What changed in this filing

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Item 1. Financial Statements

2024-10-25 compared with 2024-07-26 · 178 added, 157 removed, 389 unchanged (46% of the section changed)

4 unchanged sentences

Three Months Ended

Six Months Ended

Nine Months Ended

September 30,

Operating revenues, excluding fuel surcharge revenues

7 unchanged sentences

Operating supplies and expenses

General and administrative expenses, net of asset dispositions

Insurance and claims

General and administrative expenses, net of asset dispositions

Operating taxes and licenses

12 unchanged sentences

(in thousands)

June 30, 2024

September 30, 2024

December 31, 2023

8 unchanged sentences

Goodwill and intangible assets, net

LIABILITIES AND SHAREHOLDERS' EQUITY

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:

8 unchanged sentences

Deferred income taxes

Shareholders' equity

Total liabilities and shareholders' equity

Stockholders' equity

Total liabilities and stockholders' equity

See Notes to Condensed Consolidated Financial Statements.

HUNT TRANSPORT SERVICES, INC.

Condensed Consolidated Statements of Shareholders' Equity

Condensed Consolidated Statements of Stockholders' Equity

(in thousands, except per share amounts)

Three Months Ended June 30, 2023 and 2024

Shareholders’

Balances at March 31, 2023

Three Months Ended September 30, 2024 and 2023

Stockholders’

Balances at June 30, 2023

Comprehensive income:

3 unchanged sentences

Restricted share issuances, net of stock repurchased for payroll taxes and other

Balances at September 30, 2023

Balances at June 30, 2024

Balances at March 31, 2024

Comprehensive income:

3 unchanged sentences

Restricted share issuances, net of stock repurchased for payroll taxes and other

Balances at June 30, 2024

Six Months Ended June 30, 2023 and 2024

Shareholders’

Balances at September 30, 2024

Nine Months Ended September 30, 2024 and 2023

Stockholders’

Balances at December 31, 2022

4 unchanged sentences

Restricted share issuances, net of stock repurchased for payroll taxes and other

Balances at June 30, 2023

Balances at September 30, 2023

Balances at December 31, 2023

4 unchanged sentences

Restricted share issuances, net of stock repurchased for payroll taxes and other

Balances at June 30, 2024

Balances at September 30, 2024

See Notes to Condensed Consolidated Financial Statements.

2 unchanged sentences

(in thousands)

Six Months Ended June 30,

Nine Months Ended September 30,

Cash flows from operating activities:

3 unchanged sentences

Share-based compensation

Loss on sale of revenue equipment and other

Net loss on sale of revenue equipment and other assets

Deferred income taxes

8 unchanged sentences

Additions to property and equipment

Net proceeds from sale of equipment

Business acquisition

Proceeds from sale of equipment

Proceeds from sale of investment

Business acquisitions

Net cash used in investing activities

6 unchanged sentences

Dividends paid

Net cash provided by/(used in) financing activities

Net cash used in financing activities

Net change in cash and cash equivalents

38 unchanged sentences

Diluted earnings per share reflects the potential dilution that could occur if holders of unvested restricted and performance share units converted their holdings into common stock.

The dilutive effect of restricted and performance share units was 0.8 million shares during the three and six months ended June 30, 2024, compared to 1.0 million shares during the three and six months ended June 30, 2023.

The dilutive effect of restricted and performance share units was 0.8 million shares during the three and nine months ended September 30, 2024, compared to 1.1 million and 1.0 million shares during the three and nine months ended September 30, 2023.

Share-based Compensation

1 unchanged sentence

Three Months Ended

Six Months Ended

September 30,

Nine Months Ended

September 30,

Restricted share units:

4 unchanged sentences

Performance share unit expense, net of tax

As of June 30, 2024, we had $ 75.1 million and $ 39.7 million of total unrecognized compensation expense related to restricted share units and performance share units, respectively, that is to be recognized over the remaining weighted average period of approximately 2.6 years for restricted share units and 2.3 years for performance share units.

During the six months ended June 30, 2024, we issued 36,860 shares for vested restricted share units and 138,115 shares for vested performance share units.

Of this total, 4,477 shares for vested restricted share units and zero shares for vested performance share units were issued during the second quarter 2024.

As of September 30, 2024, we had $ 67.2 million and $ 34.6 million of total unrecognized compensation expense related to restricted share units and performance share units, respectively, that is to be recognized over the remaining weighted average period of approximately 3.0 years for restricted share units and 2.2 years for performance share units.

During the nine months ended September 30, 2024, we issued 104,033 shares for vested restricted share units and 138,115 shares for vested performance share units.

Of this total, 67,173 shares for vested restricted share units and zero shares for vested performance share units were issued during the third quarter 2024.

Financing Arrangements

Outstanding borrowings, net of unamortized discount and unamortized debt issuance cost, under our current financing arrangements consist of the following (in millions):

June 30, 2024

September 30, 2024

December 31, 2023

3 unchanged sentences

Senior Credit Facility

At June 30, 2024, we were authorized to borrow up to $ 1.5 billion through a revolving line of credit and committed term loans, which is supported by a credit agreement with a group of banks.

At September 30, 2024, we were authorized to borrow up to $ 1.5 billion through a revolving line of credit and committed term loans, which is supported by a credit agreement with a group of banks.

The revolving line of credit authorizes us to borrow up to $ 1.0 billion under a five-year term expiring September 2027 and allows us to request an increase in the revolving line of credit total commitment by up to $ 300 million and to request two one-year extensions of the maturity date.

1 unchanged sentence

The applicable interest rates under this agreement are based on either the Secured Overnight Financing Rate (SOFR) or a Base Rate, depending upon the specific type of borrowing, plus an applicable margin and other fees.

