01—Abstract
Summary
Summary of the 10-K filed February 24, 2015. Cited figures are marked; the original filing is the authoritative source.
J.B.
Hunt Transport Services, Inc. reported 2014 total operating revenues of $6.17 billiona, up from $5.58 billion in 2013, a 10.4% increase driven primarily by increased load volume and rate increases. Operating income rose to $631.5 million from $576.7 million, and net earnings increased to $374.8 million, or $3.16 diluted earnings per share, compared with $342.4 million and $2.87 in 2013. The operating ratio was 89.8% versus 89.7% in 2013, as rents and purchased transportation, salaries and wages, and insurance and claims costs grew faster than revenue.
Insurance and claims expense rose 47.0% on higher incident volume and accident severity. By segment, Intermodal (JBI) generated $3.69 billionb of revenue and $461 million of operating income, Dedicated Contract Services (DCS) produced $1.39 billion and $117 million, Integrated Capacity Solutions (ICS) grew revenue 33.8% to $718 million with operating income of $30 million, and Truck (JBT) revenue declined 1.4% to $386 million while operating income improved to $24 million. Management cited slow rail train speeds, driver shortages and rising driver procurement costs as headwinds, particularly within JBI and DCS.
On the balance sheet, total assets reached $3.40 billion and total debt rose to $933.0 millionc, with long-term debt of $683.5 million after $500 million of new 2.40% and 3.85% senior notes were issued in March 2014. Operating cash flow was $646.8 million, while capital expenditures for additions to property and equipment totaled $808.6 million.
The company expects to spend approximately $555 milliond on revenue equipment and facilities in 2015 and raised its quarterly dividend to $0.21 per share from $0.20. Management reports that the company had no derivative instruments to hedge fuel prices at year-end, and a class-action lawsuit by California drivers is on appeal with no estimable loss.
02—Key points
Key Highlights
- Total operating revenues of $6.17 billion, up 10.4% from $5.58 billion in 2013, driven by higher load volume and rate increases.
- Net earnings of $374.8 million, or $3.16 diluted EPS, versus $342.4 million and $2.87 in 2013; operating ratio of 89.8% compared with 89.7%.
- Intermodal (JBI) remained the largest segment at 60% of consolidated revenue with $461 million of operating income; DCS contributed $1.39 billion in revenue and $117 million in operating income.
- ICS revenue grew 33.8% to $718 million and operating income nearly doubled to $30 million, with gross profit margin rising to 13.0% from 11.8%.
- Insurance and claims expense increased 47.0% on higher incident volume and accident severity, and salaries, wages and benefits rose 13.4% amid driver pay increases and a tight driver supply.
- Operating cash flow of $646.8 million funded $808.6 million of equipment and property additions; total debt increased to $933.0 million after new senior note issuances in March 2014.
- Quarterly dividend raised to $0.21 per share from $0.20, and the company repurchased $125.0 million of common stock during 2014.
03—One dollar
04—Financials
Financial Highlights
Figures from 10-KFY2014filed February 24, 2015Financial Statements
FY2014 against FY2013
| Line item | FY2014FY2013 | Change |
|---|---|---|
| Revenue | $6.17B$5.58B | +10.4% |
| Operating Expenses | $5.53B$5.01B | +10.5% |
| Operating Income | $631.54M$576.71M | +9.5% |
| Interest Expense | $27.03M$23.21M | +16.5% |
| Net Income | $374.79M$342.38M | +9.5% |
| EPS (Basic) | $3.20$2.92 | +9.6% |
| EPS (Diluted) | $3.16$2.87 | +10.1% |
| Shares Outstanding (Basic) | 117.00M117.45M | −0.4% |
| Shares Outstanding (Diluted) | 118.44M119.40M | −0.8% |
05—Questions
Frequently Asked Questions
How did J.B. Hunt perform financially in 2014?
Total operating revenues rose 10.4% to $6.17 billion, operating income increased to $631.5 million, and net earnings reached $374.8 million, or $3.16 per diluted share. The operating ratio was 89.8%, slightly higher than 89.7% in 2013, as cost growth in purchased transportation, driver compensation and insurance nearly matched revenue growth.
Which business segments drove results?
Intermodal (JBI) generated $3.69 billion of revenue and $461 million of operating income. DCS produced $1.39 billion of revenue and $117 million of operating income. ICS was the fastest-growing segment, with revenue up 33.8% to $718 million, while JBT revenue fell 1.4% to $386 million but its operating income improved to $24 million from $4 million.
What are the main operational challenges the company cited?
The filing cites slow train speeds and limited dray fleet capacity affecting JBI network fluidity, driver procurement and retention costs across segments, and higher insurance and claims expense from increased incident volume and severity. Severe winter weather in the first quarter of 2014 also affected DCS productivity.
How is the company funding its capital spending and what are its debt levels?
Operating cash flow of $646.8 million, revolving credit borrowings and long-term debt issuances funded capital spending. Total debt rose to $933.0 million at year-end 2014 from $708 million. The company is committed to spend approximately $555 million on equipment and facilities in 2015 and intends to repay 2015 maturities using its revolving line of credit or other financing.
What is the company's dividend and share repurchase activity?
The company paid $0.20 per share quarterly dividends during 2014, totaling $0.80 per share, and announced an increase to $0.21 per share payable February 26, 2015. It purchased approximately 1,605,000 shares for $125.0 million during 2014, with $213.2 million remaining under its authorized repurchase plan at year-end.
06—Continue