More Companies Report Upbeat 2Q Results
Five freight companies reported upbeat second-quarter earnings last week, rounding out a period that saw profits rise across the truckload, less-than-truckload and logistics sectors.
ArcBest Corp. said its net income rose 17% to $20 million, or 74 cents per share, helped by improved profitability at both the ABF Freight LTL unit and its asset-light logistics units. USA Truck more than tripled net income to $2.46 million, or 23 cents, as truckload results improved.
Logistics operator Expeditors International of Washington improved net income 29% to $118 million, or 61 cents, tied to a 9% rise in airfreight tonnage and a 5% increase in ocean container volume. Echo Global Logistics raised net income 29%, excluding one-time costs, to $8.3 million, or 30 cents, led by higher profit margins on truckload business.
Earnings also were announced by fast-growing XPO Logistics Inc., which grew to a $9 billion annual revenue business from $175 million less than four years ago and now is targeting $23 billion in revenue by the end of 2019, CEO Bradley Jacobs told Transport Topics last week.
The company’s loss, excluding one-time costs related to acquisitions, widened slightly to $13.6 million, or 16 cents.
ArcBest, which ranks No. 12 on Transport Topics Top 100 list of the largest for-hire carriers in the United States and Canada, increased LTL profit before interest and taxes 22% to $28.1 million and boosted logistics results on that basis by 48% to $9.66 million.
In the logistics unit, profitability rose at the Panther, maintenance, brokerage and household goods businesses. Companywide revenue rose 5.7% to $696.1 million.
“ArcBest posted strong results this quarter,” said CEO Judy McReynolds. “An expanded set of service offerings are resulting in a greater percentage of customers turning to the ArcBest companies for solutions to their supply chain challenges.”
Raymond James Financial analyst Arthur Hatfield, in an investor note, said ARCBest’s ABF Freight unit is benefiting from “network consolidation efforts, combined with annual run-rate of net savings from the new labor contract and generally strong secular fundamentals.”
At USA Truck, CEO Tom Glaser said the company planned to reduce its truck fleet to boost margins.
USA Truck, which ranks No. 50 on the for-hire TT100, boosted earnings despite a 15% drop in revenue to $133.6 million. Results were helped by a $2.1 million higher gain on asset sales.
Trucking revenue dropped 12% to $93.8 million, mostly due to lower fuel surcharge collections. Brokerage revenue fell even faster at 17% to $41.6 million.
The tractor fleet is being trimmed by 400 this year through the retirement of 800 older, high-cost tractors and purchase of 400 new units.
“We expect the younger fleet to aid with lower maintenance and claims expenses, helping contribute to the company’s goal of improving operating income by $50 million,” said a report from Jason Seidl, a Cowen & Co. analyst.
In addition, USA Truck announced plans to repurchase 1 million shares, or about 10% of its stock.
At XPO, revenue more than doubled to $1.22 billion. Earnings before interest, taxes, depreciation and amortization rose to $79.7 million from $14.1 million, excluding one-time costs.
Jacobs said, “We are in active dialogue with a number of acquisition possibilities” in Europe and North America.
He told TT the company will continue to rely on a blend of acquisitions and organic growth to reach that $23 billion mark. At that level, XPO would be No. 3 on the for-hire TT100, where it is now No. 14, and atop the Transport Topics Top 50 list of the largest logistics companies in the United States, Canada and Mexico, where it now is No. 12.
“We believe the same thing now as we did in 2011,” he said. “The transportation logistics industry is the last big industry that isn’t consolidated. We have come a long way over the last four years, but we still have a tiny piece of the transportation and logistics pie. When we are a $23 billion company, we will still have a small share.”
Echo, which is No. 45 on the TT logistics 50, raised revenue 22% to $371.6 million. Net income including costs related to the acquisition of Command Logistics and other charges produced a net loss of $700,000.
Expeditors, No. 5 on the TT logistics 50, benefited from a favorable second-quarter spot market that produced significantly higher profit margins, Chief Financial Officer Bradley Powell said.
Revenue rose 6% to $1.69 billion.
“We expect pricing volatility to continue as customers and carriers adjust to current market conditions,” he said.
Stifel, Nicolaus & Co. analyst David Ross said Expeditors and other quality forwarders should be able to take market share as some large competitors are “undergoing process and system changes to try and fix years of mismanagement and/or IT confusion and inefficiency.”
