J.B. Hunt Transport Services(JBHT) - 2024 Q2 - Quarterly Results

Q2 2024 Financial Highlights Overall Performance J.B. Hunt experienced a challenging Q2 2024 with a 7% revenue decline to $2.93 billion and a 24% operating income drop to $205.7 million, driven by lower volumes and increased operating costs | Financial Metric | Q2 2024 | Q2 2023 | Change | | :--- | :--- | :--- | :--- | | Total Operating Revenue | $2.93 billion | $3.13 billion | -7% | | Operating Income | $205.7 million | $270.7 million | -24% | | Net Earnings | $135.9 million | $189.6 million | -28% | | Diluted EPS | $1.32 | $1.81 | -27% | - The 7% decrease in total operating revenue was primarily caused by volume declines in Integrated Capacity Solutions (-25%), Truckload (-9%), and Dedicated Contract Services (-9%), along with a 5% decrease in gross revenue per load in the Intermodal segment[6] - Operating income reduction was attributed to lower revenue combined with increased expenses in insurance and claims, equipment, and certain personnel-related areas[1] - Net interest expense rose approximately 38% YoY due to higher effective interest rates and a larger consolidated debt balance[7] Segment Performance Intermodal (JBI) The Intermodal segment saw revenue decline 5% and operating income drop 31%, primarily due to a 1% volume decrease and a 5% reduction in revenue per load amid a soft freight market | Metric | Q2 2024 | Q2 2023 | Change | | :--- | :--- | :--- | :--- | | Segment Revenue | $1.41 billion | $1.49 billion | -5% | | Operating Income | $99.2 million | $142.9 million | -31% | - Overall intermodal volume decreased 1% YoY, with transcontinental loads increasing 4% while eastern network loads decreased 7%[2] - Gross revenue per load decreased by 5% (4% excluding fuel surcharge) due to changes in customer rates, fuel surcharge revenue, and freight mix[2] - Operating income decline was attributed to lower yields, underutilization of assets, and increased costs for wages, equipment maintenance, and insurance[8] Dedicated Contract Services (DCS) The DCS segment experienced a 4% revenue decline and 15% operating income drop, driven by a 1% decrease in average trucks and 3% lower productivity, alongside increased operating costs | Metric | Q2 2024 | Q2 2023 | Change | | :--- | :--- | :--- | :--- | | Segment Revenue | $851 million | $888 million | -4% | | Operating Income | $96.4 million | $113.6 million | -15% | - Revenue decline was caused by a 1% drop in average trucks and a 3% decrease in productivity (revenue per truck per week)[17] - The fleet had 339 fewer revenue-producing trucks compared to the prior-year period, with customer retention rates at approximately 88%, reflecting fleet downsizing[17] Integrated Capacity Solutions (ICS) The ICS segment saw a 21% revenue decline and a widened operating loss of $13.3 million, primarily due to a 25% volume decrease, despite a 5% increase in revenue per load | Metric | Q2 2024 | Q2 2023 | Change | | :--- | :--- | :--- | :--- | | Segment Revenue | $270 million | $344 million | -21% | | Operating Loss | $(13.3) million | $(4.4) million | N/A | - Overall segment volume decreased 25% YoY, while revenue per load increased 5%[18] - Gross profit margin improved to 14.8% from 13.0% in Q2 2023, reflecting intentional yield management and better capacity procurement[3] - The carrier base decreased by 24% YoY, largely due to changes in carrier qualification requirements to mitigate cargo theft[3] Final Mile Services (FMS) The FMS segment demonstrated strong performance with revenue increasing 5% to $235 million and operating income surging 33% to $19.8 million, driven by new contracts and cost management | Metric | Q2 2024 | Q2 2023 | Change | | :--- | :--- | :--- | :--- | | Segment Revenue | $235 million | $224 million | +5% | | Operating Income | $19.8 million | $14.8 million | +33% | - Revenue growth was driven by multiple new contracts implemented over the last year, partially offset by efforts to improve revenue quality and general market weakness[19] - Operating income included a $1.1 million net benefit from two offsetting claim settlements; excluding