LOWELL, Ark. – J.B. Hunt Transport Services, Inc. (NASDAQ: JBHT), a key player in Jb Hunt Transportation and logistics, has released its financial results for the third quarter of 2023. The report, based on U.S. Generally Accepted Accounting Principles (GAAP), reveals a net earnings of $187.4 million, or $1.80 diluted earnings per share (EPS). This is compared to the third quarter of 2022, which saw net earnings of $269.4 million, or $2.57 per diluted share.
The total operating revenue for the third quarter of 2023 reached $3.16 billion, marking an 18% decrease from the $3.84 billion reported in the same quarter of the previous year. Excluding fuel surcharge revenue, the decrease in total operating revenue was 15%. This downturn was primarily attributed to a reduction in revenue per load in the Intermodal (JBI) and Truckload (JBT) segments by 14% and 22% respectively (excluding fuel surcharges). Additionally, Integrated Capacity Solutions (ICS) experienced a significant volume decrease of 38%, Final Mile Services® (FMS) saw a 20% decrease in stops, and Dedicated Contract Services® (DCS®) faced a 1% decline in average revenue producing trucks. These negative impacts were partially mitigated by a 1% increase in JBI volumes and a 6% increase in JBT loads compared to the third quarter of 2022.
Operating income for the third quarter of 2023 also saw a significant decrease, falling by 33% to $241.7 million, compared to $362.2 million in the third quarter of 2022. This decrease is largely due to reduced revenue across all business segments, coupled with increased equipment-related costs and higher insurance and claims expenses compared to the same period last year. Furthermore, the third quarter of 2023 included an $8 million net loss from the sale of equipment, contrasting with a negligible net gain in the third quarter of 2022. The consolidated operating income as a percentage of gross revenue also declined year-over-year, influenced by higher driver and non-driver wages and benefits, as well as increased equipment-related and maintenance expenses relative to gross revenue. These increases were partially offset by lower purchased transportation costs for rail and truck as a percentage of gross revenue.
Net interest expense for the quarter saw a modest decrease compared to the third quarter of 2022. This was primarily due to the interest component of a discrete income tax benefit recognized in the current quarter, which was partially offset by a higher average debt balance and increased interest rates.
The effective income tax rate for the current quarter was 18.2%, a decrease from 22.7% in the third quarter of 2022. This reduction is attributed to the discrete benefit recognized in the current quarter. J.B. Hunt anticipates its annual tax rate for 2023 to be between 22.0% and 23.0%.
Strategic Acquisition and Segment Recast
In a strategic move to expand its service offerings, jb hunt transportation announced on September 14, 2023, a definitive agreement to acquire the brokerage operations of BNSF Logistics, LLC. This acquisition was successfully completed on September 30, 2023. The financial results from this acquisition will be incorporated into the ICS segment reporting starting in the fourth quarter.
Additionally, effective January 1, 2023, jb hunt transportation implemented a segment recast, transferring the majority of JBT’s company-owned trucking operations to DCS and moving its less-than-truckload brokerage operations from ICS to FMS. The segment information provided below reflects these operational transfers for comparable prior-year periods.
Segment Performance Breakdown
To provide a clearer picture of jb hunt transportation’s performance, here’s a detailed look at each segment:
Intermodal (JBI)
- Third Quarter 2023 Segment Revenue: $1.56 billion; down 15%
- Third Quarter 2023 Operating Income: $128.0 million; down 41%
Despite a challenging market, Intermodal volume saw a slight increase of 1% compared to the same period in 2022. This growth was driven by a 4% increase in transcontinental loads, offsetting a 3% decrease in eastern network loads. The demand for jb hunt transportation’s intermodal services improved throughout the quarter, bolstered by easing destocking trends, seasonal activities, and strong rail provider performance. However, the segment’s gross revenue decreased by 15% year-over-year. This was due to a 16% decrease in gross revenue per load, influenced by changes in freight mix, customer rates, and fuel surcharge revenue. Revenue per load excluding fuel surcharge revenue decreased by 14% year-over-year.
