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J.B. Hunt Transport Services, Inc. Reports Decline in First Quarter 2024 Financial Performance
LOWELL, AR, April 16, 2024 - J.B. Hunt Transport Services, Inc. (NASDAQ: JBHT), a major player in the North American transportation and logistics industry, has reported a downturn in its financial performance for the first quarter of 2024. The company announced its results under U.S. Generally Accepted Accounting Principles (GAAP) with significant year-over-year declines across key financial metrics.
Financial Summary
For the first quarter ended March 31, 2024, J.B. Hunt reported total operating revenue of $2.94 billion, a decrease of 9% from $3.23 billion in the first quarter of 2023. This decline in revenue was largely attributed to reduced segment gross revenue per load across its major services, including Intermodal (JBI) and Truckload (JBT), coupled with a substantial 22% drop in loads in Integrated Capacity Solutions (ICS).
Net earnings for the quarter stood at $127.5 million, compared to $197.8 million in the same period last year, reflecting a 35% decrease. Diluted earnings per share also fell sharply from $1.89 to $1.22.
Operating income saw a steep decline of 30%, dropping to $194.4 million from $277.5 million in the previous year. This decrease in operating income can be attributed to lower volumes and yield pressures in JBI, ICS, and JBT, exacerbated by higher expenses in equipment, insurance, and claims.
Segment Performance
Intermodal (JBI)
- Revenue: $1.40 billion, down 9%.
- Operating Income: $101.9 million, down 40%.
Despite flat volume growth, the Intermodal segment faced a decrease in revenue per load by 9%, driven by changes in the mix of freight, customer rates, and fuel surcharge revenue. The operating income as a percentage of gross revenue declined significantly due to increased costs in driver wages, benefits, and equipment maintenance.
Dedicated Contract Services (DCS)
- Revenue: $860 million, down 2%.
- Operating Income: $93.6 million, down 9%.
The slight decrease in revenue was due to a combined 1% drop in average trucks and a similar decline in productivity. Despite these challenges, productivity excluding fuel surcharges saw a marginal increase.
Integrated Capacity Solutions (ICS)
- Revenue: $285 million, down 26%.
- Operating Loss: $(17.5) million, worsened from $(5.4) million.
This segment experienced a significant reduction in volume and revenue, with contractual volume making up a smaller portion of total loads compared to last year. Gross profit margins improved slightly, although gross profit in absolute terms declined by 21%.
Final Mile Services (FMS)
- Revenue: $229 million, up 2%.
- Operating Income: $15.1 million, up 128%.
Revenue growth in FMS was modest but significant, driven by new contracts and improvements in the quality of business. The substantial increase in operating income includes benefits from a prior period claim settlement.
Truckload (JBT)
- Revenue: $178 million, down 13%.
- Operating Income: $1.2 million, down 75%.
Revenue and operating income in the Truckload segment both saw significant declines, influenced by a decrease in load volume and revenue per load, alongside increased costs.
Financial Health and Outlook
Net interest expense increased by about 6% due to higher effective interest rates and a consolidated debt balance, although this was partially offset by higher interest income. The effective income tax rate for the quarter rose to 28.7% from 24.7% the previous year due to discrete tax items.
As of March 31, 2024, J.B. Hunt had total outstanding debt of $1.37 billion, down from $1.58 billion at the end of 2023. Net capital expenditures for the quarter were $166 million, significantly lower than the $380 million spent in the first quarter of the previous year.
The company continues its shareholder return policy, having repurchased approximately 126,000 shares for about $25 million during the quarter.
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