At June 30, 2024, we had $ 287 million outstanding on the revolving line of credit and a $ 500 million outstanding balance of term loans, at an average interest rate of 6.40 %, under this agreement.

At September 30, 2024, we had $ 335 million outstanding on the revolving line of credit and a $ 500 million outstanding balance of term loans, at an average interest rate of 6.07 %, under this agreement.

Our senior notes consist of $ 700 million of 3.875 % senior notes due March 2026, issued in March 2019.

10 unchanged sentences

Our financing arrangements require us to maintain certain covenants and financial ratios.

We were in compliance with all covenants and financial ratios at June 30, 2024.

We were in compliance with all covenants and financial ratios at September 30, 2024.

Capital Stock

On July 20, 2022, our Board of Directors authorized the purchase of up to $ 500 million of our common stock.

At June 30, 2024, $ 163 million of this authorization was remaining.

We purchased approximately 1,350,700 shares, or $ 228.3 million, of our common stock under our repurchase authorization during the six months ended June 30, 2024, of which 1,225,000 shares, or $ 203.1 million, were purchased in the second quarter 2024.

On January 18, 2024, our Board of Directors declared a regular quarterly cash dividend of $ 0.43 , which was paid February 23, 2024, to shareholders of record on February 9, 2024.

On April 25, 2024, our Board of Directors declared a regular quarterly dividend of $ 0.43 per common share, which was paid on May 24, 2024, to shareholders of record on May 10, 2024.

On July 17, 2024, our Board of Directors declared a regular quarterly dividend of $ 0.43 per common share, which will be paid on August 16, 2024, to shareholders of record on August 2, 2024.

On August 16, 2024, our Board of Directors authorized the purchase of up to an additional $ 1 billion of our common stock to be effective upon our purchase of the remaining balance under the July 2022 authorization.

At September 30, 2024, the July 2022 authorization was fully exhausted, and $ 967 million of the August 2024 authorization was remaining.

We purchased 2,551,033 shares, or $ 428 million, including applicable taxes, of our common stock under our repurchase authorizations during the nine months ended September 30, 2024, of which 1,200,330 shares, or $ 200 million, including applicable taxes, were purchased in the third quarter 2024.

On July 17, 2024, our Board of Directors declared a regular quarterly dividend of $ 0.43 per common share, which was paid on August 16, 2024, to shareholders of record on August 2, 2024.

On October 17, 2024, our Board of Directors declared a regular quarterly dividend of $ 0.43 per common share, which will be paid on November 22, 2024, to shareholders of record on November 8, 2024.

Fair Value Measurements

3 unchanged sentences

The following assets are measured at fair value on a recurring basis (in millions):

June 30, 2024

September 30, 2024

December 31, 2023

3 unchanged sentences

Financial Instruments

The carrying amount of our senior credit facility and senior notes was $ 1.48 billion and $ 1.58 billion at June 30, 2024 and December 31, 2023, respectively.

The estimated fair value of these liabilities using the income approach (Level 2), based on their net present value, discounted at our current borrowing rate, was $ 1.48 billion and $ 1.57 billion at June 30, 2024 and December 31, 2023, respectively.

The carrying amounts of all other instruments at June 30, 2024, approximate their fair value due to the short maturity of these instruments.

Our effective income tax rate was 26.8 % for the three months ended June 30, 2024, compared to 26.0 % for the three months ended June 30, 2023.

Our effective income tax rate was 27.7 % for the first six months of 2024, compared to 25.3 % in 2023.

The carrying amount of our senior credit facility and senior notes was $ 1.53 billion and $ 1.58 billion at September 30, 2024 and December 31, 2023, respectively.

The estimated fair value of these liabilities using the income approach (Level 2), based on their net present value, discounted at our current borrowing rate, was $ 1.53 billion and $ 1.57 billion at September 30, 2024 and December 31, 2023, respectively.

The carrying amounts of all other instruments at September 30, 2024, approximate their fair value due to the short maturity of these instruments.

Our effective income tax rate was 25.2 % for the three months ended September 30, 2024, compared to 18.2 % for the three months ended September 30, 2023, which included a discrete income tax benefit.

Our effective income tax rate was 26.8 % for the first nine months of 2024, compared to 23.2 % in 2023.

In determining our quarterly provision for income taxes, we use an estimated annual effective tax rate, adjusted for discrete items.

This rate is based on our expected annual income, statutory tax rates, best estimate of nontaxable and nondeductible items of income and expense, and the ultimate outcome of tax audits.

At June 30, 2024, we had a total of $ 81.8 million in gross unrecognized tax benefits, which are a component of other long-term liabilities on our Condensed Consolidated Balance Sheets.

At September 30, 2024, we had a total of $ 81.4 million in gross unrecognized tax benefits, which are a component of other long-term liabilities on our Condensed Consolidated Balance Sheets.

Of this amount, $ 66.0 million represents the amount of unrecognized tax benefits that, if recognized, would impact our effective tax rate.

The total amount of accrued interest and penalties for such unrecognized tax benefits was $ 12.6 million at June 30, 2024.

The total amount of accrued interest and penalties for such unrecognized tax benefits was $ 14.5 million at September 30, 2024.

Commitments and Contingencies

6 unchanged sentences

Based on present knowledge of the facts and, in certain cases, opinions of outside counsel, we believe the resolution of these claims and pending litigation will not have a material adverse effect on our financial condition, results of operations, or liquidity.

On September 14, 2023, we entered into an asset purchase agreement to acquire substantially all of the brokerage assets and assume certain specified liabilities of BNSF Logistics, LLC (BNSFL), an affiliate of Burlington Northern Santa Fe, LLC, subject to customary closing conditions.

The closing of the transaction was effective on September 30, 2023, with a purchase price of $ 85.0 million.

Total consideration paid in cash under the BNSFL agreement was $ 81.2 million and consisted of the agreed upon purchase price reduced for estimated work capital adjustments.

