentage of gross revenue.

Cash Flow and Capitalization:

At June 30, 2024, we had approximately $1.48 billion outstanding on various debt instruments compared to $1.45 billion at June 30, 2023 and $1.58 billion at December 31, 2023.

Our net capital expenditures for the six months ended June 30, 2024 approximated $409 million compared to $854 million for the same period 2023. At June 30, 2024, we had cash and cash equivalents of approximately $54 million.

In the second quarter 2024, we purchased approximately 1,225,000 shares of common stock for approximately $203 million. At June 30, 2024, we had approximately $163 million remaining under our share repurchase authorization. Actual shares outstanding at June 30, 2024 approximated 102.0 million.

Conference Call Information:

The company will hold a conference call today from 4:00–5:00 p.m. CDT to discuss the quarterly earnings. Investors will have the opportunity to listen to the conference call live over the internet by going to investor.jbhunt.com. Please log on 15 minutes early to register, download and install any necessary audio software. For those who cannot listen to the live broadcast, an online replay of the earnings call webcast will be available a few hours after the completion of the call.

Forward-Looking Statements:

This press release may contain forward-looking statements, which are based on information currently available. Actual results may differ materially from those currently anticipated due to a number of factors, including, but not limited to, those discussed in Item 1A of our Annual Report filed on Form 10-K for the year ended December 31, 2023. We assume no obligation to update any forward-looking statement to the extent we become aware that it will not be achieved for any reason. This press release and additional information will be available to interested parties on our website, www.jbhunt.com.

About J.B. Hunt

J.B. Hunt’s vision is to create the most efficient transportation network in North America. The company’s industry-leading solutions and mode-neutral approach generate value for customers by eliminating waste, reducing costs and enhancing supply chain visibility. Powered by one of the largest company-owned fleets in the country and third-party capacity through its J.B. Hunt 360°® digital freight marketplace, J.B. Hunt can meet the unique shipping needs of any business, from first mile to final delivery, and every shipment in-between. Through disciplined investments in its people, technology and capacity, J.B. Hunt is delivering exceptional value and service that enable long-term growth for the company and its stakeholders.

J.B. Hunt Transport Services Inc. is a Fortune 500 company, an S&P 500 company and a component of the Dow Jones Transportation Average. Its stock trades on NASDAQ under the ticker symbol JBHT. J.B. Hunt Transport Inc. is a wholly owned subsidiary of JBHT. The company’s services include intermodal, dedicated, refrigerated, truckload, less-than-truckload, flatbed, single source, last mile, transload and more. For more information, visit www.jbhunt.com.

J.B. HUNT TRANSPORT SERVICES, INC.
Condensed Consolidated Statements of Earnings
(in thousands, except per share data)
(unaudited)
		Three Months Ended June 30
		2024						2023
				% Of						% Of
		Amount		Revenue				Amount		Revenue
Operating revenues, excluding fuel surcharge revenues	$	2,545,023					$	2,707,560
Fuel surcharge revenues		383,662						425,063
Total operating revenues		2,928,685		100.0	%			3,132,623		100.0	%
Operating expenses
Rents and purchased transportation		1,274,011		43.5	%			1,404,586		44.8	%
Salaries, wages and employee benefits		803,047		27.4	%			821,876		26.2	%
Depreciation and amortization		184,658		6.3	%			179,972		5.7	%
Fuel and fuel taxes		164,291		5.6	%			171,846		5.5	%
Operating supplies and expenses		120,425		4.1	%			128,949		4.1	%
General and administrative expenses, net of asset dispositions		74,707		2.6	%			61,472		2.1	%
Insurance and claims		73,222		2.5	%			63,893		2.1	%
Operating taxes and licenses		17,575		0.6	%			18,951		0.6	%
Communication and utilities		11,040		0.4	%			10,366		0.3	%
Total operating expenses		2,722,976		93.0	%			2,861,911		91.4	%
Operating income		205,709		7.0	%			270,712		8.6	%
Net interest expense		20,198		0.7	%			14,604		0.4	%
Earnings before income taxes		185,511		6.3	%			256,108		8.2	%
Income taxes		49,638		1.7	%			66,556		2.1	%
Net earnings	$	135,873		4.6	%		$	189,552		6.1	%
Average diluted shares outstanding		103,146						104,566
Diluted earnings per share	$	1.32					$	1.81

