More LTLs Report 4Q Gains; Continued Growth Predicted

Four publicly traded less-than-truckload carriers have joined the ranks of fleets that improved fourth-quarter financial performance and signaled that prospects for continued growth are brightening.

The four carriers’ results built on the fourth-quarter profit growth reported earlier by Arkansas Best Corp. and Saia Inc. (2-6, p. 3)

The largest company to report was Con-way Inc., whose quarterly net income leaped to $23 million from $2.38 million a year earlier.

Next in line by size was Old Dominion Freight Line Inc., whose profits were the industry’s highest, with net income growing to $39.9 million from $22.1 million last year.

Roadrunner Transportation Systems improved net income to $6.9 million from $3.9 million, while Vitran Inc. sharply cut its loss from continuing operations to $8.1 million, compared with $40.2 million a year ago.

All four carriers reported revenue increases, which ranged from 9% to 44%, and carriers projected improving freight and profits.

“We are optimistic about our prospects for further growth in earnings and shareholder value in 2012,” Executive Chairman Earl Congdon of Old Dominion said on a conference call. Analysts surveyed by Bloomberg News expect Old Dominion’s net income to rise 15% this year over 2011.

Roadrunner’s Feb. 8 earnings announcement projected profit would range from $7.0 million to $7.6 million in the first quarter, as much as 71% above the 2011 quarter.

Two LTL carriers reported stronger trends in January.

“We kicked off the new year with an uptick in tonnage, as our weight per day rose 3.3% compared to last year,” Con-way CEO Douglas Stotlar said. “January’s yield, excluding fuel surcharge, [was] up 4%.”

Vitran CEO Richard Gaetz said Feb. 8 that tonnage rose 23% last month, faster than any month of the fourth quarter. In the first quarter last year, Vitran bought assets from Tennessee-based Milan Express, enabling the Canada-based company to expand in the U.S. Southeast.

Stifel, Nicolaus & Co. analyst John Larkin said he believes LTL carriers’ results should improve for many reasons.

“Pricing in the less-than-truckload sector will increase year-over-year in a range of 3% to 10% in 2012,” he wrote in a Feb. 8 report.

“We are in [supply-demand] balance, even with the economy growing at a fairly mediocre clip of roughly 2%,” enabling carriers to boost prices, even when freight growth is modest, Larkin said.

In his report, he also said that warm weather in some parts of the country should help LTL carriers improve first-quarter results because of lower operating costs, compared with last year, when weather was worse.

Revenue rose 9% at Con-way to $1.32 billion, 22% at Old Dominion to $485.1 million, 44% at Roadrunner to $238.0 million, with help from acquisitions, and 20% at Vitran to $205.2 million.

Old Dominion had the best LTL operating ratio at 86.9, and Vitran trailed at 102.4.

Old Dominion also led the rate race, boosting revenue per 100 pounds of freight by 11%, including fuel surcharges. Con-way was next at 8.3%, followed by 8.1% at Vitran and 7.9% at Roadrunner.

YRC Worldwide Inc., which hasn’t announced an earnings date, is the only LTL carrier yet to report fourth-quarter results.

Non-LTL businesses boosted results at Con-way, Roadrunner and Vitran.

Con-way’s truckload unit boosted operating income 31% to $9.54 million, far faster than the 9% rise in revenue to $156.6 million.

Con-way was helped by a $10 million gain on a purchase price adjustment related to a 2007 logistics acquisition. Con-way’s Menlo Worldwide Logistics unit had operating income of $11.3 million, excluding the purchase-related gain, up from $6.7 million. Logistics revenue rose 11% to $408.9 million.

Revenue more than doubled at Roadrunner’s truckload business to $98.7 million, and operating income jumped to $7.7 million from $1.9 million. Logistics revenue rose 24% to $22 million at Roadrunner, boosting operating income by 83%.

Vitran’s supply-chain unit produced $2.9 million operating profit to offset the $4.21 million operating loss at the LTL unit.