Transaction costs incurred were not material.

The BNSFL acquisition was accounted for as a business combination and operates within our Integrated Capacity Solutions business segment.

Assets acquired and liabilities assumed were recorded in our Consolidated Balance Sheet at their estimated fair values, as of the closing date, using cost, market data and valuation techniques that reflect management’s judgment and estimates.

As a result of the acquisition, we recorded approximately $ 38.5 million of definite-lived intangible assets and approximately $ 13.6 million of goodwill.

Goodwill consists of acquiring and retaining the BNSFL existing brokerage network and expected synergies from the combination of operations.

Business Segments

We reported five distinct business segments during the six months ended June 30, 2024 and 2023.

We reported five distinct business segments during the nine months ended September 30, 2024 and 2023.

These segments included Intermodal (JBI), Dedicated Contract Services® (DCS®), Integrated Capacity Solutions (ICS), Final Mile Services® (FMS), and Truckload (JBT).

2 unchanged sentences

(Excludes intercompany accounts)

June 30, 2024

September 30, 2024

December 31, 2023

2 unchanged sentences

Three Months Ended

Six Months Ended

September 30,

Nine Months Ended

September 30,

Inter-segment eliminations

1 unchanged sentence

Three Months Ended

Six Months Ended

September 30,

Nine Months Ended

September 30,

Other (includes corporate)

1 unchanged sentence

Three Months Ended

Six Months Ended

September 30,

Nine Months Ended

September 30,

Other (includes corporate)

66 unchanged sentences

RESULTS OF OPERATIONS

Comparison of Three Months Ended June 30, 2024 to Three Months Ended June 30, 2023

Comparison of Three Months Ended September 30, 2024 to Three Months Ended September 30, 2023

Summary of Operating Segment Results

For the Three Months Ended June 30,

For the Three Months Ended September 30,

(in millions)

3 unchanged sentences

Inter-Segment eliminations

Total consolidated operating revenues were $2.93 billion for the second quarter 2024, a 7% decrease from $3.13 billion in the second quarter 2023.

This decrease was primarily the result of decreased revenue per load in JBI and lower volumes in ICS, JBT, and DCS, when compared to the second quarter 2023.

These decreases were partially offset by revenue growth in FMS in the current quarter from new contracts implemented over the past year.

Total consolidated operating revenue, excluding fuel surcharge revenue, decreased 6%.

JBI segment revenue decreased 5% to $1.41 billion during the second quarter 2024, compared with $1.49 billion in 2023.

Load volumes during the second quarter 2024 decreased 1% over the same period 2023, primarily driven by weak demand, competition from over-the-road truck options in the eastern network, and our disciplined approach to the market for the value our services provide.

Transcontinental loads increased 4% during the second quarter 2024, and eastern network load volume was down 7% compared to the second quarter 2023.

Revenue per load, which is determined by the combination of customer rates, fuel surcharges, and freight mix, decreased 5% during the second quarter 2024.

Revenue per load, excluding fuel surcharge revenue, decreased 4% compared to the second quarter 2023.

JBI segment operating income decreased 31% to $99.2 million in the second quarter 2024 from $142.9 million in 2023.

The decrease is primarily due to the decrease in revenue and higher driver and non-driver wages, increased maintenance and equipment-related costs, and higher insurance premiums expense, as a percentage of gross revenue.

Total consolidated operating revenues were $3.07 billion for the third quarter 2024, a 3% decrease from $3.16 billion in the third quarter 2023.

This decrease was primarily the result of decreased revenue per load in JBI and JBT, lower volumes in ICS, JBT, and DCS, and a decrease in stops in FMS when compared to the third quarter 2023.

These decreases were partially offset by load volume growth in JBI and an increase in ICS revenue per load in the current quarter over the past year.

Total consolidated operating revenue, excluding fuel surcharge revenue, decreased less than 1%.

JBI segment reported revenue of $1.56 billion during the third quarter 2024, which was flat compared to third quarter 2023, resulting from a 5% increase in load volume being fully offset by a 5% decrease in revenue per load, which is determined by the combination of customer rates, fuel surcharges, and freight mix.

The increase in load volumes was primarily driven by increased customer demand, seasonal activity, and rail network improvements.

Transcontinental loads increased 7% and eastern network load volume increased 3% compared to the third quarter 2023.

Revenue per load, excluding fuel surcharge revenue, decreased 2% compared to the third quarter 2023.

JBI segment operating income decreased 13% to $111.8 million in third quarter 2024 from $128.0 million in 2023.

The decrease was primarily due to increased network imbalance and repositioning cost and higher driver wages to meet peak season customer demand as well as increased maintenance and equipment-related costs, higher insurance premium and claims expense, and higher other personnel-related expenses, compared to third quarter 2023.

The current quarter ended with approximately 121,500 units of trailing capacity and 6,500 power units assigned to the dray fleet.

DCS segment revenue decreased 4% to $851 million in the second quarter 2024 from $888 million in 2023.

Productivity, defined as revenue per truck per week, decreased 3% when compared to the second quarter 2023.

Productivity, excluding fuel surcharge revenue, decreased 3%, primarily due to decreased asset utilization and increased idle equipment, partially offset by contractual index-based rate increases.

On a net basis, revenue-producing trucks in the fleet at the end of the second quarter 2024 decreased by 339 trucks, or 3%, compared to the prior-year period.

Customer retention rates are approximately 88%, primarily due to customer account losses and fleet downsizing.

DCS segment operating income decreased 15% to $96.4 million in the second quarter 2024, from $113.6 million in 2023.

The decrease is primarily due to decreased revenue, increased insurance premium expense, increased equipment-related costs, higher bad debt expense, and higher new account start-up costs, partially offset by lower maintenance costs and the maturing of new business onboarded over the past year when compared to the second quarter 2023.

