Truckload Carriers Report Higher 3Q Profits; Cautious About Future Industry Conditions
Third-quarter earnings rose at several truckload carriers amid growing caution about future industry conditions.
Among six of 10 TL carriers, earnings climbed the fastest at Covenant Transportation Group, whose profit quadrupled, while Celadon Group’s profit rose 42.5% and Werner Enterprises boosted net income 24%. In addition, Knight Transportation posted a 21% gain, Marten Transport’s results improved 9.9% and Landstar System raised profit 7.1%.
However, Forward Air Corp. net income slipped 6.3%, Heartland Express’ fell 31%, Swift Transportation slid 27% and Universal Truckload Services Inc. earnings fell more than 40%.
Consequently, Knight and Covenant tempered fourth-quarter expectations — which Swift did for the second half before its announcement. Landstar’s fourth-quarter
outlook trailed analysts’ average estimate, and Roadrunner Transportation Systems said its earnings could be as much as 70% below forecasts, in part because of weak conditions in truckload, its largest business.
Earnings at Swift were $36.3 million, or 25 cents per share. Revenue was 0.9% lower at $1.06 billion. Adjusted earnings per share were 31 cents. Profit before interest and taxes fell at every unit.
“We have pulled back on our initial growth targets given that the freight environment is softer than we originally expected, and peak volumes have not yet materialized as in years past,” stated Swift, which ranks No. 6 on the Transport Topics Top 100 list of for-hire carriers in the United States and Canada.
Net income at No. 31 Knight was $30.3 million, or 37 cents. Revenue increased 10.5% to $300.1 million despite a decline in fuel-surcharge revenue — which lowered every fleet’s revenue.
“Business is not bad overall,” Knight CEO Dave Jackson said, though he noted that profit margins were under pressure.
Knight shaved 1 cent from its earlier fourth-quarter earnings forecast to a range of 37 to 39 cents per share, trailing the 40 cents in last year’s quarter.
No. 46 Covenant raised net income to $7.6 million, or 42 cents, from $1.9 million, or 12 cents. Revenue slipped 2.3% to $173.5 million.
“We are not yet prepared to forecast whether our net income will improve versus the fourth quarter of 2014,” Covenant Chief Financial Officer Richard Cribbs said, while noting results should be “solid.”
Werner, which reported that early October freight volumes were at seasonal levels, increased net income $32.1 million, or 44 cents. Revenue dipped 3% to $534.4 million. Profit before interest and taxes at No. 16 Werner’s truckload unit rose nearly 25% and increased to $5 million from $1 million at its non-asset-based unit.
Meanwhile, No. 42 Celadon produced net income of $11.4 million, or 41 cents, for its fiscal first quarter. Revenue jumped 38% to $266.1 million, aided by acquisitions in a “less than robust freight environment.”
Heartland Express’ third-quarter report showed net income of $24.3 million, or 17 cents. Revenue dipped 16% to $182.5 million.
“Driver challenges coupled with our yield, management efforts and current freight demand has resulted in lower revenues and earnings,” said the company that ranks No. 39.
Marten, No. 48, raised net income 9.9% to $8.4 million, or 25 cents, by expanding profit margins on dedicated, brokerage and intermodal business. Revenue was little changed at $171.3 million in a “soft” third quarter.
No. 34 Forward Air’s earnings dipped to $15.7 million, or 50 cents, hurt by costs related to the acquisition of Towne Air. Revenue climbed 23% to $247.1 million as sales were buoyed by the purchase.
Forward Air said fourth-quarter earnings will be as much as 20% higher due to factors including lower costs and higher margins.
No. 27 Universal’s net income was $9.2 million, or 32 cents. Revenue dropped 5.9% to $284.2 million. CEO Jeff Rogers blamed a “significant contraction in energy exploration and steel shipments” for the results.
At Landstar, net income reached $39.3 million, or 90 cents. Revenue climbed 3% to $841.7 million. Revenue per truckload for the 10th-ranked company slipped about 3% for dry van and about 10% for flatbed freight.
In addition to truckload results, Ryder System’s net income rose 8.4% to $90.6 million, or $1.69. Revenue was 1% lower at $1.67 billion.
Leasing revenue at Ryder rose 6% and rental revenue rose 7%, excluding fuel surcharges.
Ryder, whose Supply Chain Solutions unit ranks No. 13, also lowered third-quarter expectations before its announcement. Ryder still expects to exceed last year’s fourth-quarter earnings by at least 8%.
