01—Abstract
Summary
Summary of the 10-K filed March 2, 2020. Cited figures are marked; the original filing is the authoritative source.
J.B.
Hunt Transport Services, Inc. (NASDAQ: JBHT) reported 2019 total operating revenues of $9.17 billiona, up from $8.61 billion in 2018, and operating income of $733.8 million compared with $681.0 million in 2018. Net earnings were $516.3 million, or $4.77 per diluted share, versus $489.6 million, or $4.43 per diluted share, in 2018. The operating ratio was 92.0% compared with 92.1% in 2018.
Growth was driven mainly by DCS, where revenue rose to $2.69 billionb from $2.16 billion, helped by the Cory 1st Choice Home Delivery acquisition, while ICS operating income turned to a $11 million loss from $50 million of income in 2018 amid lower gross profit margin. The company recorded significant BNSF arbitration charges: $26.8 million in rents and purchased transportation and a $17.4 million insurance and claims charge in the third quarter of 2019, totaling $44.2 million, following the October 2019 Final Award. In 2018, it recorded $152.3 million of BNSF-related charges in JBI.
Net cash provided by operating activities was $1.10 billionc, and net cash used in investing activities was $804 million. Total debt rose to $1.30 billion, with a $700 million 3.875% senior notes issuance in March 2019 used to repay $250 million of 2.40% notes.
Looking ahead, the Board authorized an additional $500 milliond share repurchase program on January 22, 2020, and raised the quarterly dividend from $0.26 to $0.27 per share. The company is committed to approximately $938 million of net equipment and facility purchases during 2020 through 2022, and it filed a motion on January 17, 2020, to confirm and enforce the BNSF Final Award.
02—Key points
Key Highlights
- Total operating revenues rose 6.4% to $9.17 billion in 2019, with operating income of $733.8 million and net earnings of $516.3 million ($4.77 diluted EPS).
- DCS revenue grew 25% to $2.69 billion, aided by the Cory acquisition and 972 net additional revenue-producing trucks.
- ICS posted an operating loss of $11 million in 2019 versus $50 million of operating income in 2018, as gross profit margin fell to 13.1% from 15.4%.
- BNSF arbitration charges totaled $44.2 million in the third quarter of 2019, following the October 2019 Final Award; 2018 included $152.3 million of related JBI charges.
- The Board authorized an additional $500 million share repurchase program and raised the quarterly dividend to $0.27 per share from $0.26.
- Operating cash flow was $1.10 billion, and $938 million of equipment and facility purchase commitments extend through 2020 to 2022.
- Total debt increased to $1.30 billion after issuing $700 million of 3.875% senior notes due 2026 in March 2019.
03—One dollar
04—Financials
Financial Highlights
Figures from 10-KFY2019filed March 2, 2020Financial Statements
FY2019 against FY2018
| Line item | FY2019FY2018 | Change |
|---|---|---|
| Revenue | $9.17B$8.61B | +6.4% |
| Operating Expenses | $8.43B$7.93B | +6.3% |
| Operating Income | $733.83M$681.02M | +7.8% |
| Interest Expense | $54.68M$40.43M | +35.3% |
| Net Income | $516.32M$489.58M | +5.5% |
| EPS (Basic) | $4.81$4.48 | +7.4% |
| EPS (Diluted) | $4.77$4.43 | +7.7% |
| Shares Outstanding (Basic) | 107.33M109.38M | −1.9% |
| Shares Outstanding (Diluted) | 108.31M110.43M | −1.9% |
05—Questions
Frequently Asked Questions
How did J.B. Hunt perform financially in 2019?
Total operating revenues increased 6.4% to $9.17 billion, operating income rose to $733.8 million from $681.0 million, and net earnings increased to $516.3 million from $489.6 million. Diluted EPS was $4.77, compared with $4.43 in 2018. The operating ratio improved slightly to 92.0% from 92.1%.
What drove the growth in DCS and what challenged ICS?
DCS revenue increased 25% to $2.69 billion, driven by higher productivity, the Cory acquisition, and a net increase of 972 revenue-producing trucks. ICS revenue rose 1% to $1.35 billion, but it incurred a $11 million operating loss because of lower gross profit margins, increased expenses to expand the Marketplace for J.B. Hunt 360, and higher personnel and digital marketing costs.
What is the status of the BNSF arbitration?
In October 2019 the arbitrators issued a Final Award, and the company recorded $44.2 million of pre-tax charges in the third quarter of 2019, including $26.8 million for 2018 charges claimed by BNSF and a $17.4 million charge for legal fees, costs and interest. On January 17, 2020, the company filed a motion to confirm and enforce the Final Award, and BNSF has moved to confirm it in the District of Columbia.
What are the company's capital return plans?
On January 22, 2020, the Board authorized an additional purchase of up to $500 million of common stock and increased the quarterly cash dividend from $0.26 to $0.27 per share, payable February 21, 2020. During 2019 the company repurchased about 2.8 million shares for $275.7 million, and $95 million remained under the prior plan at year-end.
How is the company funding its equipment and liquidity needs?
The company had $1.10 billion of operating cash flow in 2019 and no borrowings outstanding under its $750 million revolving credit facility at December 31, 2019. It issued $700 million of 3.875% senior notes due 2026 in March 2019 and repaid $250 million of 2.40% notes at maturity. It is committed to about $938 million of net equipment and facility purchases during 2020 through 2022 and states that its resources are sufficient for the foreseeable future.
06—Continue