LOWELL, Ark. — J.B. Hunt Transport Services has announced a fourth quarter 2023 U.S. GAAP (United States Generally Accepted Accounting Principles) net income of $153.5 million — or diluted earnings per share of $1.47 — versus fourth quarter 2022 net earnings of $201.3 million, or diluted earnings per share of $1.92.
Total operating revenue for the current quarter was $3.30 billion, compared with $3.65 billion for the fourth quarter 2022, a decrease of 9%, according to a news release.
Current quarter total operating revenue, excluding fuel surcharge revenue, decreased approximately 6% versus the comparable quarter 2022.
This decrease was primarily driven by a 12% and 7% decline in volume in Integrated Capacity Solutions (ICS) and Truckload (JBT) respectively, a 10% and 13% decline in revenue per load excluding fuel surcharge revenue in Intermodal (JBI) and JBT, respectively, and a 12% decline in stops in Final Mile Services (FMS).
Revenue, excluding fuel surcharge revenue, performance was positively offset by a 6% increase in volume in JBI, a 3% increase in productivity (revenue per truck per week excluding fuel surcharge revenue) in Dedicated Contract Services (DCS), and the revenue contribution from the acquisition of the brokerage assets of BNSF Logistics.
Operating income for the current quarter decreased 28% to $203.3 million versus $281.9 million for the fourth quarter 2022.
Current and prior quarter operating income was negatively impacted by pre-tax charges of $53.4 million and $64.0 million for insurance-related items, respectively.
Excluding these charges, operating income declined from the prior year period primarily due to yield pressure in JBI, ICS and JBT, higher equipment-related costs and increased insurance and claims expense.
In addition, fourth quarter 2023 included a $15.0 million net increase in loss on sale of equipment compared to the prior-year period.
On a consolidated basis, operating income as a percentage of consolidated gross revenue decreased year-over-year as a result of higher equipment-related cost and professional driver and non-driver wages and benefits as a percentage of gross revenue.
These items were partially offset by lower rail and truck purchased transportation costs as a percentage of gross revenue.
Net interest expense in the current quarter increased primarily from higher interest rates and a higher average outstanding debt balance compared to fourth quarter 2022. The fourth quarter effective tax rates for 2023 and 2022 were 17.9% and 25.7%, respectively.
The annual effective tax rates for 2023 and 2022 were 22.1% and 24.4%, respectively.
Company officials say they expect the 2024 annual tax rate to be between 24.0% and 25.0%.
Segment recast
On Jan. 1, 2023, the company transferred the majority of JBT’s company-owned trucking operations to DCS and transferred its less-than-truckload brokerage operations from ICS to FMS. The segment information discussed below adjusts the prior-year periods for these operational transfers between segments.
Segment information:
Intermodal (JBI)
- Fourth Quarter 2023 Segment Revenue: $1.62 billion, down 7%
- Fourth Quarter 2023 Operating Income: $129.9 million, down 28%
Intermodal volume increased 6% over the same period in 2022.
Transcontinental network loads increased 13%, while eastern network loads decreased 2% compared to the fourth quarter 2022. Year-over-year demand trends for the company’s intermodal service improved throughout the quarter largely driven by seasonal activity, that was absent in the prior-year period, and strong performance by the company’s rail providers during the quarter.
Revenue decreased 7% for the quarter versus the prior year primarily driven by a 13% decrease in revenue per load resulting from changes in mix of freight, customer rates and fuel surcharge revenue, partially offset by the 6% increase in volume. Revenue per load excluding fuel surcharge revenue was down 10% year-over-year.
Operating income decreased 28% in the fourth quarter. Fourth quarter 2023 and 2022 included $16.0 million and $21.8 million in pre-tax charges for insurance-related items, respectively.
Excluding these charges, operating income decreased primarily from lower yields, partially offset by higher volume. 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 and higher equipment-related and maintenance expenses as a percentage of gross revenue.
During the period the company onboarded approximately 800 new units of container capacity. The current period ended with 118,171 units of trailing capacity and approximately 6,400 power units in the dray fleet.
Dedicated contract services (DCS)
- Fourth Quarter 2023 Segment Revenue: $884 million, down 3%
- Fourth Quarter 2023 Operating Income: $86.1 million, up 8%
DCS revenue decreased 3% during the current quarter over the same period 2022, driven by a 2% decline in average trucks combined with a modest decline in productivity (revenue per truck per week).
Productivity, excluding fuel surcharge revenue, increased 3% from a year ago driven by increases in contracted indexed-based price escalators but partially offset by an increase in idled equipment.
On a net basis, there were 122 fewer revenue producing trucks in the fleet by the end of the quarter compared to the prior-year period, and 7 fewer versus the end of the third quarter 2023. Customer retention rates are approximately 93%, largely reflecting the downsizing of fleets and to a lesser extent account losses.
Operating income increased 8% from the prior year quarter. Fourth quarter 2023 and 2022 included $20.0 million and $18.7 million in pre-tax charges for insurance-related items, respectively.