ICS segment revenue decreased 21% to $270 million in the second quarter 2024, from $344 million in 2023.

Overall volumes decreased 25% compared to the second quarter 2023, while revenue per load increased 5%, primarily due to higher contractual and spot rates and changes in customer freight mix.

Contractual business represented approximately 61% of total load volume and 59% of total revenue in the second quarter 2024, compared to 66% and 64%, respectively, in 2023.

Approximately $104 million of second quarter 2024 ICS revenue was executed through the Marketplace for J.B.

Hunt 360, compared to $225 million in the second quarter 2023.

The ICS segment had an operating loss of $13.3 million in the second quarter 2024, compared to an operating loss of $4.4 million in 2023.

The increase in operating loss is primarily due to an 11% decrease in gross profit, higher insurance and claims expense, and integration and transition costs related to the purchase of the brokerage assets of BNSF Logistics, LLC, partially offset by lower personnel salary and wages expense and reduced technology costs.

Gross profit margin increased to 14.8% in the second quarter 2024, compared to 13.0% in 2023, reflecting our focused bid season yield management and improved capacity procurement.

ICS’s carrier base decreased 24% compared to second quarter 2023, primarily due to changes in carrier qualification requirements.

FMS segment revenue increased 5% to $235 million in the second quarter 2024 from $224 million in 2023, primarily due to the addition of multiple new customer contracts implemented over the past year, partially offset by the effects of internal efforts to improve revenue quality across certain accounts and general weakness in customer demand.

FMS segment operating income increased to $19.8 million in the second quarter of 2024 compared to $14.8 million in 2023.

This increase was primarily due to increased revenue, decreased personnel, equipment-related, and bad debt expenses, and a $1.1 million net benefit from two offsetting claim settlements.

These items were partially offset by increased facility maintenance expenses, higher insurance premiums expense, and higher loss on equipment sales, compared to the second quarter 2023.

JBT segment revenue decreased 12% to $168 million in the second quarter 2024, from $192 million in 2023.

Revenue, excluding fuel surcharge revenue, decreased 13% primarily due to a 9% decrease in load volume and a 4% decrease in revenue per load, excluding fuel surcharge revenue, compared to second quarter 2023.

JBT average effective trailer count decreased to 12,600 in the second quarter 2024, compared to 13,108 in 2023.

At the end of the second quarter 2024, the JBT power fleet consisted of 1,897 tractors, compared to 2,068 tractors at June 30, 2023.

Trailer turns in the second quarter of 2024 decreased 5% compared to second quarter 2023, due to weakened overall customer demand.

JBT segment operating income decreased to $3.5 million in 2024, compared with $3.8 million during second quarter 2023.

The decrease is primarily due to the decrease in revenue and higher insurance premiums expense, partially offset by overall cost management initiatives.

DCS segment revenue decreased 5% to $846 million in the third quarter 2024 from $892 million in 2023.

Productivity, defined as revenue per truck per week, decreased 3% when compared to the third quarter 2023.

Productivity, excluding fuel surcharge revenue, remained flat, primarily due to decreased asset utilization and increased idle equipment, offset by contractual index-based rate increases.

On a net basis, revenue-producing trucks in the fleet at the end of the third quarter 2024 decreased by 498 trucks, or 4%, compared to the prior-year period.

DCS segment operating income decreased 7% to $95.5 million in the third quarter 2024, from $102.4 million in 2023.

The decrease is primarily due to decreased revenue, increased insurance premium and claims expense, and higher new account start-up costs, partially offset by lower maintenance and equipment-related costs, lower bad debt expense, and the maturing of new business onboarded over the past year when compared to the third quarter 2023.

Customer retention rates are approximately 87%, primarily due to fleet downsizing and customer account losses.

ICS segment revenue decreased 7% to $278 million in the third quarter 2024, from $298 million in 2023.

Overall volumes decreased 10% compared to the third quarter 2023, while revenue per load increased 3%, primarily due to higher contractual and spot rates and changes in customer freight mix.

Contractual business represented approximately 62% of total load volume and 61% of total revenue in the third quarter 2024, compared to 68% and 67%, respectively, in 2023.

Approximately $92 million of third quarter 2024 ICS revenue was executed through the Marketplace for J.B.

Hunt 360, compared to $169 million in the third quarter 2023.

ICS segment had an operating loss of $3.3 million in the third quarter 2024, compared to an operating loss of $9.4 million in 2023.

The decrease in operating loss was driven primarily by a 31% increase in gross profit, lower cargo claims expense, and lower personnel-related expenses, partially offset by integration and transition costs related to the purchase of the brokerage assets of BNSF Logistics, LLC (BNSFL).

Gross profit margin increased to 17.9% in the third quarter 2024, compared to 12.8% in 2023, reflecting focused bid season yield management, improved capacity procurement, and certain project-related activity.

ICS’s carrier base decreased 18% compared to third quarter 2023, primarily due to changes in carrier qualification requirements.

FMS segment revenue decreased 3% to $218 million in the third quarter 2024 from $226 million in 2023, primarily due to general weakness in customer demand, partially offset by the addition of multiple new customer contracts implemented over the past year as well as internal efforts to improve revenue quality across certain accounts.

FMS segment operating income decreased to $12.0 million in the third quarter of 2024 compared to $13.0 million in 2023.

This decrease was primarily due to decreased revenue, higher purchased transportation costs and higher insurance premiums expense, partially offset by decreased personnel-related expenses compared to the third quarter 2023.

JBT segment revenue decreased 12% to $173 million in the third quarter 2024, from $196 million in 2023.

Revenue, excluding fuel surcharge revenue, decreased 9% primarily due to a 6% decrease in load volume and a 3% decrease in revenue per load, excluding fuel surcharge revenue, compared to third quarter 2023.

