Third-Quarter Truckload Results Show Lower Profits at Most Fleets
This story appears in the Oct. 24 print edition of Transport Topics.
The third-quarter earnings season began with truckload carriers struggling to match year-over-year results, headlined by Covenant Transportation Group’s profits plummeting 62%.
Likewise, profits fell 41% at Werner Enterprises Inc., 24% at Forward Air Corp., 17% at Heartland Express Inc., 8% at Landstar System Inc. and 6% at J.B. Hunt Transport Services Inc.
The sole winner was Marten Transport Ltd., which eked out higher year-over-year profits, but only by 0.3%.
Covenant Transportation, which ranks No. 43 on the Transport Topics Top 100 list of the largest U.S. and Canadian for-hire carriers, reported $2.9 million in earnings, or 16 cents per share, compared with $7.6 million, or 42 cents one year ago.
Revenue declined 5.2% to $164.5 million versus $173.5 million a year ago, although its decline was 3.4% to $148.2 million after fuel surcharges were removed. Average freight revenue per mile dropped 1% to $1.62.
Depreciation expenses on equipment increased $4.6 million, or 15 cents, due to the soft used-truck market. Higher casualty insurance and claims expenses increased $1.7 million, or 6 cents.
“On average, approximately 6.4% of our fleet lacked drivers during the 2016 quarter compared with approximately 4.6% during the 2015 quarter,” said CEO David Parker.
Earnings were 9 cents below the Bloomberg News forecast, based on a survey of analysts.
J.B. Hunt, No. 4 on the TT100, reported a net income of $109.4 million, or 97 cents, compared with $115.1 million, or 99 cents, a year ago. The results trailed the average Bloomberg forecast of $1.02.
Revenue rose 7% to $1.69 billion, but expenses such as purchased transportation, salaries, wages and employee benefits increased 8%.
Intermodal unit profits before interest and taxes fell 7% to $116.9 million after revenue per load slipped 4.2%.
Dedicated trucking posted $52.4 million in profits, or a 16% jump. The unit was helped by a higher truck count and improved productivity that outpaced higher driver-related costs.
Brokerage revenue rose 35% to $233 million, but lower contract and spot market rates and higher personnel costs dropped the overall profits before taxes and interest to $8.5 million, 26% lower than the year prior.
Over-the-road trucking revenue was unchanged, but profits fell 55% due to lower rates per mile, higher maintenance, safety and insurance costs and increased driver hiring costs.
Landstar System Inc., No. 9, reported profit of $36.3 million, or 86 cents, hurt by a drop in flatbed freight loads and revenue.
Revenue fell 6.4% to $787.9 million. Year-earlier period earnings were $39.3 million, or 90 cents.
Flatbed freight shipments were off 14%, while van shipments rose 6%.
“Overall, we continued to have difficult year-over-year comparisons to 2015 driven mostly by tougher overall industry conditions in 2016,” CEO Jim Gattoni said in a statement that noted the decline in the flatbed sector was tied to a contract that expired at the end of 2015. “I expect the slow growth environment we have experienced during the first three quarters of 2016 to continue.”
Flatbed freight revenue fell more than 15% to $248.9 million. Van freight revenue was little changed at $465.8 million. Revenue from rail intermodal, ocean and less-than-truckload all declined.
Landstar beat analyst estimates by a nickel per share.
Werner Enterprises, No. 15, reported $18.9 million in profits, or 26 cents, compared with $32.1 million, or 44 cents.
Revenue dropped 4.8% to $508.7 million from $534.4 million in the third-quarter last year. The company fell about $150,000 short on the earnings’ forecast from analysts, fractions of a cent per share.
Forward Air, No. 35, announced a net income of $11.9 million, or 39 cents, after income tax expenses rose. The company reported a net income of $15.7 million, or 50 cents a year ago. Revenue rose 1% to $249.6 million.
Heartland Express, No. 41, declared a net income of $12.5 million, or 15 cents, a 17% decline from $15.1 million, or 17 cents, the year before. Revenue dropped 18% to $149.3 million.
CEO Michael Gerdin blamed lower rates, volume and overcapacity in the industry. The company fell a penny short of the Bloomberg consensus forecast.
Marten Transport, No. 47, declared $8.43 million in earnings, or 26 cents, compared with $8.41 million, or 25 cents, a year ago. Revenue fell 0.5% to $170.5 million from $171.3 million a year ago. Expenses declined 0.8% to $155.6 million, and overall income before taxes and interest increased. The company ended up a penny higher per share than the consensus forecast from analysts.
