J.B. Hunt Transport Services, Inc.

Transcription

1 J.B. Hunt Transport Services, Inc. J.P. Morgan Aviation & Transportation Conference 2009

2 Disclosure Today s presentation and discussion will contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of Words such as expects, anticipates, intends, estimates, or similar expressions are intended to identify these forward-looking statements. These statements are based on J.B. Hunt s current plans and expectations and involve risks and uncertainties that could cause future activities and results of operations to be materially different from those set forth in the forward-looking statements. For further information, please refer to J.B. Hunt s reports and filings with the Securities and Exchange Commission. 2

3 J.B. Hunt Transport Services, Inc. 4Symbol: 4Shares outstanding: JBHT 129 million 4Recent share price (3/03/2009): $ week Range: $ Market Capitalization: $2.5 billion Revenue: $3.7 billion 4Insider Ownership: ~35% 3

4 Distinct Complementary Businesses 4 Intermodal (JBI) h h h Largest, 100% 53 high-cube container fleet Largest drayage fleet in North America Priority loading and unloading at major rail terminals 4 Dedicated (DCS) h h h Fleet creation, conversion and augmentation Design and implementation of value-driven supply chain solutions On-site management 4 Integrated Capacity Solutions (ICS) h h h Non-asset based offering of dry van, flatbed, refrigerated, expedited and LTL services 40- and 20-foot box domestic and international containers and international intermodal services Services to all 50 States, Canada and Mexico 4 Truckload (JBT) h h h One of the largest capacity networks in North America Instant tracking via the Internet GPS trailer tracking 4

5 Our Strategy; Before, During, After the Downturn 4 Use our unique network to bring our customers the low-cost, servicesensitive advantages of intermodal (JBI) 4 Utilize our scale, experience, systems and network to drive growth in services that have defensible characteristics (JBI, DCS Final Mile Delivery and Replenishment, ICS) 4 Further leverage the J.B. Hunt brand, network and technology to penetrate new markets (DCS, ICS) 4 Reduce asset-based exposure to areas with low entry barriers, high capital requirements and undifferentiated service (JBT, DCS Capacity) 4 Deploy growing free cash flow to further strengthen balance sheet 5

6 Results 6

7 Strong Cash Generation, Reduced CAPEX 4 Reductions in JBT s fleet reduces our CAPEX needs 4 Our lower CAPEX and higher cash generating businesses of JBI and ICS are growing 4 Our ability to cascade older and/or less expensive equipment into intermodal drayage and DCS means less CAPEX 4 Drayage tractors and many DCS units last longer than over-the-road tractors * 2006 CAPEX includes trailers previously under operating lease. 7

8 Balance Sheet Strengthens 8 Free Cash Flow = EBITDA Net Capex

9 Return Comparisons 9

10 The Economy 10

11 Comparing the Downturns 4 Previous Downturn ( ) h Asset-based TL represented 39% of JBHT h EBIT margins fell 70bp to 2.9% in 2000 h JBI margins actually expanded h DCS margins hurt by equipment issues h EBIT margins rose 50bp in 2001 and 100bp in Current Downturn (2H 06 -?) h Asset-based TL 18% of revenue in 2008 h EBIT margin down 100bp y/y to 9.6% in 2008 h Truck fleet down 16% y/y from 2007 h Truck fleet down 43% from 2000 h DCS consistent performance h ICS strong growth Note: JBT and JBI margins are combined for

12 JBI and ICS: Load Growth Despite Weak Freight Market 12

13 DCS: Stable vs. Traditional Truckload 25% EBIT Margin Comparison 20% HTLD KNX DCS JBT WERN CVTI 15% 10% 5% 0% -5% 1Q07 2Q07 3Q07 4Q07 1Q08 2Q08 3Q08 4Q08-10% 13

14 Service Quality vs. Cost Trade-offs 4Shippers seek the optimal trade-off between service and cost 14

15 J.B. Hunt Covers the Service Spectrum J.B. Hunt Transport's Service Spectrum Higher 3.50 Service COST - Relative Cost per Mile ICS Low-Cost Solution Truck DCS Flawless Service Solution Intermodal Lower % Lower Higher 100% Service VALUE - Velocity and Reliability Source: 2008 J.B. Hunt Transport, Inc. on-time service measurements and average rate per mile data 15

16 J.B. Hunt Transport Services, Inc. Segment Discussion

17 JBI - Intermodal 4 Largest 53, high-cube container fleet 4 Proprietary company owned chassis 4 Largest drayage fleet in North America 4 Priority loading and unloading at major rail terminals 4 Long-standing, mutually beneficial relationships with rail partners 4 20 years of experience! 17

18 20 Years of Success and Counting 4 Past h Experimental h Service gaps h Lower cost h Limited routes h Long-haul 4 Present h Broadly accepted h Truck-like service in many lanes h Lower cost h Established, proven network h Solution for reducing carbon emissions 4 Future h Deeper penetration in Eastern markets h Elimination of service gap h Shorter length of haul h Solution for reducing carbon emissions h Reduced highway congestion and fatalities 18

