Shelley Simpson
Chief Commercial Officer Executive Vice President, People and Human Resources at J.B. Hunt Transport Services
Thank you, John, and good afternoon. I thought it made sense to talk about where we are as an organization and what we are working on to set us up for long-term success. More importantly, how this aligns with our 2023 priorities that I've previously shared, which are to: one, remain committed to disciplined long-term investments in our people, technology and capacity; two, deliver exceptional value to our customers; and three, drive long-term compounding returns for our shareholders.
To start, we're in a challenging freight environment where there is deflationary price pressure for an industry that continues to face inflationary cost pressures. Simply stated, we're in a freight recession. As we have discussed, we believe we are in a position to deliver exceptional value for our customers by leveraging our full suite of services to deliver maximum efficiency and eliminate waste in the supply chain. We can do this by providing cost savings opportunities by converting on-highway freight to Intermodal, designing a highly engineered and efficient solution in our Dedicated segment, leveraging vast amounts of market competitive capacity sourced on J.B. Hunt 360, or by providing best-in-class service as one of the largest final mile providers in North America. The strength and resiliency of our organization is supported by our mode-neutral approach across all of our businesses and backed by our company foundations, which are our people, technology and capacity, and that's where we are today.
So what are we working on? As we've committed to disciplined long-term investments in our people, technology and capacity, we admittedly have too much cost in our system right now for the current level of activity in our organization. And while we want to prudently manage our business in the near term by focusing on controllable costs, more importantly, we remain focused on our long-term strategy to compound our growth at acceptable returns.
As an organization, we have put greater emphasis in areas of our business by reallocating resources that will set us up to accelerate our growth and performance coming out of this current environment. One area in particular that has immense focus is in the area of safety. Also, as you might have noticed in our release, we moved pieces of our JBT and ICS segments into DCS and FMS segments, respectively, to best position the organization longer term.
While none of our businesses are immune to this environment, I am confident that there are great things happening in our business that set us up for long-term success. Remaining committed to our disciplined investment while prudently managing our cost is an area of focus for us across our organization.
In closing, I want to say we remain cautious on the outlook for the year but remain confident in our ability to deliver value for our customers that will enable us to grow and take share through cycles while maintaining discipline on our returns on capital.
As I have stated previously, we will remain focused on the things we can control but remain committed to managing our business for the long term. As I look across our organization and see the experience and tenure of our team as a result of the investments made throughout our careers, I am confident in our ability to deliver long-term sustainable returns for our shareholders.
With that, I'd like to turn the call over to our CFO, John Kuhlow. John? Thank you, Shelley, and good afternoon, everyone. I want to touch on three topics with my prepared remarks, including a quick review of the quarter, some details on our capital plan for 2023 and bring to your attention some small changes we made in our segment reporting. First, on the quarter's results. As previously discussed, overall demand for freight capacity has moderated versus the prior year period as evidenced in our results. On a consolidated GAAP basis, revenue for the quarter declined 7% year-over-year, operating income declined 17% and diluted earnings per share decreased 18%. These declines were primarily driven by lower freight volumes, moderating pricing trends and inflationary cost pressures, particularly in the areas of salaries and wages, insurance and claims and parts and maintenance-related expenses. Our balance sheet remains strong with ample liquidity available to support our investments to drive long-term value for our shareholders. Regarding those investments, our capital plan still contemplates between $1.5 billion and $2 billion of investment in 2023. To provide some greater detail, we expect about $400 million to $500 million for real estate, which will support our long-term growth plans for the company. The majority of the balance is almost evenly split between our tractor and trailing capacity needs. Keep in mind, trailing capacity includes both dry and temperature-controlled trailers and containers as well as chassis. The growth in our Intermodal and Dedicated fleets the past two years, coupled with the lack of availability of new equipment as OEM supply chains were constrained, required us to hold our equipment longer. Accordingly, a large portion of our 2023 tractor capital is for replacement needs. We did repurchase some shares in the quarter and remain committed to be active in the market as opportunities arise. Finally, we moved the majority of our J.B. Hunt-owned tractors out of our JBT segment into DCS. These trucks have consistently operated in a Dedicated-like manner for customers over many years and makes more strategic sense to be managed out of our DCS segment, while also allowing JBT to focus its efforts on scaling our J.B. Hunt 360 box service offering. Second, we moved our non-asset LTL business out of ICS and into Final Mile, which has similar operating characteristics as our Final Mile business. These realignments best position our organization for our future and focuses each segment's people and assets in particular areas of expertise. We have included an addendum in our earnings release to provide a historical perspective for these moves. This concludes my remarks, and I'll now turn it over to Nick.