JBT average effective trailer count in third quarter 2024 decreased 2% to 12,588, compared to third quarter 2023.

Trailer turns in third quarter 2024 decreased 4% compared to third quarter 2023, due to weakened overall customer demand.

At the end of third quarter 2024, the JBT power fleet consisted of 1,989 tractors.

JBT segment operating income increased to $8.2 million in 2024, compared with $7.7 million during third quarter 2023.

The increase is primarily due to improved network balance, decreased trailing capacity costs, and overall cost management initiatives, partially offset by higher insurance premiums expense.

Consolidated Operating Expenses

The following table sets forth items in our Condensed Consolidated Statements of Earnings as a percentage of operating revenues and the percentage increase or decrease of those items as compared with the prior period.

Three Months Ended June 30,

Three Months Ended September 30,

Dollar Amounts as a

2 unchanged sentences

Percentage Change

of Dollar Amounts Between Quarters

of Dollar Amounts

Between Quarters

Total operating revenues

5 unchanged sentences

Operating supplies and expenses

General and administrative expenses, net of asset dispositions

Insurance and claims

General and administrative expenses, net of asset dispositions

Operating taxes and licenses

4 unchanged sentences

Earnings before income taxes

Total operating expenses decreased 4.9%, while operating revenues decreased 6.5% during the second quarter 2024 from the comparable period 2023.

Operating income decreased to $205.7 million during the second quarter 2024 from $270.7 million in 2023.

Rents and purchased transportation costs decreased 9.3% in the second quarter 2024.

This decrease was primarily the result of a decrease in rail and truck carrier purchased transportation rates within JBI, ICS, and JBT segments and decreased JBI, ICS and JBT load volumes, which decreased services provided by third-party rail and truck carriers during the second quarter 2024 compared to 2023.

Salaries, wages, and employee benefits costs decreased 2.3% during the second quarter 2024, compared with 2023.

This decrease was primarily due to a decrease in driver and office employee headcounts and lower incentive compensation, partially offset by an increase in group medical benefit expenses.

Depreciation and amortization expense increased 2.6% in second quarter 2024 compared with 2023, primarily due to equipment purchases related to new DCS long-term customer contracts, the addition of trailing equipment within JBI, and additional depreciation and amortization expense resulting from the recent business acquisition, partially offset by the impact of the change in expected useful lives of our container fleet.

Fuel costs decreased 4.4% in the second quarter 2024, compared with 2023, due primarily to a decrease in the price of fuel and decreased road miles.

Operating supplies and expenses decreased 6.6%, driven primarily by lower equipment maintenance costs, decreased towing expenses, and lower travel and entertainment expenses.

General and administrative expenses increased 21.5% for the current quarter from the comparable period in 2023, primarily due to higher building and yard rental expense, increased professional services expense, and an increase in net loss from sale or disposal of assets, partially offset by lower advertising costs and bad debt expense.

Total operating expenses decreased 2.7%, while operating revenues decreased 3.0% during the third quarter 2024 from the comparable period 2023.

Operating income decreased to $224.1 million during the third quarter 2024 from $241.7 million in 2023.

Rents and purchased transportation costs decreased 4.4% in the third quarter 2024.

This decrease was primarily the result of a decrease in rail and truck carrier purchased transportation rates within JBI, ICS, and JBT segments and decreased ICS and JBT load volumes, which decreased services provided by third-party rail and truck carriers during the third quarter 2024 compared to 2023.

Salaries, wages and employee benefits costs increased 0.8% during the third quarter 2024, compared with 2023.

This increase was primarily due to increased group medical benefit expenses, partially offset by a decrease in non-driver employee headcounts.

Depreciation and amortization expense increased 0.1% in third quarter 2024 compared with 2023, primarily due to the addition of trailing equipment within JBI and additional depreciation and amortization expense resulting from the recent business acquisition, partially offset by the impact of the change in expected useful lives of our container fleet and equipment reductions within DCS.

Fuel costs decreased 19.0% in the third quarter 2024, compared with 2023, due primarily to a decrease in the price of fuel and decreased road miles.

Operating supplies and expenses decreased 2.3%, driven primarily by decreased tolls expense, lower towing costs, and decreased other operating supply costs, partially offset by higher equipment maintenance costs.

Insurance and claims expenses increased 25.2% in 2024 compared with 2023, primarily due to higher insurance policy premiums expense.

General and administrative expenses increased 4.3% for the current quarter from the comparable period in 2023, primarily due to higher building and yard rental expense and increased professional services expense, partially offset by a decrease in net loss from sale or disposal of assets and lower bad debt expense.

Net loss from sale or disposal of assets was $0.8 million in 2024, compared to a net loss from sale or disposal of assets of $7.7 million in 2023.

Insurance and claims expenses increased 14.6% in 2024 compared with 2023, primarily due to higher insurance policy premiums expense, partially offset by lower cost per claim.

Net interest expense increased 38.3% in 2024 due to an increase in effective interest rates on our debt and an increase in our average debt balance compared to second quarter 2023.

Income tax expense decreased 25.4% in 2024, compared with 2023, primarily due to lower taxable earnings.

Our effective income tax rate was 26.8% for the second quarter of 2024, compared to 26.0% in 2023.

Our annual tax rate for 2024 is expected to be between 24.0% and 25.0%.

Net interest expense increased 64.9% in 2024 due to an increase in effective interest rates on our debt and an increase in our average debt balance compared to third quarter 2023.

In addition, third quarter 2023 interest expense included an interest component of a discrete income tax benefit recognized in the quarter.

Income tax expense increased 23.0% in 2024, compared with 2023, primarily due to a higher effective income tax rate in the third quarter 2024 compared with 2023, which included the recording of a discrete benefit, partially offset by lower taxable earnings.

