Burlington Northern Santa Fe Corp (BNI)

F4Phanatic (98.78) Submitted: 2/08/08 10:47 PM : Start Price: $69.58 BNI Score: 39.47

Burlington Northern and The Atchison, Topeka & Santa Fe railroads merged on 31 December 1996 to form Burlington Northern Santa Fe Corporation. ATSF was famous for its locomotives that pulled its freight and passenger consists, resplendent in the famous Warbonnet paint scheme. Reminiscent of a Native American ceremonial headdress, they are still popular with railfans.

Burlington Northern Santa Fe provides freight rail transportation in North America, primarily in the Mid-West, Pacific Northwest, Western, Southwestern and Southeastern regions. BNSF transports various commodities such as consumer, industrial, coal, and agricultural products. The consumer products include automobiles and vehicle parts, as well as perishables and dry boxcar products. BNSF also transports other consumer goods such as cotton, salt, rubber, and tires. The company also transports industrial and construction products like clays, sands, cements, aggregates, and other products including lumber, plywood, oriented strandboard, paper products, pulpmill feedstock, wood pulp and saw logs.

Chemical and plastic products such as caustic gases, chlorine, acids, and polyvinyl chloride are transported along with petroleum products, as well as, agricultural products.

As of February 2007, BNSF operated a rail system consisting of approximately 32,000 route miles(23,000 miles of which are owned) in 28 states and 2 Canadian providences. As for equipment, as of 31 December 1996, it has:

Locomotives - 6330
Freights Cars - 85,121

The average of the locomotive fleet is 15 years.
The average of the freight cars is 14 years.

BNSfFis the 2nd largest railroad in the nation. It main competitors are;

Canadian National Railway Company (CNI)
CSX Corporation (CSX)
Union Pacific Corporation (UNP)

For Q4 2007 quarterly earnings were $1.46 per share compared with Q4 2006 earnings of $1.42 per share. Freight revenues increased $352 million, or 9%, to $4.12 billion compared with $3.77 billion in the fourth quarter of 2006, pricipally due to strong yields and an increase in fuel surcharges of $120 million. BNSF spent $2.7 billion on fuel in 2006 making it the largest expense. In response BNSF established a fuel surcharge program which recovers most of BNSF's increased fuel expense. In early 06 BNSF implemented a mileage based fuel surcharge with fuel consumption based on weight, distance and fuel density.

Operating income in the fourth quarter of 2007 was $950 million, compared to $943 million in the fourth quarter of 2006. Operations income reflects a $257 million increase in fuel expense, principally resulting from higher fuel prices. In 2007 BNSF used 1,442,000,000 gallons of fuel at a average price per gallon of $2.57 compared to 1,478,000,000 at a average price per gallon of $1.86.

In 2007, BNSF exceeded $1 billion in free cash flow before dividends and achieved $738 million in free cashflow after dividends.

Agricultural products revenues were up $158 million or 24%, to an all-time quarterly record of $804 million for the fourth quarter of 2007. Coal revenues rose by $119million, or 15%, to $894 million, as a result of increased tons per unit and improved yields. BNSFresponded to the rising value of Powder River Basin Coal in the global energy markets by expanding capacity with projects that included 37miles of new track on key coal routes.

Industrial products increased by $141 million, or 5%, to $926 million on 2% higher volume yields. Strong demand for construction and petroleum products was offset by a decline in building products as a result of weakness in the housing market. Consumer products revenues of $1.5 billion were $34 million, or 2% higher than the fourth quarter of 2006, principally due to stronger yields.

Operating expenses for the fourth quarter of 2007 were $3.3 billion compared with fourth quarter 06 operating expenses of $2.94 billion. The $356 million increase in operating expenses was largely driven by a $257million increase in fuel expense primarily reflecting increased prices.

For the full year of 2007, operating revenues reached a record $15.8 billion, a 5% increase over 2006, which included increases in each of BNSF's 4 business groups, with record revenues in agriculture and coal. Despite a $310 million dollar reduction in fuel hedge benefit, 2007 operating income of $3.49 billion decreased slightly compared with 2006.

In the future expenses might increase because of a planned $2.75 billion in capital expenditures because of capacity constraints.Most of the employees are represented by a union, failure to successfully negotiate collective bargaining agreements may result in strikes, work stoppages, or substantially higher labor costs. fuel supply availability and fuel prices may adversely affect the company's operations, financial condition or liquidity.

Forward Annual Dividend Rate is 1.28
Forward Annual Dividend Yield is 1.50%
Revenue (ttm) $15.80B
Gross Profit (ttm) $9.41B
Q. Revenue Growth 9.40%
Total Debt (mrq) $8.15B
Trailing P/E (ttm) 17.27

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