The operating income for the JBI segment decreased by 41%, primarily due to lower revenue, which was only partially offset by the positive impact of higher volume on network and equipment cost absorption. The operating income as a percentage of segment gross revenue declined due to increases in driver and non-driver wages and benefits, as well as higher equipment-related and maintenance expenses as a percentage of gross revenue. jb hunt transportation successfully added 906 net new pieces of trailing equipment during the quarter, ending with approximately 117,400 containers and 6,400 power units in its dray fleet.
Dedicated Contract Services (DCS)
- Third Quarter 2023 Segment Revenue: $892 million; down 4%
- Third Quarter 2023 Operating Income: $102.4 million; down 4%
The Dedicated Contract Services segment experienced a 4% decrease in revenue during the third quarter of 2023 compared to the same period in 2022. Productivity, measured as revenue per truck per week, decreased by approximately 2%. However, excluding fuel surcharge revenue, productivity increased by 2% year-over-year, primarily driven by contracted indexed-based price escalators. The fleet size decreased by a net of 370 revenue-producing trucks compared to the prior year, but increased by 31 trucks compared to the end of the second quarter of 2023. Customer retention rates remained strong at approximately 94%.
Operating income for DCS also decreased by 4%, attributed to higher equipment-related costs, insurance and claims expense, and a net $6.7 million year-over-year increase in loss on sale of equipment. These factors were partially offset by the maturation of new business acquired over the past twelve months.
Integrated Capacity Solutions (ICS)
- Third Quarter 2023 Segment Revenue: $298 million; down 48%
- Third Quarter 2023 Operating (Loss)/Income: $(9.4) million; vs. $13.4 million in Q3’22
Integrated Capacity Solutions faced a significant revenue decline of 48% compared to the third quarter of 2022. Overall segment volume decreased by 38% year-over-year, and revenue per load decreased by 17% due to lower contractual and transactional rates and changes in customer freight mix. Contractual volume constituted approximately 68% of total load volume and 67% of total revenue in the current quarter, compared to 49% and 52% respectively in the third quarter of 2022. Approximately $169 million of the reported ICS revenue was executed through the Marketplace for J.B. Hunt 360°®, a digital freight platform central to jb hunt transportation‘s technology strategy, compared to $391 million in the third quarter of 2022.
The segment reported an operating loss of $9.4 million, a stark contrast to the $13.4 million operating income in the third quarter of 2022. This shift is primarily due to lower gross profit, partially offset by reductions in personnel and technology costs. Gross profit decreased by 53% due to lower volume, revenue, and gross profit margins, which decreased to 12.8% in the current period from 14.2% in the prior period. ICS’s carrier base decreased by 17% year-over-year, largely due to changes in carrier qualification requirements.
Final Mile Services (FMS)
- Third Quarter 2023 Segment Revenue: $226 million; down 15%
- Third Quarter 2023 Operating Income: $13.0 million; up 33%
Final Mile Services experienced a 15% decrease in revenue compared to the same period in 2022. This was primarily driven by strategic efforts to improve revenue quality across the business portfolio and a general softening in demand across many end markets served. This revenue decline was partially offset by new customer contracts implemented over the past twelve months and improved revenue quality at underperforming accounts.
Despite the revenue decrease, FMS operating income increased by 33% compared to the prior-year period. This improvement is attributed to internal initiatives focused on enhancing revenue quality and managing costs effectively. The higher revenue quality was partially offset by increased equipment-related expenses, technology investments, and inflationary increases in facility rental expenses.
Truckload (JBT)
- Third Quarter 2023 Segment Revenue: $196 million; down 17%
- Third Quarter 2023 Operating Income: $7.7 million; down 48%
The Truckload segment’s gross revenue decreased by 17% compared to the third quarter of the previous year. Excluding fuel surcharge revenue, the decrease was 18%, primarily due to a 22% decline in gross revenue per load excluding fuel surcharge revenue. This was partially offset by a 6% increase in load volume. The total average effective trailer count increased by approximately 1,900 units, or 18% year-over-year. However, trailer turns decreased by 9% from the prior-year period, mainly due to freight mix and weaker overall freight demand compared to the third quarter of 2022.
JBT segment operating income decreased significantly by 48% to $7.7 million. This decline was primarily driven by the decrease in segment revenue. The segment’s operating income as a percentage of gross revenue also declined year-over-year due to higher purchased transportation expense, equipment-related and maintenance expense, insurance costs, and increased technology expense as a percentage of segment gross revenue. jb hunt transportation continues to leverage the J.B. Hunt 360 platform to expand third-party power capacity and capability for the 360box® service offering.