Our effective income tax rate was 25.2% for the third quarter of 2024, compared to 18.2% in 2023.

Our annual tax rate for 2024 is expected to be approximately 24.5.%.

In determining our quarterly provision for income taxes, we use an estimated annual effective tax rate, adjusted for discrete items.

This rate is based on our expected annual income, statutory tax rates, best estimate of nontaxable and nondeductible items of income and expense, and the ultimate outcome of tax audits.

Comparison of Six Months Ended June 30, 2024 to Six Months Ended June 30, 2023

Comparison of Nine Months Ended September 30, 2024 to Nine Months Ended September 30, 2023

Summary of Operating Segment Results

For the Six Months Ended June 30,

For the Nine Months Ended September 30,

(in millions)

3 unchanged sentences

Inter-segment eliminations

Total consolidated operating revenues were $5.87 billion for the first six months of 2024, an 8% decrease from $6.36 billion for the comparable period 2023.

Fuel surcharge revenue decreased to $775.2 million during the first six months of 2024, compared with $912.1 million in 2023.

Total consolidated operating revenue, excluding fuel surcharge revenue, decreased 6% for the first six months of 2024 compared to the prior-year period.

JBI segment revenue decreased 7% to $2.80 billion during the first six months of 2024, compared with $3.03 billion in 2023.

Load volume during the first six months of 2024 decreased 1% and revenue per load decreased 7%, compared to a year ago.

Revenue per load, excluding fuel surcharge revenue, decreased 6% compared to the first six months of 2023.

JBI segment operating income decreased 35% to $201.1 million in the first six months of 2024, from $311.5 million in 2023.

The decrease is primarily due to decreased revenue and higher driver and non-driver wages and benefits, increased maintenance and equipment-related costs, and higher insurance premiums expense, as a percentage of gross revenue when compared to the first six months of 2023.

DCS segment revenue decreased 3% to $1.71 billion during the first six months of 2024, from $1.77 billion in 2023.

Total consolidated operating revenues were $8.94 billion for the first nine months of 2024, a 6% decrease from $9.53 billion for the comparable period 2023.

Fuel surcharge revenue decreased to $1.16 billion during the first nine months of 2024, compared with $1.39 billion in 2023.

Total consolidated operating revenue, excluding fuel surcharge revenue, decreased 5% for the first nine months of 2024 compared to the prior-year period.

JBI segment revenue decreased 5% to $4.36 billion during the first nine months of 2024, compared with $4.58 billion in 2023.

Load volume during the first nine months of 2024 increased 1% and revenue per load decreased 6%, compared to a year ago.

Revenue per load, excluding fuel surcharge revenue, decreased 5% compared to the first nine months of 2023.

JBI segment operating income decreased 29% to $312.9 million in the first nine months of 2024, from $439.5 million in 2023.

The decrease is primarily due to decreased revenue and higher driver wages and benefits, increased maintenance and equipment-related costs, and higher insurance premiums expense.

DCS segment revenue decreased 4% to $2.56 billion during the first nine months of 2024, from $2.66 billion in 2023.

Productivity, defined as revenue per truck per week, decreased 2% from a year ago.

Productivity, excluding fuel surcharge revenue, for the first six months of 2024 decreased 1% from a year ago.

Productivity, excluding fuel surcharge revenue, for the first nine months of 2024 decreased 1% from a year ago.

The decrease in productivity was primarily due to decreased utilization of equipment, partially offset by contractual index-based rate increases during the current period.

Operating income of our DCS segment decreased to $190.1 million in the first six months of 2024, from $216.2 million in 2023.

The decrease is primarily due to decreased revenue, higher insurance premiums expense, increased equipment-related costs, higher bad debt expense, and higher new account start-up costs, partially offset by lower maintenance costs and the maturing of new business onboarded over the past year, when compared to the first six months of 2023.

ICS revenue decreased 24% to $555.7 million during the first six months of 2024, from $728.5 million in 2023.

Overall volumes decreased 24%, while revenue per load remained flat compared to 2023.

Approximately $210 million of ICS revenue for the first six months of 2024 was executed through the Marketplace for J.B.

Operating income of our DCS segment decreased to $285.6 million in the first nine months of 2024, from $318.6 million in 2023.

The decrease is primarily due to decreased revenue, higher insurance premiums expense, and higher new account start-up costs, partially offset by decreased equipment-related costs, lower personnel costs, decreased loss on equipment sales, and the maturing of new business onboarded over the past year, when compared to the first nine months of 2023.

ICS revenue decreased 19% to $834 million during the first nine months of 2024, from $1.03 billion in 2023.

Overall volumes decreased 20%, while revenue per load increased 1% compared to 2023.

Approximately $302 million of ICS revenue for the first nine months of 2024 was executed through the Marketplace for J.B.

Hunt 360 compared to $644 million in 2023.

The ICS segment had an operating loss of $30.8 million in the first six months of 2024 compared to an operating loss of $9.8 million in 2023, primarily due to decreased gross profit, higher insurance and claims expense, and integration and transition costs related to the purchase of the brokerage assets of BNSF Logistics, LLC.

These items were partially offset by lower salary, wages, and benefits expenses and decreased technology cost during the first six months of 2024.

ICS segment had an operating loss of $34.1 million in the first nine months of 2024 compared to an operating loss of $19.2 million in 2023, primarily due to decreased gross profit and integration and transition costs related to the purchase of the brokerage assets of BNSFL.

These items were partially offset by lower salary, wages, and benefits expenses and reduced equipment rental expense during the first nine months of 2024.

Gross profit margin increased to 15.7% in the current period compared to 13.1% in 2023, reflecting our focused bid season yield management and improved capacity procurement.

