01—Abstract
Summary
Summary of the 10-K filed February 27, 2009. Cited figures are marked; the original filing is the authoritative source.
J.B.
Hunt Transport Services, Inc. reported record consolidated operating revenues of $3.73 billiona for 2008, up 6.9% from $3.49 billion in 2007, driven largely by fuel surcharge revenue of $730 million (versus $480 million in 2007) and load growth in the JBI and ICS segments. Net earnings were $200.6 million, or $1.56 per diluted share, down 6% from $213.1 million, or $1.55 per diluted share, in 2007. The company cited a slowing freight environment and higher fuel costs as its major challenges, with fuel cost per gallon averaging 30% above 2007 levels.
The operating ratio rose slightly to 90.4% from 89.4%, as operating expenses grew 8.1%. The company continued its shift toward an asset-light model. Total debt was reduced by approximately $280 millionb, or 31%, to $633.5 million at year-end, and debt as a percentage of total capital fell to 54% from 73%.
Operating cash flow was $505 millionc, versus $458 million in 2007. JBI (intermodal) was the largest segment at 52% of revenue, with operating income of $254 million. JBT (full-load dry van) declined sharply, with operating income of $1 million versus $32 million in 2007, and the company plans to sell or trade about 1,100 trailers in 2009.
Management announced a quarterly dividend increase to $0.11d per share from $0.10, and no shares were repurchased in 2008. Management concluded that internal control over financial reporting was effective as of December 31, 2008, and Ernst & Young LLP issued an unqualified opinion on it. The company expects its 2009 effective tax rate to approximate 38%.
02—Key points
Key Highlights
- Total operating revenues of $3.73 billion in 2008, up from $3.49 billion in 2007, including $730 million of fuel surcharge revenue
- Net earnings of $200.6 million, or $1.56 per diluted share, down from $1.55 per diluted share in 2007 on $213.1 million of net earnings
- Total debt reduced by approximately $280 million (31%) to $633.5 million; no stock repurchases during 2008
- Operating cash flow of $505.1 million in 2008 versus $457.8 million in 2007
- JBI intermodal segment revenue of $1.95 billion and operating income of $254 million; JBT full-load segment operating income fell to $1 million from $32 million
- ICS segment revenue grew 128.5% to $209 million; operating income rose to $11 million
- Quarterly dividend increased to $0.11 per share from $0.10, paid February 26, 2009
03—One dollar
04—Financials
Financial Highlights
Figures from 10-KFY2008filed February 27, 2009Financial Statements
| Revenue | $3.73B |
| Operating Expenses | $3.37B |
| Operating Income | $358.42M |
| Interest Expense | $35.34M |
| Net Income | $200.59M |
| EPS (Basic) | $1.60 |
| EPS (Diluted) | $1.56 |
| Shares Outstanding (Basic) | 125.42M |
| Shares Outstanding (Diluted) | 128.53M |
05—Questions
Frequently Asked Questions
How did J.B. Hunt perform financially in 2008?
Revenue rose 6.9% to $3.73 billion, but net earnings declined 6% to $200.6 million, or $1.56 per diluted share. The company attributed the pressure to a slowing freight environment and higher fuel costs, with fuel cost per gallon averaging 30% above 2007 levels. The operating ratio increased to 90.4% from 89.4%.
How is the company's balance sheet and debt position?
Total debt fell by approximately $280 million, or 31%, to $633.5 million at December 31, 2008. Total debt to equity was 1.20 at year-end 2008, compared with 2.66 at year-end 2007. Stockholders' equity increased to $529 million from $343 million. The company stated it was in compliance with all covenants and believes liquidity is sufficient for the foreseeable future.
What is the company doing with its JBT trucking segment?
The company entered a plan to reduce the JBT fleet and sell or trade approximately 1,100 trailers in calendar 2009, as part of its strategy to become an asset-light transportation company. JBT revenue fell 19.6% to $676 million and its operating income declined to $1.4 million from $32 million, which included pretax asset write-down charges of $3.9 million in 2008 and $8.4 million in 2007.
What are the main risks the filing highlights?
The filing cites dependence on railroads (mainly BNSF and Norfolk Southern) for intermodal service, a concentration of revenue among major customers (top 10 accounted for about 35% of 2008 revenue, and one customer for about 9%), fuel price volatility, insurance and claims costs, driver availability, regulatory changes such as FMCSA hours-of-service rules and EPA engine standards, and an economic slowdown affecting retail and manufacturing customers.
Will the company continue paying dividends?
The company raised its quarterly cash dividend to $0.11 per share from $0.10 in February 2009 and stated it currently intends to continue paying quarterly cash dividends. It noted, however, that no assurance can be given that future dividends will be paid. Dividends paid in 2008 totaled $50.1 million, or $0.40 per share for the year.
06—Continue