Financial Strength and Capital Management
As of September 30, 2023, jb hunt transportation reported a total of $1.4 billion outstanding on various debt instruments, compared to $1.2 billion at September 30, 2022, and $1.3 billion at December 31, 2022.
Net capital expenditures for the nine months ended September 30, 2023, were approximately $1.3 billion, compared to $1.0 billion for the same period in 2022. The company’s cash and cash equivalents stood at approximately $75 million as of September 30, 2023.
In the third quarter of 2023, jb hunt transportation demonstrated its commitment to shareholder value by purchasing approximately 267,000 shares of its common stock for around $51 million. As of September 30, 2023, approximately $416 million remained under its share repurchase authorization. The actual shares outstanding on September 30, 2023, were approximately 103.1 million.
Looking Ahead
While jb hunt transportation faced a challenging third quarter in 2023, the company is actively adapting to market conditions and investing in strategic areas for future growth. The acquisition of BNSF Logistics’ brokerage operations and the ongoing development of the J.B. Hunt 360 platform highlight jb hunt transportation’s proactive approach to enhancing its service offerings and technological capabilities. Despite current market headwinds, jb hunt transportation remains focused on its mission to create the most efficient transportation network in North America and deliver long-term value to its stakeholders.
(Please refer to the attached financial tables for detailed financial statements and operating statistics.)
[Include financial tables and operating statistics from the original document here, formatted in markdown tables as in the original.]
| J.B. HUNT TRANSPORT SERVICES, INC. |
|---|
| Condensed Consolidated Statements of Earnings |
| (in thousands, except per share data) |
| (unaudited) |
| Three Months Ended September 30 |
| 2023 |
| % Of |
| Amount |
| Operating revenues, excluding fuel surcharge revenues |
| Fuel surcharge revenues |
| Total operating revenues |
| Operating expenses |
| Rents and purchased transportation |
| Salaries, wages and employee benefits |
| Fuel and fuel taxes |
| Depreciation and amortization |
| Operating supplies and expenses |
| Insurance and claims |
| General and administrative expenses, net of asset dispositions |
| Operating taxes and licenses |
| Communication and utilities |
| Total operating expenses |
| Operating income |
| Net interest expense |
| Earnings before income taxes |
| Income taxes |
| Net earnings |
| Average diluted shares outstanding |
| Diluted earnings per share |
| J.B. HUNT TRANSPORT SERVICES, INC. |
| Condensed Consolidated Statements of Earnings |
| (in thousands, except per share data) |
| (unaudited) |
| Nine Months Ended September 30 |
| 2023 |
| % Of |
| Amount |
| Operating revenues, excluding fuel surcharge revenues |
| Fuel surcharge revenues |
| Total operating revenues |
| Operating expenses |
| Rents and purchased transportation |
| Salaries, wages and employee benefits |
| Fuel and fuel taxes |
| Depreciation and amortization |
| Operating supplies and expenses |
| Insurance and claims |
| General and administrative expenses, net of asset dispositions |
| Operating taxes and licenses |
| Communication and utilities |
| Total operating expenses |
| Operating income |
| Net interest expense |
| Earnings before income taxes |
| Income taxes |
| Net earnings |
| Average diluted shares outstanding |
| Diluted earnings per share |
| Financial Information By Segment | |
| (in thousands) | |
| (unaudited) | |
| Three Months Ended September 30 | |
| 2023 | 2022 |
| % Of | % Of |
| Amount | Total |
| Revenue | |
| Intermodal | $ |
| Dedicated | 892,257 |
| Integrated Capacity Solutions | 298,015 |
| Final Mile Services | 225,929 |
| Truckload | 196,338 |
| Subtotal | 3,167,921 |
| Intersegment eliminations | (4,168 |
| Consolidated revenue | $ |
| Operating income | |
| Intermodal | $ |
| Dedicated | 102,435 |
| Integrated Capacity Solutions | (9,375 |
| Final Mile Services | 12,975 |