FMS revenue increased 3% to $465 million during the first six months of 2024, from $449 million in 2023, primarily due to the addition of multiple new customer contracts implemented over the past year, partially offset by internal efforts to improve revenue quality across certain accounts and general weakness in customer demand.

FMS segment had operating income of $34.9 million in the first six months of 2024 compared to $21.4 million in 2023.

This increase was primarily due to increased revenue and decreased personnel and equipment-related expenses as well as a $4.2 million net benefit from offsetting claim settlements, partially offset by increased facility rent and maintenance expense, higher insurance premiums expense, and increased loss on equipment sales compared to the first six months of 2023.

JBT segment revenue decreased 13% to $346 million for the first six months of 2024, from $398 million in 2023.

Revenue, excluding fuel surcharge revenue, decreased 13%, primarily due to a 7% decrease in revenue per load, excluding fuel surcharge revenue, and a 7% decrease in load volume compared to the first six months of 2023.

Operating income of our JBT segment decreased to $4.8 million in the first six months of 2024, from $8.8 million in 2023.

FMS revenue increased 1% to $683 million during the first nine months of 2024, from $675 million in 2023, primarily due to the addition of multiple new customer contracts implemented over the past year, partially offset by internal efforts to improve revenue quality across certain accounts and general weakness in customer demand.

FMS segment had operating income of $46.9 million in the first nine months of 2024 compared to $34.4 million in 2023.

This increase was primarily due to increased revenue and decreased personnel expenses as well as a $4.2 million net benefit from offsetting claim settlements, partially offset by higher insurance premiums expense compared to the first nine months of 2023.

JBT segment revenue decreased 13% to $519 million for the first nine months of 2024, from $594 million in 2023.

Revenue, excluding fuel surcharge revenue, decreased 12%, primarily due to a 5% decrease in revenue per load, excluding fuel surcharge revenue, and a 7% decrease in load volume compared to the first nine months of 2023.

Operating income of our JBT segment decreased to $12.9 million in the first nine months of 2024, from $16.5 million in 2023.

The decrease in operating income was driven primarily by the decrease in revenue and higher insurance premiums expense, partially offset by overall cost management initiatives.

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Six Months Ended June 30,

Nine Months Ended September 30,

Dollar Amounts as a

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Percentage Change

of Dollar Amounts Between Periods

of Dollar Amounts

Between Periods

Total operating revenues

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Operating supplies and expenses

General and administrative expenses, net of asset dispositions

Insurance and claims

General and administrative expenses, net of asset dispositions

Operating taxes and licenses

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Earnings before income taxes

Total operating expenses decreased 5.9%, while operating revenues decreased 7.7%, during the first six months of 2024, from the comparable period of 2023.

Operating income decreased to $400.1 million during the first six months of 2024, from $548.2 million in 2023.

Total operating expenses decreased 4.8%, while operating revenues decreased 6.1%, during the first nine months of 2024, from the comparable period of 2023.

Operating income decreased to $624.2 million during the first nine months of 2024, from $789.9 million in 2023.

Rents and purchased transportation costs decreased 8.8% in 2024.

This decrease was primarily the result of a decrease in rail and truck carrier purchased transportation rates within JBI, ICS, and JBT segments and decreased JBI, ICS and JBT load volume, which decreased services provided by third-party rail and truck carriers during the current period.

This decrease was primarily the result of a decrease in rail and truck carrier purchased transportation rates within JBI, ICS, and JBT segments and decreased ICS and JBT load volume, which decreased services provided by third-party rail and truck carriers during the current period.

Salaries, wages and employee benefits costs decreased 1.2% in 2024 from 2023.

This decrease was primarily due to a decrease in driver and office employee headcounts and lower incentive compensation, partially offset by an increase in group medical benefit expenses.

Depreciation and amortization expense increased 3.3% in 2024 primarily due to equipment purchases related to new DCS long-term customer contracts, the addition of trailing equipment within JBI, and additional depreciation and amortization expense resulting from the recent business acquisition, partially offset by the impact of the change in expected useful lives of our container fleet.

This decrease was primarily due to a decrease in driver and office employee headcounts, partially offset by an increase in group medical benefit expenses.

Depreciation and amortization expense increased 2.2% in 2024 primarily due to equipment purchases related to the addition of tractors and trailing equipment within JBI and additional depreciation and amortization expense resulting from the recent business acquisition, partially offset by the impact of the change in expected useful lives of our container fleet and equipment reductions within DCS.

Fuel costs decreased 11.9% in 2024, compared with 2023, due primarily to a decrease in the price of fuel and decreased road miles.

Operating supplies and expenses decreased 5.4% primarily due to lower equipment maintenance costs, decreased towing expenses, and lower travel and entertainment expenses.

General and administrative expenses increased 24.3% from the comparable period in 2023, primarily due to an increase in building and yard rental expense, higher professional services expense, increased technology costs, higher bad debt expense, and higher net losses from sale or disposal of assets, partially offset by lower advertising costs.

Net loss from sale or disposal of assets was $12.5 million in 2024, compared to a net loss from sale or disposal of assets of $9.6 million in 2023.

Operating supplies and expenses decreased 4.4% primarily due to lower equipment maintenance costs, decreased towing expenses, lower tolls expense, decreased other operating supply costs, and lower travel and entertainment expenses.

Insurance and claims expense increased 15.5% in 2024 compared with 2023, primarily due to higher insurance policy premium expense, partially offset by decreased cost per claim and lower claim volume in the current period.

General and administrative expenses increased 17.0% from the comparable period in 2023, primarily due to an increase in building and yard rental expense, higher professional services expense, increased technology costs, and higher bad debt expense, partially offset by lower advertising costs and lower net losses from sale or disposal of assets.

Net loss from sale or disposal of assets was $13.3 million in 2024, compared to a net loss from sale or disposal of assets of $17.2 million in 2023.

