01—Abstract
Summary
Summary of the 10-K filed February 23, 2016. Cited figures are marked; the original filing is the authoritative source.
J.B.
Hunt Transport Services, Inc. reported 2015 total operating revenues of $6.19 billiona, essentially flat versus $6.17 billion in 2014, as a 38.0% decline in fuel surcharge revenue to $671 million offset customer rate increases and load growth. Operating income rose to $716 million from $632 million, and net earnings increased to $427 million ($3.66 diluted EPS) from $375 million ($3.16 diluted EPS in 2014). The operating ratio improved to 88.4% from 89.8%, driven by lower fuel and fuel taxes expense (down 31.0%) and higher operating income in the JBI, DCS, ICS and JBT segments.
Management attributed the 2015 expense trend to lower fuel costs, higher salaries and driver pay (up 8.1%), and higher depreciation (up 15.3%) from fleet additions. Operating cash flow strengthened to $873 millionb from $647 million, while the company spent $725 million on property and equipment additions and repurchased $262 million of common stock. Total debt rose to $1.005 billion from $934 million after the issuance of $350 million of 3.30% senior notes due 2022, and the $250 million 3.375% notes matured in September 2015.
The company stated it is committed to approximately $463 millionc of net equipment and facility spending during 2016 and 2017, and its board raised the quarterly dividend from $0.21 to $0.22 per share in January 2016. The filing notes a pending class-action lawsuit by California-based drivers on which the company cannot reasonably estimate a possible loss, and management believes other claims will not have a material adverse effect. Ernst & Young issued an unqualified opinion on both the financial statements and internal control over financial reporting, which management assessed as effective.
02—Key points
Key Highlights
- Total operating revenues were $6.19 billion in 2015, roughly flat versus $6.17 billion in 2014, while fuel surcharge revenue fell 38.0% to $671 million.
- Operating income increased to $716 million from $632 million, and the operating ratio improved to 88.4% from 89.8%.
- Net earnings rose to $427 million, or $3.66 diluted earnings per share, compared with $375 million, or $3.16 per diluted share, in 2014.
- Net cash provided by operating activities increased to $873 million from $647 million.
- Segment operating income: JBI $477 million, DCS $163 million, ICS $36 million, and JBT $40 million, with DCS operating income up from $117 million.
- The company repurchased $262.3 million of common stock in 2015 and had $451.0 million remaining under its buyback authorization at year-end.
- Quarterly dividend was increased to $0.22 per share from $0.21, and approximately $463 million of net equipment and facility commitments were outstanding for 2016 and 2017.
03—One dollar
04—Financials
Financial Highlights
Figures from 10-KFY2015filed February 23, 2016Financial Statements
FY2015 against FY2014
| Line item | FY2015FY2014 | Change |
|---|---|---|
| Revenue | $6.19B$6.17B | +0.4% |
| Operating Expenses | $5.47B$5.53B | −1.1% |
| Operating Income | $715.69M$631.54M | +13.3% |
| Interest Expense | $25.58M$27.03M | −5.4% |
| Net Income | $427.24M$374.79M | +14.0% |
| EPS (Basic) | $3.69$3.20 | +15.3% |
| EPS (Diluted) | $3.66$3.16 | +15.8% |
| Shares Outstanding (Basic) | 115.68M117.00M | −1.1% |
| Shares Outstanding (Diluted) | 116.73M118.44M | −1.4% |
05—Questions
Frequently Asked Questions
How did J.B. Hunt's profitability change in 2015?
Operating income increased to $716 million from $632 million, and net earnings rose to $427 million from $375 million. Diluted EPS was $3.66 versus $3.16. The operating ratio improved to 88.4% from 89.8%, reflecting lower fuel and fuel taxes expense, which fell 31.0%, along with customer rate increases and load growth.
Why did revenue stay flat despite load growth and rate increases?
The filing states that overall customer rate increases and load growth, along with increased fleet counts in the JBI, DCS and JBT segments, were offset by a 38.0% decrease in fuel surcharge revenue to $671 million, due to lower fuel prices during 2015.
How much debt does the company carry and what changed in its financing?
Total debt was $1.005 billion at December 31, 2015, up from $934 million in 2014. The company issued $350 million of 3.30% senior notes due August 2022 in 2015 and paid off $250 million of 3.375% senior notes at maturity in September 2015. It also had $150 million outstanding under its $500 million senior revolving line of credit, which expires in September 2020.
What capital spending and shareholder returns does the company plan or report?
The company spent $725 million on additions to property and equipment in 2015 and purchased $262 million of its common stock. It is committed to approximately $463 million, net of proceeds from sales or trade-ins, for 2016 and 2017, primarily for containers, chassis and tractors. The quarterly dividend was increased to $0.22 per share, payable February 26, 2016.
Are there material legal risks disclosed in the filing?
The company is a defendant in class-action lawsuits brought by current and former California-based drivers alleging unpaid wages and meal and rest period violations. The lead case was decided in the company's favor in the first half of 2014 and is on appeal to the Ninth Circuit. The company states it cannot reasonably estimate the possible loss or range of loss, and believes other claims will not have a material adverse effect.
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