| Truckload | 7,715 |
| Other (1) | (6 |
| Operating income | $ |
| Nine Months Ended September 30 | |
| 2023 | 2022 |
| % Of | % Of |
| Amount | Total |
| Revenue | |
| Intermodal | $ |
| Dedicated | 2,658,993 |
| Integrated Capacity Solutions | 1,026,480 |
| Final Mile Services | 674,945 |
| Truckload | 594,003 |
| Subtotal | 9,538,510 |
| Intersegment eliminations | (12,545 |
| Consolidated revenue | $ |
| Operating income | |
| Intermodal | $ |
| Dedicated | 318,610 |
| Integrated Capacity Solutions | (19,166 |
| Final Mile Services | 34,419 |
| Truckload | 16,503 |
| Other (1) | 62 |
| Operating income | $ |
| (1) Includes corporate support activity |
| Operating Statistics by Segment |
| (unaudited) |
| Three Months Ended September 30 |
| 2023 |
| Intermodal |
| Loads |
| Average length of haul |
| Revenue per load |
| Average tractors during the period * |
| Tractors (end of period) * |
| Trailing equipment (end of period) |
| Average effective trailing equipment usage |
| Dedicated |
| Loads |
| Average length of haul |
| Revenue per truck per week** |
| Average trucks during the period*** |
| Trucks (end of period) *** |
| Trailing equipment (end of period) |
| Average effective trailing equipment usage |
| Integrated Capacity Solutions |
| Loads |
| Revenue per load |
| Gross profit margin |
| Employee count (end of period) |
| Approximate number of third-party carriers (end of period) |
| Marketplace for J.B. Hunt 360 revenue (millions) |
| Final Mile Services |
| Stops |
| Average trucks during the period*** |
| Truckload |
| Loads |
| Revenue per load |
| Average length of haul |
| Tractors (end of period) |
| Company-owned |
| Independent contractor |
| Total tractors |
| Trailers (end of period) |
| Average effective trailing equipment usage |
| * Includes company-owned and independent contractor tractors |
| ** Using weighted workdays |
| *** Includes company-owned, independent contractor, and customer-owned trucks |
| Operating Statistics by Segment |
| (unaudited) |
| Nine Months Ended September 30 |
| 2023 |
| Intermodal |
| Loads |
| Average length of haul |
| Revenue per load |
| Average tractors during the period * |
| Tractors (end of period) * |
| Trailing equipment (end of period) |
| Average effective trailing equipment usage |
| Dedicated |
| Loads |
| Average length of haul |
| Revenue per truck per week** |
| Average trucks during the period*** |
| Trucks (end of period) *** |
| Trailing equipment (end of period) |
| Average effective trailing equipment usage |
| Integrated Capacity Solutions |
| Loads |
| Revenue per load |
| Gross profit margin |
| Employee count (end of period) |
| Approximate number of third-party carriers (end of period) |
| Marketplace for J.B. Hunt 360 revenue (millions) |
| Final Mile Services |
| Stops |
| Average trucks during the period*** |
| Truckload |
| Loads |
| Revenue per load |
| Average length of haul |
| Tractors (end of period) |
| Company-owned |
| Independent contractor |
| Total tractors |
| Trailers (end of period) |
| Average effective trailing equipment usage |
| * 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) |
| September 30, 2023 |
| ASSETS |
| Current assets: |
| Cash and cash equivalents |
| Accounts Receivable, net |
| Prepaid expenses and other |
| Total current assets |
| Property and equipment |
| Less accumulated depreciation |
| Net property and equipment |
| Other assets, net |
| $ |
| LIABILITIES & STOCKHOLDERS’ EQUITY |
| Current liabilities: |
| Current debt |
| Trade accounts payable |
| Claims accruals |
| Accrued payroll |
| Other accrued expenses |
| Total current liabilities |
| Long-term debt |
| Other long-term liabilities |
| Deferred income taxes |
| Stockholders’ equity |
| $ |
| Supplemental Data |
|---|
| (unaudited) |
| September 30, 2023 |
| Actual shares outstanding at end of period (000) |
| Book value per actual share outstanding at end of period |
| Nine Months Ended September 30 |
| 2023 |
| Net cash provided by operating activities (000) |
| Net capital expenditures (000) |
Brad Delco Senior Vice President – Finance (479) 820-2723
