01—Abstract
Summary
Summary of the 10-K filed February 26, 2010. Cited figures are marked; the original filing is the authoritative source.
J.B.
Hunt Transport Services, Inc. reported 2009 total operating revenues of $3,203.3 milliona, down from $3,731.9 million in 2008, and net earnings of $136.4 million, or $1.05 per diluted share, versus $200.6 million, or $1.56 per diluted share, in 2008. The filing attributes the decline primarily to pricing pressure and margin contraction aggravated by the recession, along with lower fuel surcharge revenue ($326.3 million in 2009 versus $730.4 million in 2008). Operating income fell to $248.0 million from $358.4 million, and the consolidated operating ratio rose to 92.3% from 90.4%.
Pretax charges of $10.3 millionb to write down assets held for sale were recorded in 2009. By segment, Intermodal (JBI) remained the largest, with revenue of $1.76 billion and operating income of $183 million. Dedicated Contract Services (DCS) generated $757 million in revenue and $63 million in operating income, Full-Load Dry-Van (JBT) posted an operating loss of $11 million on $447 million of revenue, and Integrated Capacity Solutions (ICS) grew revenue to $259 million with operating income of $13 million.
Management also highlights a reduction in total debt of approximately $69 million during 2009, to $565.0 millionc, with total debt at 47% of total capital. Cash flow from operations was $356.9 million in 2009, compared with $505.1 million in 2008.
The company ended 2009 with $7.8 milliond in cash, a working capital ratio of 1.46, and stockholders' equity of $643.9 million. Management plans roughly $132 million of 2010 capital commitments for tractors and containers, and the quarterly dividend was raised from $0.11 to $0.12, effective February 2010.
02—Key points
Key Highlights
- 2009 net earnings of $136.4 million, or $1.05 per diluted share, down from $200.6 million, or $1.56 per diluted share, in 2008.
- Total operating revenues fell to $3.20 billion from $3.73 billion, reflecting lower fuel surcharge revenue of $326.3 million versus $730.4 million in 2008 and competitive rate pressure.
- Operating ratio worsened to 92.3% from 90.4%, with operating income down to $248.0 million from $358.4 million.
- Total debt was reduced by approximately $69 million to $565.0 million, and the working capital ratio improved to 1.46 from 0.97.
- Intermodal (JBI) remained the largest segment at $1.76 billion of revenue, while ICS was the only segment with revenue growth, rising to $259 million from $209 million.
- JBT reported an operating loss of $11 million on $447 million of revenue as demand and rates weakened.
- The quarterly dividend was increased to $0.12 per share from $0.11, payable February 26, 2010.
03—One dollar
04—Financials
Financial Highlights
Figures from 10-KFY2009filed February 26, 2010Financial Statements
FY2009 against FY2008
| Line item | FY2009FY2008 | Change |
|---|---|---|
| Revenue | $3.20B$3.73B | −14.2% |
| Operating Expenses | $2.96B$3.37B | −12.4% |
| Operating Income | $247.97M$358.42M | −30.8% |
| Interest Expense | $27.43M$35.34M | −22.4% |
| Net Income | $136.44M$200.59M | −32.0% |
| EPS (Basic) | $1.08$1.60 | −32.5% |
| EPS (Diluted) | $1.05$1.56 | −32.7% |
| Shares Outstanding (Basic) | 126.68M125.42M | +1.0% |
| Shares Outstanding (Diluted) | 129.46M128.53M | +0.7% |
05—Questions
Frequently Asked Questions
Why did J.B. Hunt's earnings decline in 2009?
The filing says pricing pressure and resulting margin contraction, aggravated by the ongoing recession, contributed significantly to the decline. Operating income decreased 28% in JBI, 32% in DCS, and JBT reported an operating loss, while ICS operating income grew 23%. The company also recorded $10.3 million of pretax charges to write down assets held for sale.
How much did fuel prices affect revenue and expenses?
Fuel surcharge revenue fell to $326.3 million in 2009 from $730.4 million in 2008, which reduced the reported revenue comparison. Fuel and fuel taxes expense decreased 47.5%, primarily due to a 36.7% lower fuel cost per gallon. The filing notes that fuel surcharge programs lag fuel cost changes, which affects operating income when fuel prices move rapidly.
Is J.B. Hunt's debt position improving?
Total debt declined to $565.0 million at December 31, 2009, from $633.5 million a year earlier, and debt represented 47% of total capital compared with 54% in 2008. The company terminated its $75 million accounts receivable securitization facility and repaid its $100 million term loan at maturity in September 2009. Its $350 million revolving line of credit had $165.0 million outstanding at December 31, 2009.
What are the main risks for investors identified in the filing?
Key risks include reliance on railroads, particularly BNSF and Norfolk Southern, for JBI; dependence on a few major customers, with the top 10 accounting for approximately 33% of 2009 revenue; fuel price volatility; rising insurance and claims costs; and difficulty attracting drivers. The company also cites its exposure to California class-action lawsuits by drivers, for which it cannot reasonably estimate a loss.
06—Continue