19 Intermodal Market View 4Near-term h Seasonal and cyclical weakness h Conversion of truck freight continues h Rails providing consistently better service h 15-20% cost advantage vs. truck even with drop in diesel prices h Pricing pressures h Environmental initiatives stimulate growth 4Intermediate-term h Substantial Eastern market opportunity h Recovery in truck rates likely to help intermodal as well h Rail partners invest to unclog bottlenecks h Environmental initiatives stimulate growth h Highway congestion furthers intermodal usage 19

20 DCS - Dedicated 4 Design, develop execute supplychain solutions 4 Utilize variety of specialized equipment for customer-specific needs 4 Operate under long-term contracts 4 On-site solutions 4 Well-defined customer P&Ls 20

21 DCS Characteristics 21

22 DCS: On-Site, Solution-Based 22

23 Stable Business Model 23

24 DCS Favorable Stand-alone Comparison Source: Company reports 24

25 DCS Market View 4Near-term h Broad economic weakness evident in lower utilization and fleet contraction h Customer downsizing, consolidations and liquidations h Pricing pressures in generic dedicated capacity segment h Non-generic dedicated performing much better than OTR trucking 4Intermediate-term h Target complex and customized solutions-based services h Leverage established national network as competitive advantage h Outsourcing stimulated by regulatory, environmental and capital concerns h Implement enhanced cab technology and route visibility 25

26 ICS Non-asset Based 4 Non-asset based offerings in dry van, flatbed, refrigerated, expedited and LTL 4 Bring broader range of services to customers 4 Utilize brand, systems and network to penetrate new segments 4 Capture freight that historically did not fit JBHT network 26

27 ICS Market View 4Near-term h Capacity remains plentiful in the marketplace h Diversification will continue to spur growth h Pricing remains highly competitive h Access to cash remains critical for carriers h Shippers are focused on optimizing transportation in supply chain 4Intermediate-term h Capacity will continue to exit the marketplace h Diversification will spur growth h Stimulus package will shift capacity to government projects h Pricing will recover h Increased focus on alignment with financially strong transportation providers 27

28 JBT Truckload 4 One of the Country s largest truckload fleets 4 Broad customer base and diverse mix of freight 4 Positioned to benefit from eventual recovery 4 Ongoing strategic right-sizing to meet customer requirement and ROI needs 28

29 Early, Proactive Fleet Reduction 29

30 Truckload Market View 4Near-term h FSC lag benefits offer only modest offset to weak demand h Seasonal and cyclical weakness in demand h Customers seeking to capture lower prices h Carrier failures and fleet downsizing likely to continue 4Intermediate-term h Trucking capacity will tighten quickly and rates will respond h Hour-of-service regulations and demographics act to tighten driver availability h Highway congestion and environmental regulations will pressure capacity 30

31 Summary 4 Competitively differentiated h Unique intermodal network h Distinct advantages in dedicated segments h Network economics and brand strength to penetrate new markets 4 Prepared to weather downturn h Strong financial position h Less cyclical business model h Diversification 4 Complemented by industry dynamics h Shippers need to reduce costs h Shippers demand on-time service h Increasingly complex supply-chains 4 Positioned for recovery h Leading positions in large and consolidating markets h Clear value proposition for our customers h Best-in-class systems and technology Intermodal Dedicated Contract Services Integrated Capacity Solutions Truckload 31

32 J.B. Hunt Transport Services, Inc. Supplemental Information

33 Performance Metrics (5-year averages, Full Year 2008) 33

34 Intermodal Delivers Environmental Benefits Truck Distance (Miles) Intermodal Distance (Miles) Dray Miles Distance (Miles) 11,261,675 10,831,742 1,250,490 TRUCK Emission Factor (lbs CO 2 e / mile) 4.2 Gallons Emissions Burned (Tonnes CO 2 e) 21,328 2,072,371 INTERMODAL RAIL DRAY Emission Factor (lbs CO 2 e / mile) 1.6 Emission Factor (lbs CO 2 e / mile) 4.2 Emissions (Tonnes CO 2 e) 8, ,909 Emissions (Tonnes CO 2 e) 2, ,358 Savings (Tonnes CO2e) * 10,849 1,054,104 Reduction % 51% 51% *The equivalent of taking 1,808 cars off the road * The equivalent of taking 57 "Big Rigs" off the road 34

35 Perceived Service Gaps Persist Intermodal service gap vs. TL historically supports 15-20% service discount. 4 Source: Morgan Stanley Freight Pulse Survey October Shipper Ranking of Service Reliability for Each Mode (10=Excellent) 35

36 Obstacles Are Not Insurmountable if rails can overcome service issues, it could lead to a windfall for intermodal volumes or rail pricing. 4 Shipper Ranking of Service Reliability for Each Mode (10=Excellent) Source: Morgan Stanley Freight Pulse Survey October

37 Door-to-Door Service Is Critical 37

38 JBI Performance 38

39 DCS Performance 39

40 ICS Performance 40

41 JBT Performance 41

42 Diversified Customer Mix 42