Excluding these charges, operating income increased primarily from the maturing of new business onboarded over the trailing twelve months, lower maintenance cost, and greater productivity and utilization of equipment. These items were partially offset by higher equipment-related cost, a net $8.1 million increase in loss on sale of equipment, and increased bad debt expense.
Integrated capacity solutions (ICS)
- Fourth Quarter 2023 Segment Revenue: $364 million, down 25%
- Fourth Quarter 2023 Operating Loss: $(24.9) million: compared to $(3.2) million in 4Q’22
ICS revenue decreased 25% in the current quarter versus the fourth quarter 2022. Overall segment volume decreased 12% versus the prior-year period. Revenue per load decreased 15% compared to the fourth quarter 2022 due to lower contractual and transactional rates and changes in customer freight mix.
Contractual volume represented approximately 59% of the total load volume and 59% of the total revenue in the current quarter compared to 56% and 60%, respectively, in fourth quarter 2022.
Operating loss was $24.9 million compared to an operating loss of $3.2 million in the fourth quarter 2022. Fourth quarter 2023 and 2022 included $9.9 million and $15.1 million in pre-tax charges for insurance-related items, respectively.
Excluding these charges, operating performance declined largely due to a $24.3 million decrease in gross profit, higher leased equipment-related costs, and integration and transaction costs related to the purchase of the brokerage assets of BNSF Logistics.
These items were partially offset by lower personnel and technology costs. Gross profit declined 32% as a result of lower volume, revenue, and gross profit margins compared to the prior-year period. Gross profit margins decreased to 14.0% in the current period versus 15.6% in the prior period. ICS carrier base decreased 22% year-over-year, largely driven by changes to carrier qualification requirements.
Final mile Services (FMS)
- Fourth Quarter 2023 Segment Revenue: $243 million, down 9%
- Fourth Quarter 2023 Operating Income: $12.3 million, down 5%
FMS revenue declined 9% compared to the same period 2022. The decline was primarily driven by general weakness in demand across many of the end markets served, in addition to efforts to improve the overall business portfolio.
The decline in revenue was partially offset by improved revenue quality at underperforming accounts and multiple new customer contracts implemented over the past year.
Operating income decreased 5% compared to the prior-year period. Both fourth quarter 2023 and 2022 included $3.3 million in pre-tax charges for insurance-related items. Excluding these charges, operating income decreased primarily from lower revenue, increased equipment-related cost, and higher insurance and claims expense. These items were partially offset by lower personnel expense, maintenance cost, and bad debt expense.
Truckload (JBT)
- Fourth Quarter 2023 Segment Revenue: $195 million, down 19%
- Fourth Quarter 2023 Operating (Loss)/Income: $(39) thousand, compared to $12.9 million in 4Q’22
JBT revenue decreased 19% compared to the same period in the previous year. Revenue excluding fuel surcharge revenue decreased 19% primarily due to a 13% decline in revenue per load excluding fuel surcharge revenue and a 7% decline in load volume, partially offset by a 13% increase in average length of haul.
Total average effective trailer count increased by approximately 500 units, or 4% versus the prior-year period. Trailer turns in the quarter were down 10% from the prior period primarily due to changes in freight mix indicative of an increase in average length of haul and weaker overall freight demand as compared to the fourth quarter 2022.
JBT operating income decreased $12.9 million to a modest operating loss compared to the fourth quarter 2022. Fourth quarter 2023 and 2022 included $4.2 million and $5.1 million in pre-tax charges for insurance-related items, respectively.
Excluding these charges, operating income decreased primarily as a result of lower revenue combined with higher insurance and claims expense and loss on sale of equipment. JBT segment operating income as a percentage of segment gross revenue declined year-over-year due to higher purchased transportation expense, equipment-related expense, and insurance costs.
Cash flow and capitalization:
At Dec. 31, 2023, the company had total debt outstanding of $1.58 billion on various debt instruments compared to $1.26 billion at Dec. 31, 2022, and $1.45 billion at Sept. 30, 2023.
The company’s net capital expenditures for 2023 approximated $1.60 billion versus $1.43 billion in 2022. On Dec. 31, 2023, the company had cash and cash equivalents of $53 million.
In the fourth quarter of 2023, the company purchased approximately 137,000 shares of our common stock for approximately $25 million.
On Dec. 31, 2023, the company had approximately $392 million remaining under our share repurchase authorization. Actual shares outstanding on Dec. 31, 2023, approximated 103.2 million.
Born and raised in Little Rock, AR, Erica N. Guy decided to stay in her hometown to begin her professional career in journalism. Since obtaining her bachelor’s degree from UAPB, Erica has professionally written for several publications about several topics ranging from lifestyle, tech, culture, and entertainment, just to name a few. Continuing her love for her hometown, she joined our team in June 2023, where she is currently a staff writer. Her career goals include continuing storytelling through her writing by being the best professional writer she can be. In her spare time, Erica enjoys trying new foods, cozying up with a good book, spending time with family and friends, and establishing herself as a future businesswoman.