J.B. HUNT TRANSPORT SERVICES, INC.
Condensed Consolidated Statements of Earnings
(in thousands, except per share data)
(unaudited)
		Six Months Ended June 30
		2024						2023
				% Of						% Of
		Amount		Revenue				Amount		Revenue
Operating revenues, excluding fuel surcharge revenues	$	5,097,508					$	5,450,070
Fuel surcharge revenues		775,177						912,142
Total operating revenues		5,872,685		100.0	%			6,362,212		100.0	%
Operating expenses
Rents and purchased transportation		2,554,998		43.5	%			2,872,384		45.1	%
Salaries, wages and employee benefits		1,610,931		27.4	%			1,646,875		25.9	%
Depreciation and amortization		367,655		6.3	%			355,784		5.6	%
Fuel and fuel taxes		337,817		5.8	%			367,680		5.8	%
Operating supplies and expenses		243,416		4.1	%			257,308		4.0	%
General and administrative expenses, net of asset dispositions		151,490		2.6	%			121,879		2.0	%
Insurance and claims		148,908		2.5	%			134,221		2.1	%
Operating taxes and licenses		35,110		0.6	%			37,058		0.6	%
Communication and utilities		22,282		0.4	%			20,822		0.3	%
Total operating expenses		5,472,607		93.2	%			5,814,011		91.4	%
Operating income		400,078		6.8	%			548,201		8.6	%
Net interest expense		35,847		0.6	%			29,393		0.4	%
Earnings before income taxes		364,231		6.2	%			518,808		8.2	%
Income taxes		100,865		1.7	%			131,488		2.1	%
Net earnings	$	263,366		4.5	%		$	387,320		6.1	%
Average diluted shares outstanding		103,626						104,647
Diluted earnings per share	$	2.54					$	3.70

Financial Information By Segment
(in thousands)
(unaudited)
		Three Months Ended June 30
		2024							2023
					% Of							% Of
		Amount			Total				Amount			Total
Revenue
Intermodal	$	1,407,496			48	%		$	1,489,148			48	%
Dedicated		851,010			29	%			887,593			28	%
Integrated Capacity Solutions		270,378			9	%			343,691			11	%
Final Mile Services		235,290			8	%			223,939			7	%
Truckload		168,095			6	%			191,803			6	%
Subtotal		2,932,269			100	%			3,136,174			100	%
Intersegment eliminations		(3,584	)		(0	%)			(3,551	)		(0	%)
Consolidated revenue	$	2,928,685			100	%		$	3,132,623			100	%
Operating income
Intermodal	$	99,244			48	%		$	142,860			53	%
Dedicated		96,410			47	%			113,615			42	%
Integrated Capacity Solutions		(13,287	)		(7	%)			(4,419	)		(2	%)
Final Mile Services		19,778			10	%			14,824			5	%
Truckload		3,549			2	%			3,798			2	%
Other (1)		15			0	%			34			0	%
Operating income	$	205,709			100	%		$	270,712			100	%
		Six Months Ended June 30
		2024							2023
					% Of							% Of
		Amount			Total				Amount			Total
Revenue
Intermodal	$	2,802,846			48	%		$	3,028,707			48	%
Dedicated		1,711,026			29	%			1,766,735			28	%
Integrated Capacity Solutions		555,665			9	%			728,465			11	%
Final Mile Services		464,570			8	%			449,016			7	%
Truckload		346,407			6	%			397,665			6	%
Subtotal		5,880,514			100	%			6,370,588			100	%
Intersegment eliminations		(7,829	)		(0	%)			(8,376	)		(0	%)
Consolidated revenue	$	5,872,685			100	%		$	6,362,212			100	%
Operating income
Intermodal	$	201,133			50	%		$	311,518			57	%
Dedicated		190,060			48	%			216,175			39	%
Integrated Capacity Solutions		(30,828	)		(8	%)			(9,791	)		(2	%)
Final Mile Services		34,864			9	%			21,444			4	%
Truckload		4,778			1	%			8,788			2	%
Other (1)		71			0	%			67			0	%
Operating income	$	400,078			100	%		$	548,201			100	%
(1) Includes corporate support activity

Operating Statistics by Segment
(unaudited)
		Three Months Ended June 30
		2024				2023
Intermodal
Loads		497,446				501,681
Average length of haul		1,689				1,655
Revenue per load	$	2,829			$	2,968
Average tractors during the period *		6,209				6,517
Tractors (end of period) *		6,162				6,491
Trailing equipment (end of period)		121,169				116,481
Average effective trailing equipment usage		98,350				95,815
Dedicated
Loads		1,007,798				1,104,896
Average length of haul		182				172
Revenue per truck per week**	$	5,004			$	5,182
Average trucks during the period***		13,142				13,236
Trucks (end of period) ***		12,889				13,228
Trailing equipment (end of period)		31,802				31,280
Average effective trailing equipment usage		32,461				31,979
Integrated Capacity Solutions
Loads		145,362				194,635
Revenue per load	$	1,860			$	1,766
Gross profit margin		14.8	%			13.0	%
Employee count (end of period)		708				769
Approximate number of third-party carriers (end of period)		109,200				144,600
Marketplace for J.B. Hunt 360 revenue (millions)	$	104.1			$	225.0
Final Mile Services
Stops		1,098,521				1,141,415
Average trucks during the period***		1,374				1,551
Truckload
Loads		92,628				101,402
Revenue per load	$	1,815			$	1,892
Average length of haul		646				659
Tractors (end of period)
Company-owned		23				33
Independent contractor		1,874				2,035
Total tractors		1,897				2,068
Trailers (end of period)		13,299				13,851
Average effective trailing equipment usage		12,600				13,108
* Includes company-owned and independent contractor tractors
** Using weighted workdays
*** Includes company-owned, independent contractor, and customer-owned trucks

