J.B. Hunt Transport Services(JBHT) - 2025 Q2 - Quarterly Report

Part I. Financial Information Item 1. Financial Statements The financial statements for the period ended June 30, 2025, show a slight year-over-year decrease in total operating revenues and net earnings for both the three and six-month periods, with a minor contraction in total assets and shareholders' equity compared to year-end 2024, while cash flow from operations remained strong but slightly lower than the prior year, and significant financing activities included a new senior note issuance, repayment of term loans, and substantial share repurchases Condensed Consolidated Statements of Earnings For the second quarter of 2025, total operating revenues were nearly flat at $2.93 billion, while net earnings decreased by 5.3% to $128.6 million compared to the same period in 2024, with diluted earnings per share falling slightly to $1.31 from $1.32, and for the six-month period, revenues saw a minor decline, and net earnings dropped 6.5% to $246.4 million Consolidated Earnings Summary (in thousands, except per share amounts) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Total operating revenues | $2,928,181 | $2,928,685 | $5,849,573 | $5,872,685 | | Operating income | $197,274 | $205,709 | $375,954 | $400,078 | | Net earnings | $128,624 | $135,873 | $246,364 | $263,366 | | Diluted earnings per share | $1.31 | $1.32 | $2.48 | $2.54 | Condensed Consolidated Balance Sheets As of June 30, 2025, total assets stood at $8.24 billion, a slight decrease from $8.31 billion at December 31, 2024, with the decline primarily reflected in shareholders' equity, which fell to $3.66 billion from $4.01 billion, largely due to share repurchases Balance Sheet Summary (in thousands) | Account | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Total current assets | $1,686,822 | $1,770,983 | | Net property and equipment | $5,750,531 | $5,729,799 | | Total assets | $8,241,134 | $8,312,270 | | Total current liabilities | $1,933,194 | $1,678,040 | | Long-term debt | $1,019,925 | $977,702 | | Total liabilities | $4,585,804 | $4,297,765 | | Shareholders' equity | $3,655,330 | $4,014,505 | Condensed Consolidated Statements of Cash Flows For the first six months of 2025, net cash from operating activities was $806.2 million, a slight decrease from $827.0 million in the prior year, while net cash used in investing activities was stable at $399.1 million, and financing activities used $403.2 million, driven by $552.9 million in treasury stock purchases, partially offset by net proceeds from debt activities Cash Flow Summary for Six Months Ended June 30 (in thousands) | Cash Flow Activity | 2025 | 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $806,245 | $827,021 | | Net cash used in investing activities | ($399,079) | ($405,068) | | Net cash used in financing activities | ($403,248) | ($421,792) | | Net change in cash and cash equivalents | $3,918 | $161 | Notes to Condensed Consolidated Financial Statements Key notes detail the company's financing arrangements, capital stock activities, and segment performance, including the issuance of $750 million in new senior notes and repayment of $500 million in term loans, along with $552.9 million in common stock repurchases in the first half of 2025, showing varied segment results where Intermodal (JBI) and Dedicated Contract Services (DCS) remain primary profit drivers, and Integrated Capacity Solutions (ICS) narrowed its operating loss - The company issued $750 million of 4.90% senior notes due 2030 in March 2025 and paid off the entire outstanding balance of its term loans in the same month[26][27] - During the first six months of 2025, the company purchased approximately 3,824,000 shares of its common stock for $552.9 million, with $334.7 million remaining available under the share repurchase authorization as of June 30, 2025[29] Segment Operating Income for Q2 (in millions) | Segment | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | JBI | $95.7 | $99.2 | | DCS | $93.7 | $96.4 | | ICS | ($3.6) | ($13.3) | | FMS | $8.0 | $19.8 | | JBT | $3.4 | $3.5 | Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management reports that consolidated operating revenues were flat in Q2 2025 compared to Q2 2024, while operating income declined 4.1% due to rising costs, notably in insurance and claims, with mixed segment performance where Intermodal (JBI) saw volume growth offset by lower revenue per load, Dedicated (DCS) revenue was flat, and Integrated Capacity Solutions (ICS) significantly reduced its operating loss, all while the company maintains strong liquidity, having issued new debt to repay existing loans and continued its share repurchase program, with full-year 2025 net capital expenditures projected between $550 million and $650 million Results of Operations - Q2 2025 vs Q2 2024 In Q2 2025, consolidated revenue was flat at $2.93 billion, while operating income fell 4.1% to $197.3 million, with JBI revenue growing 2% on 6% higher volume but its operating income falling 4%, DCS revenue remaining flat with operating income down 3%, ICS narrowing its operating loss from $13.3 million to $3.6 million despite a 4% revenue decline due to improved gross profit margins, and FMS revenue and operating income declining significantly, while JBT revenue increased 5% but operating income was slightly down Segment Results for Three Months Ended June 30 (in millions) | Segment | Operating Revenues 2025 | Operating Revenues 2024 | Operating Income 2025 | Operating Income 2024 | | :--- | :--- | :--- | :--- | :--- | | JBI | $1,438 | $1,408 | $95.7 | $99.2 | | DCS | $847 | $851 | $93.7 | $96.4 | | ICS | $260 | $270 | ($3.6) | ($13.3) | | FMS | $211 | $235 | $8.0 | $19.8 | | JBT | $177 | $168 | $3.4 | $3.5 | - Consolidated operating expenses increased, driven by a 15.9% rise in Insurance and claims expense and a 6.5% increase in Operating supplies and expenses, which pressured operating income[57][62] Results of Operations - H1 2025 vs H1 2024 For the first six months of 2025, consolidated revenue decreased 0.4% to $5.85 billion, and operating income fell 6.0% to $376.0 million, with JBI revenue increasing 4% on 7% volume growth but operating income decreasing 5%, DCS revenue and operating income both declining, ICS significantly reducing its operating loss to $6.2 million from $30.8 million in the prior year, FMS operating income seeing a sharp decline, and JBT operating income slightly increasing Segment Results for Six Months Ended June 30 (in millions) | Segment | Operating Revenues 2025 | Operating Revenues 2024 | Operating Income 2025 | Operating Income 2024 | | :--- | :--- | :--- | :--- | :--- | | JBI | $2,907 | $2,803 | $190.1 | $201.1 | | DCS | $1,669 | $1,711 | $174.0 | $190.1 | | ICS | $528 | $556 | ($6.2) | ($30.8) | | FMS | $411 | $465 | $12.7 | $34.9 | | JBT | $344 | $346 | $5.4 | $4.8 | - Insurance and claims expense for the six-month period increased by 14.1% year-over-year, primarily due to higher claim severity and increased insurance premiums[71][75] Liquidity and Capital Resources The company maintains a strong liquidity position with $806.2 million in operating cash flow for the first half of 2025, with key capital activities including issuing $750 million in senior notes, retiring $500 million in term loans, and spending $399.1 million on net capital expenditures, and the company expects full-year 2025 net capital expenditures to be in the range of $550 million to $650 million and was in compliance with all debt covenants - Net cash from operations was $806.2 million for the first six months of 2025, compared to $827 million in 2024[77] - The company has a $1.0 billion revolving line of credit expiring in September 2027, with $278.3 million outstanding as of June 30, 2025[79] - The forecast for full-year 2025 net capital expenditures is between $550 million and $650 million[82] Item 3. Quantitative and Qualitative Disclosures About Market Risk The company's primary market risks are related to interest rates and diesel fuel prices, where a one-percentage-point increase in interest rates on its variable-rate debt would reduce annual pretax earnings by $2.8 million, and fuel price volatility is largely managed through customer fuel surcharges, with foreign currency risk not considered material - A one-percentage-point increase in the applicable rate on variable-rate debt would reduce annual pretax earnings by $2.8 million at the current borrowing level[87] - The company manages fuel price fluctuations primarily through fuel surcharges passed on to customers, but cannot guarantee full recovery of price increases[89] Item 4. Controls and Procedures Based on an evaluation as of June 30, 2025, the company's Chief Executive Officer and Chief Financial Officer concluded that disclosure controls and procedures were effective, with no material changes to internal control over financial reporting during the second quarter of 2025 - Management concluded that the company's disclosure controls and procedures were effective as of June 30, 2025[91] Part II. Other Information Item 1. Legal Proceedings The company is involved in routine claims and litigation arising from normal business operations but believes their resolution will not have a material adverse effect on its financial condition, results, or liquidity - The company does not expect pending litigation to have a material adverse effect on its financial condition or results of operations[94] Item 1A. Risk Factors This section refers to the risk factors detailed in the company's 2024 Annual Report on Form 10-K and within the MD&A section of this report, with key risks including economic conditions, competition, reliance on third-party rail providers, fuel costs, driver attraction and retention, customer concentration, and information technology system disruptions - Key industry risks include economic conditions, competition, dependence on third parties like rail service providers, fuel cost volatility, and difficulty in attracting and retaining drivers[85] - Key business risks include operating in a highly competitive industry, reliance on a few major customers, potential for litigation, and dependence on information technology systems[90] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds The company issued 14,033 shares of common stock to non-employee directors in April 2025, and during the second quarter of 2025, it repurchased 2,410,498 shares of its common stock for a total of approximately $318.8 million, with about $335 million remaining available for future repurchases under the authorized plan as of June 30, 2025 Purchases of Equity Securities (Q2 2025) | Period | Common Shares Purchased | Average Price Paid Per Share | | :--- | :--- | :--- | | April 2025 | 1,820,898 | $131.59 | | May 2025 | 589,600 | $134.29 | | June 2025 | - | - | | Total | 2,410,498 | $132.25 | - The company's Board of Directors authorized a $1 billion stock repurchase program on August 16, 2024, which has no expiration date[97] Other Items (3, 4, 5, 6) This section confirms there were no defaults upon senior securities (Item 3) and that mine safety disclosures are not applicable (Item 4), with no directors or officers adopting or terminating Rule 10b5-1 trading arrangements during the quarter (Item 5), and a list of exhibits filed with the report is also provided (Item 6)