01—Abstract
Summary
Summary of the 10-K filed February 23, 2021. Cited figures are marked; the original filing is the authoritative source.
J.B.
Hunt Transport Services, Inc. reported total operating revenues of $9.64 billiona for 2020, up from $9.17 billion in 2019, driven mainly by higher ICS revenue per load, the December 2019 acquisition and new contractual business in FMS, and increased JBT and DCS load volumes. Operating income was $713 million versus $734 million in 2019, and net earnings were $506 million, or $4.74 per diluted share, compared with $516 million and $4.77 in 2019. The operating ratio rose to 92.6% from 92.0%, reflecting higher rents and purchased transportation costs, higher salaries and wages (including a $12.3 million one-time COVID-19 related bonus), and lower operating results in ICS and FMS, partially offset by lower fuel expense.
Cash flow remained solid, with net cash provided by operating activities of $1.12 billionb in 2020 versus $1.10 billion in 2019. Net cash used in investing activities was $613 million, and the company ended the year with $313 million in cash and no balance outstanding on its $750 million revolving line of credit. Management stated it is committed to approximately $1.12 billion in net equipment and facility purchases during 2021 and 2022, and it increased the quarterly dividend to $0.28 per share from $0.27.
The filing also notes ongoing litigation with BNSF over the Joint Service Agreement revenue division, following a Final Award that resulted in $44.2 millionc of pretax charges in 2019 and an $8.2 million charge in the first quarter of 2020. The company has appealed to the Eighth Circuit. Management described COVID-19 as a continuing source of uncertainty for customer demand and operations, and the company remains subject to regulatory and independent contractor classification risks.
02—Key points
Key Highlights
- Total operating revenues rose 5.1% to $9.64 billion in 2020, with ICS revenue up 23% to $1.66 billion and FMS revenue up 22% to $689 million.
- Operating income declined to $713 million from $734 million, and the operating ratio increased to 92.6% from 92.0%.
- Net earnings were $506 million, or $4.74 per diluted share, versus $516 million, or $4.77 per diluted share, in 2019.
- ICS posted an operating loss of $45 million in 2020, with gross profit margin falling to 9.9% from 13.1%, while Marketplace for J.B. Hunt 360° revenue reached $1.14 billion.
- JBI revenue declined 1% to $4.68 billion and segment operating income fell to $428 million from $447 million, while DCS operating income rose to $314 million.
- Operating cash flow was $1.12 billion, the company held $313 million in cash, and it had no outstanding revolver borrowings against a $750 million facility.
- The company has $1.12 billion in committed equipment and facility purchases for 2021 and 2022, and an ongoing BNSF arbitration award and appeal.
03—One dollar
04—Financials
Financial Highlights
Figures from 10-KFY2020filed February 23, 2021Financial Statements
FY2020 against FY2019
| Line item | FY2020FY2019 | Change |
|---|---|---|
| Revenue | $9.64B$9.17B | +5.1% |
| Operating Expenses | $8.92B$8.43B | +5.8% |
| Operating Income | $713.12M$733.83M | −2.8% |
| Interest Expense | $47.58M$54.68M | −13.0% |
| Net Income | $506.04M$516.32M | −2.0% |
| EPS (Basic) | $4.79$4.81 | −0.4% |
| EPS (Diluted) | $4.74$4.77 | −0.6% |
| Shares Outstanding (Basic) | 105.70M107.33M | −1.5% |
| Shares Outstanding (Diluted) | 106.77M108.31M | −1.4% |
05—Questions
Frequently Asked Questions
How did J.B. Hunt perform financially in 2020?
Total operating revenues increased 5.1% to $9.64 billion, while operating income decreased to $713 million from $734 million. Net earnings were $506 million, or $4.74 per diluted share, compared with $516 million, or $4.77 per diluted share, in 2019.
Which segments drove revenue growth and which weighed on profitability?
ICS revenue increased 23% to $1.66 billion and FMS revenue increased 22% to $689 million, driven by higher revenue per load and acquisitions and new contracts. ICS posted a $45 million operating loss due to lower gross profit margins and technology spending, and FMS posted a $1 million operating loss. JBI operating income decreased to $428 million from $447 million.
How strong is the company's liquidity and cash generation?
Net cash provided by operating activities was $1.12 billion in 2020. The company had $313 million in cash at year end and no borrowings outstanding under its $750 million senior revolving line of credit, which expires in September 2023.
What are the main outstanding legal and capital commitments?
The company is appealing to the Eighth Circuit in its BNSF arbitration matter after the Arkansas Federal Court confirmed the arbitration awards in July 2020 but denied additional enforcement relief. It is also committed to approximately $1.12 billion, net of sales or trade-ins, for equipment and facility purchases during 2021 and 2022.
What is the dividend and share repurchase picture?
The quarterly cash dividend was increased from $0.27 to $0.28 per share, paid February 19, 2021. Dividends declared totaled $1.08 per share in 2020. During 2020, the company purchased about 942,000 shares for $92.5 million, and $503 million remained available under its repurchase authorization at year end.
06—Continue