this, income still increased due to higher revenue and lower personnel and equipment costs[20] Truckload (JBT) The JBT segment's revenue declined 12% to $168 million and operating income decreased 7% to $3.5 million, primarily due to a 9% load volume drop and 4% lower revenue per load | Metric | Q2 2024 | Q2 2023 | Change | | :--- | :--- | :--- | :--- | | Segment Revenue | $168 million | $192 million | -12% | | Operating Income | $3.5 million | $3.8 million | -7% | - Revenue excluding fuel surcharge decreased 13%, driven by a 9% decline in load volume and a 4% decline in revenue per load excluding fuel[11] - The operating income decline was less severe than the revenue decline due to cost management initiatives, which improved the operating income as a percentage of gross revenue[12] Financial Statements & Data Condensed Consolidated Statements of Earnings Q2 2024 total operating revenues were $2.93 billion, a 7% decrease, with operating income falling to $205.7 million and net earnings to $135.9 million, or $1.32 per diluted share Q2 Statement of Earnings (in thousands, except per share data) | Metric | Three Months Ended June 30, 2024 | Three Months Ended June 30, 2023 | | :--- | :--- | :--- | | Total operating revenues | $2,928,685 | $3,132,623 | | Operating income | $205,709 | $270,712 | | Net earnings | $135,873 | $189,552 | | Diluted earnings per share | $1.32 | $1.81 | YTD Statement of Earnings (in thousands, except per share data) | Metric | Six Months Ended June 30, 2024 | Six Months Ended June 30, 2023 | | :--- | :--- | :--- | | Total operating revenues | $5,872,685 | $6,362,212 | | Operating income | $400,078 | $548,201 | | Net earnings | $263,366 | $387,320 | | Diluted earnings per share | $2.54 | $3.70 | Condensed Consolidated Balance Sheets As of June 30, 2024, total assets were $8.42 billion, total liabilities $4.34 billion, and shareholders' equity $4.08 billion, with cash and equivalents at approximately $54 million Balance Sheet Highlights (in thousands) | Account | June 30, 2024 | December 31, 2023 | | :--- | :--- | :--- | | Total current assets | $1,913,710 | $2,084,912 | | Net property and equipment | $5,833,493 | $5,773,913 | | Total Assets | $8,415,880 | $8,538,260 | | Total current liabilities | $1,581,460 | $1,779,421 | | Long-term debt | $1,483,804 | $1,326,107 | | Shareholders' equity | $4,075,996 | $4,103,758 | | Total Liabilities & Equity | $8,415,880 | $8,538,260 | Cash Flow and Capitalization Net cash from operating activities for H1 2024 was $827 million, a decrease from $1.1 billion, with net capital expenditures significantly reduced to $409 million and total debt at $1.48 billion Six Months Ended June 30 (in thousands) | Metric | 2024 | 2023 | | :--- | :--- | :--- | | Net cash provided by operating activities | $827,021 | $1,097,290 | | Net capital expenditures | $408,853 | $853,778 | - Total debt outstanding was approximately $1.48 billion as of June 30, 2024, compared to $1.45 billion a year prior and $1.58 billion at the end of 2023[21] - Cash and cash equivalents were approximately $54 million at the end of the second quarter[13] Operating Statistics by Segment Q2 2024 operating statistics reflected a soft freight environment, with Intermodal loads down 1%, Dedicated loads down 9%, ICS loads down 25%, Truckload loads down 9%, and FMS stops down 4% Q2 2024 vs Q2 2023 Key Operating Metrics | Segment | Metric | Q2 2024 | Q2 2023 | | :--- | :--- | :--- | :--- | | Intermodal | Loads | 497,446 | 501,681 | | Dedicated | Loads | 1,007,798 | 1,104,896 | | ICS | Loads | 145,362 | 194,635 | | Final Mile | Stops | 1,098,521 | 1,141,415 | | Truckload | Loads | 92,628 | 101,402 | Shareholder Activity Share Repurchase Program In Q2 2024, the company repurchased approximately 1.225 million shares for $203 million, with $163 million remaining under the share repurchase authorization - In Q2 2024, the company repurchased approximately 1,225,000 shares of common stock at a cost of around $203 million[14] - At the end of the quarter (June 30, 2024), approximately $163 million was still available under the existing share repurchase authorization[14]