01—Abstract
Summary
Summary of the 10-K filed February 21, 2014. Cited figures are marked; the original filing is the authoritative source.
J.B.
Hunt Transport Services, Inc. reported 2013 total operating revenues of $5.58 billiona, up 10.5% from $5.06 billion in 2012, driven primarily by increased load volume. Operating income rose to $576.7 million from $530.2 million, and net earnings increased to $342.4 million, or $2.87 per diluted share, from $310.4 million, or $2.59 per diluted share, in 2012. The operating ratio was 89.7% compared with 89.5% in 2012, as operating expenses grew 10.7%, slightly faster than revenue.
Rents and purchased transportation rose 12.9% and salaries, wages and employee benefits rose 9.7%, reflecting a tighter driver market and reliance on third-party rail and truck carriers. By segment, Intermodal (JBI) was the main driver, with revenue up 12.5% to $3.46 billionb and operating income of $447 million, versus $375 million in 2012. Dedicated Contract Services (DCS) revenue rose 14.1% to $1.23 billion, but its operating income fell to $110 million from $116 million amid implementation costs for new long-term contracts.
Integrated Capacity Solutions (ICS) grew 17.6% to $537 millionc with flat operating income of $16 million, and Truck (JBT) revenue fell 19.2% to $391 million, with operating income dropping to $4 million from $23 million. Cash flow from operations was $574.4 million, and capital spending on property and equipment was $493.4 million. Total debt was $708.4 million at year-end, against stockholders' equity of $1.01 billion.
The company committed about $606.6 milliond to revenue equipment and facilities for 2014, and the Board announced a quarterly dividend increase from $0.15 to $0.20 per share. The filing also notes pending California class-action lawsuits by drivers, for which the company cannot reasonably estimate a possible loss.
02—Key points
Key Highlights
- Total operating revenues of $5.58 billion in 2013, up 10.5% from 2012, primarily on higher load volume.
- Net earnings of $342.4 million, or $2.87 per diluted share, compared with $310.4 million, or $2.59 per diluted share, in 2012.
- Operating ratio of 89.7%, compared with 89.5% in 2012, as operating expenses rose 10.7%.
- JBI segment revenue rose 12.5% to $3.46 billion with operating income of $447 million, up from $375 million.
- JBT segment revenue fell 19.2% to $391 million, and its operating income dropped to $4 million from $23 million.
- Quarterly dividend increased from $0.15 to $0.20 per share, payable February 27, 2014.
- Committed approximately $606.6 million to acquire revenue equipment and facilities in 2014; total debt was $708.4 million at year-end.
03—One dollar
04—Financials
Financial Highlights
Figures from 10-KFY2013filed February 21, 2014Financial Statements
FY2013 against FY2012
| Line item | FY2013FY2012 | Change |
|---|---|---|
| Revenue | $5.58B$5.05B | +10.5% |
| Operating Expenses | $5.01B$4.52B | +10.7% |
| Operating Income | $576.71M$530.20M | +8.8% |
| Interest Expense | $23.21M$25.56M | −9.2% |
| Net Income | $342.38M$310.35M | +10.3% |
| EPS (Basic) | $2.92$2.64 | +10.6% |
| EPS (Diluted) | $2.87$2.59 | +10.8% |
| Shares Outstanding (Basic) | 117.45M117.57M | −0.1% |
| Shares Outstanding (Diluted) | 119.40M120.02M | −0.5% |
05—Questions
Frequently Asked Questions
What drove the increase in revenue and earnings in 2013?
Total operating revenues increased 10.5% to $5.6 billion, primarily due to increased load volume. Operating income increased to $576.7 million from $530.2 million, and net earnings rose to $342.4 million from $310.4 million. Growth was led by the JBI intermodal segment, where volume growth and improved container utilization offset higher outsourced drayage and rail costs.
Which segments performed well and which struggled?
JBI (intermodal) and ICS grew revenue strongly, at 12.5% and 17.6% respectively. DCS revenue rose 14.1%, but its operating income declined to $110 million from $116 million because of implementation costs for new long-term customers. JBT was the weakest segment, with revenue down 19.2% and operating income of $4 million, down from $23 million, due to lower equipment utilization and fewer tractors.
How is the company's balance sheet and cash flow position?
Net cash provided by operating activities was $574.4 million in 2013. Total debt was $708.4 million, and stockholders' equity was $1.01 billion, up from $791.9 million. The $500 million senior revolving line of credit had $208.7 million outstanding at year-end, and the company stated it was in compliance with all covenants.
What are the main risks to the business according to the filing?
Key risks include fuel price volatility, dependence on third-party railroads and carriers (mainly BNSF and Norfolk Southern for intermodal), the loss of major customers (the top 10 accounted for approximately 29% of revenue), difficulty attracting and retaining drivers, insurance and claims costs, and regulatory compliance. The company also faces pending California class-action lawsuits by drivers and cannot reasonably estimate a possible loss from them.
What is the company's capital return and spending outlook?
The company purchased about 1,575,000 shares for $114.7 million in 2013 and had $338 million remaining under its authorized repurchase plan at year-end. Dividends paid totaled $52.8 million. Capital expenditures on property and equipment were $493.4 million in 2013, and the company is committed to spend approximately $607 million net of proceeds in 2014, mainly on containers, chassis, and tractors.
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