Operating Statistics by Segment
(unaudited)
		Six Months Ended June 30
		2024				2023
Intermodal
Loads		982,612				987,772
Average length of haul		1,689				1,653
Revenue per load	$	2,852			$	3,066
Average tractors during the period *		6,277				6,558
Tractors (end of period) *		6,162				6,491
Trailing equipment (end of period)		121,169				116,481
Average effective trailing equipment usage		97,231				96,061
Dedicated
Loads		2,012,135				2,182,268
Average length of haul		181				172
Revenue per truck per week**	$	5,012			$	5,120
Average trucks during the period***		13,220				13,353
Trucks (end of period) ***		12,889				13,228
Trailing equipment (end of period)		31,802				31,280
Average effective trailing equipment usage		32,728				31,679
Integrated Capacity Solutions
Loads		303,609				397,166
Revenue per load	$	1,830			$	1,834
Gross profit margin		14.5	%			13.3	%
Employee count (end of period)		708				769
Approximate number of third-party carriers (end of period)		109,200				144,600
Marketplace for J.B. Hunt 360 revenue (millions)	$	209.6			$	475.6
Final Mile Services
Stops		2,175,210				2,303,553
Average trucks during the period***		1,391				1,601
Truckload
Loads		186,313				200,186
Revenue per load	$	1,859			$	1,986
Average length of haul		662				650
Tractors (end of period)
Company-owned		23				33
Independent contractor		1,874				2,035
Total tractors		1,897				2,068
Trailers (end of period)		13,299				13,851
Average effective trailing equipment usage		12,746				13,118
* Includes company-owned and independent contractor tractors
** Using weighted workdays
*** Includes company-owned, independent contractor, and customer-owned trucks

J.B. HUNT TRANSPORT SERVICES, INC.
Condensed Consolidated Balance Sheets
(in thousands)
(unaudited)
		June 30, 2024			December 31, 2023
ASSETS
Current assets:
Cash and cash equivalents	$	53,505		$	53,344
Accounts Receivable, net		1,251,665			1,334,912
Prepaid expenses and other		608,540			696,656
Total current assets		1,913,710			2,084,912
Property and equipment		9,007,510			8,767,872
Less accumulated depreciation		3,174,017			2,993,959
Net property and equipment		5,833,493			5,773,913
Other assets, net		668,677			679,435
	$	8,415,880		$	8,538,260
LIABILITIES & SHAREHOLDERS' EQUITY
Current liabilities:
Current debt	$	-		$	249,961
Trade accounts payable		724,862			737,364
Claims accruals		594,482			547,277
Accrued payroll		111,234			94,563
Other accrued expenses		150,882			150,256
Total current liabilities		1,581,460			1,779,421
Long-term debt		1,483,804			1,326,107
Other long-term liabilities		394,494			392,766
Deferred income taxes		880,126			936,208
Shareholders' equity		4,075,996			4,103,758
	$	8,415,880		$	8,538,260
Supplemental Data
(unaudited)
		June 30, 2024			December 31, 2023
Actual shares outstanding at end of period (000)		101,987			103,220
Book value per actual share outstanding at end of period	$	39.97		$	39.76
		Six Months Ended June 30
		2024			2023
Net cash provided by operating activities (000)	$	827,021		$	1,097,290
Net capital expenditures (000)	$	408,853		$	853,778

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20240716256509/en/

Brad Delco

Senior Vice President – Finance

(479) 820-2723

Source: J.B. Hunt Transport Services, Inc.

FAQ

What was J.B. Hunt's (JBHT) revenue for Q2 2024?

J.B. Hunt reported revenue of $2.93 billion for Q2 2024, representing a 7% decrease compared to the same period in 2023.

How did J.B. Hunt's (JBHT) earnings per share (EPS) change in Q2 2024?

J.B. Hunt's earnings per share (EPS) decreased by 27% to $1.32 in Q2 2024, compared to $1.81 in Q2 2023.

Which segment of J.B. Hunt (JBHT) showed growth in Q2 2024?

The Final Mile Services (FMS) segment of J.B. Hunt showed growth, with revenue increasing by 5% and operating income rising by 33% in Q2 2024.

What factors contributed to J.B. Hunt's (JBHT) decline in performance in Q2 2024?

J.B. Hunt's decline in performance was primarily due to a soft freight market, decreased revenue in multiple segments, higher expenses, and underutilization of assets in the network.