Net interest expense increased 34.8% in 2024, due primarily to an increase in effective interest rates on our debt and an increase in our average debt balance.

Income tax expense decreased 23.3% during the first six months of 2024 compared with 2023, primarily due to decreased taxable earnings, partially offset by a higher effective income tax rate in the first six months of 2024.

Our effective income tax rate was 27.7% for the first six months of 2024, compared to 25.3% in 2023 due to discrete tax items.

Our annual tax rate for 2024 is expected to be between 24.0% and 25.0%.

Income tax expense decreased 12.1% during the first nine months of 2024 compared with 2023, primarily due to decreased taxable earnings, partially offset by a higher effective income tax rate in the first nine months of 2024.

Our effective income tax rate was 26.8% for the first nine months of 2024, compared to 23.2% in 2023 due to discrete tax items.

Our annual tax rate for 2024 is expected to be approximately 24.5.%.

In determining our quarterly provision for income taxes, we use an estimated annual effective tax rate, adjusted for discrete items.

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Liquidity and Capital Resources

Net cash provided by operating activities totaled $827 million during the first six months of 2024, compared with $1.1 billion for the same period 2023.

Net cash provided by operating activities totaled $1.17 billion during the first nine months of 2024, compared with $1.53 billion for the same period 2023.

Operating cash flows decreased primarily due to decreased earnings, partially offset by the timing of general working capital activities.

Net cash used in investing activities totaled $405.1 million in 2024, compared with $853.8 million in 2023.

Net cash used in investing activities totaled $477.5 million in 2024, compared with $1.40 billion in 2023.

The decrease resulted primarily from a decrease in equipment purchases, net of proceeds from the sale of equipment in the current period.

Net cash used in financing activities was $421.8 million in 2024, compared with net cash provided of $0.5 million in 2023.

This use of cash resulted primarily from the retirement of long-term debt that matured in the first quarter of 2024 and an increase in treasury stock purchased during the current period.

Net cash used in financing activities was $621.3 million in 2024, compared with $101.4 million in 2023.

This increase resulted primarily from the retirement of long-term debt that matured in the first quarter of 2024 and an increase in treasury stock purchased during the current period.

Our need for capital has typically resulted from the acquisition of containers and chassis, trucks, tractors, and trailers required to support our growth and the replacement of older equipment, as well as periodic business acquisitions and real estate transactions.

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We have also periodically utilized operating leases to acquire revenue equipment.

For our senior credit facility term loans maturing in 2025, it is our intent to pay the entire outstanding balances in full, on or before the maturity dates, using our existing cash balance, revolving line of credit or other sources of long-term financing.

We believe our liquid assets, cash generated from operations, and revolving line of credit will provide sufficient funds for our operating and capital requirements for the foreseeable future.

At June 30, 2024 we were authorized to borrow up to $1.5 billion through a revolving line of credit and committed term loans, which is supported by a credit agreement with a group of banks.

At September 30, 2024 we were authorized to borrow up to $1.5 billion through a revolving line of credit and committed term loans, which is supported by a credit agreement with a group of banks.

The revolving line of credit authorizes us to borrow up to $1.0 billion under a five-year term expiring September 2027 and allows us to request an increase in the revolving line of credit total commitment by up to $300 million and to request two one-year extensions of the maturity date.

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The applicable interest rates under this agreement are based on either the Secured Overnight Financing Rate (SOFR), or a Base Rate, depending upon the specific type of borrowing, plus an applicable margin and other fees.

At June 30, 2024, we had a cash balance of $53.5 million.

At September 30, 2024, we had a cash balance of $120.0 million.

Under our senior credit facility, we had a $335 million outstanding balance on the revolving line of credit and a $500 million outstanding balance of term loans at an average interest rate of 6.07%.

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Our financing arrangements require us to maintain certain covenants and financial ratios.

At June 30, 2024, we were compliant with all covenants and financial ratios.

Our net capital expenditures were approximately $408.9 million during the first six months of 2024, compared with $853.8 million for the same period 2023.

At September 30, 2024, we were compliant with all covenants and financial ratios.

Our net capital expenditures were approximately $488.1 million during the first nine months of 2024, compared with $1.32 billion for the same period 2023.

Our net capital expenditures include net additions to revenue equipment and non-revenue producing assets that are necessary to contribute to and support the future growth of our various business segments.

Capital expenditures in 2024 were primarily for intermodal containers and chassis and other trailing equipment.

We expect to spend in the range of $650 million to $700 million for net capital expenditures during the full calendar year 2024.

Capital expenditures in 2024 were primarily for tractors, intermodal containers and chassis and other trailing equipment.

We expect to spend approximately $625 million for net capital expenditures during the full calendar year 2024.

We are currently committed to spend approximately $385 million, net of proceeds from sales or trade-ins, during the years 2024 and 2025, as well as an additional $237 million thereafter.

These expenditures will relate primarily to the acquisition of tractors, containers and chassis, and other trailing equipment.

At June 30, 2024, our aggregate future minimum lease payments under operating lease obligations totaled $386.9 million, related primarily to the rental of maintenance and support facilities, cross-dock and delivery system facilities, office space, parking yards, and equipment.

At September 30, 2024, our aggregate future minimum lease payments under operating lease obligations totaled $370 million, related primarily to the rental of maintenance and support facilities, cross-dock and delivery system facilities, office space, parking yards, and equipment.

Off-Balance Sheet Arrangements

We had no off-balance sheet arrangements, other than our net purchase commitments of $1.2 billion, as of June 30, 2024.

We had no off-balance sheet arrangements, other than our net purchase commitments of $622 million, as of September 30, 2024.

You should refer to Part I, Item 1A of our Annual Report (Form 10-K) for the year ended December 31, 2023, under the caption “Risk Factors” for specific details on the following factors and events that are not within our control and could affect our financial results.

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements