Swift Transportation Profits Rise in Third Quarter
Swift Transportation reported profits were up 4.7%, one of the few bright spots so far in the industry for the third quarter, and the company said it was the result of cutting expenses to deal with the challenging truckload environment.
Swift reported $38 million in profits, or 34 cents per share, reversing four consecutive quarters in which the company reported year-over-year profits. Net income one year ago was $36.3 million, or 31 cents.
Revenue was down 4.8% to $1.01 billion versus $1.07 billion year-over-year, or about $52 million less in total. When revenue from fuel surcharges is removed, however, it fell only 2.6% to $929.7 million. But the company also was able to cut operating expenses 3.9% and benefited from higher interest expenses and one-time charges recorded one year ago.
Earnings before interest, taxes, depreciation and amortization fell 17% to $61.9 million from $74.9 million a year ago. However, Swift was able to report year-over-year gains because its interest expenses dropped 19% to $7.4 million. It also benefited from lower income taxes and a one-time $9.6 million loss on debt extinguishment reported one year ago, when Swift refinanced a line of credit, which didn't appear on the 2016 third-quarter report.
“As we have discussed several times throughout this year, the truckload market has been very challenged thus far in 2016," the company wrote in a letter to investors. "Many of the same headwinds we have previously disclosed remained throughout the third quarter, as the presence of excess industry capacity, excess customer inventories and sluggish demand have combined to cause persistent pressure on freight volumes and pricing.”
The truckload unit, the largest division, reported revenue declined 6.2% to $516.7 million, although it was down only 4.2% to $469 million when fuel surcharges were removed. Weekly revenue per truck fell to $3,460 from $3,492 one year ago. Total loaded miles decreased 1.8% to 256 million, and the total average amount of trucks dropped to 10,317 from 10,662 year-over-year. Earnings before interest, taxes, depreciation and amortization in the unit was $47.7 million, down 16% from $57 million one year ago.
Dedicated contract carriage, the company’s second-biggest unit, fared much better than all others in the company. Revenue rose 6.1% to $248 million and overall EBITDA climbed 73% to $30.3 million from $17.6 million one year ago. Swift wrote that increase was due to being recently awarded several growth opportunities within the dedicated customer base. Weekly revenue per tractor increased to $3,603 from $3,333, and the number of average operational trucks on the road increased by 38 to 4,951.
The intermodal unit reported revenues fell 8.6% to $92.3 million from $101 million one year ago. EBITDA dropped 50% to $359 million from $723 million the year prior. Load counts dropped 7%, and the company said it was a challenge to secure intermodal freight without compromising on price, which it decided against.
Swift Refrigerated, the temperature-controlled trucking division, reported revenue also dropped 8.6% to $85 million. Loaded miles during the period fell 4.1% because the company said some refrigerated shippers took advantage of a lower priced spot market. However, weekly revenue, excluding the fuel surcharge, per loaded tractor increased 2.9% to $3,568, and deadhead miles fell 40 basis points year-over-year.
Swift, which ranks No. 6 on the Transport Topics Top 100 list of the largest U.S. and Canadian for-hire carriers, beat estimates by 2 cents per share, according to a Bloomberg News survey of analysts.
