Universal, Heartland Earnings Decline in Second Quarter
Universal Logistics Holdings Inc. second-quarter earnings fell 32%, and Heartland Express Inc. net income slipped 30%, consistent with weaker results reported by almost every other truckload carrier.
Heartland net income fell to $16.4 million, or 20 cents per share, and Universal Logistics net income declined to $9 million, or 32 cents as freight rates declined at the truckload business, its largest unit.
Heartland's revenue fell 17% to $160.8 million. More than 90% of the revenue decline was due to lower fuel surcharge collections. Net income at Heartland fell from $23.3 million, or 27 cents.
Heartland’s results followed reports yesterday of lower truckload earnings at Knight Transportation, Roadrunner Transportation Systems and Covenant Transportation Group. Every truckload carrier except Patriot Transportation Holdings previously reported lower earnings in the quarter.
“We continued to experience downward pressure on freight rates due to the softness in freight volumes resulting from the available capacity in the industry," CEO Michael Gerdin said. "Typically, freight volumes improve during the second quarter as compared to the first three months of the year but that has not been our experience during 2016 as freight volumes didn't improve until mid-June.”
A report on Heartland from Ben Hartford, a Robert W. Baird & Co. analyst, said that “truckload operating conditions remain challenging” as volumes remain soft. He also said Heartland described the pricing environment as the toughest since 2009, adding that there was little freight demand pickup until mid-June.
Heartland’s proceeds from equipment sales fell to $4.5 million from $9.7 million.
The operating ratio was 84.8, a deterioration of 3.4 percentage points.
The Warren, Michigan-based Universal Logistics reported revenue fell 6% to $276.8 million. Year-before period earnings were $13.3 million, or 44 cents.
Transportation revenue per mile fell 11% to $2.41, but shipments increased 2% to 158,283. Revenue dipped 10% to $162.7 million. In the intermodal unit, revenue fell nearly 10% to $35.9 million as load levels were little changed.
“We've seen some positive momentum this quarter," said Jeff Rogers, Universal's CEO said in a statement. “Both our transportation and intermodal services performed well in terms of load volumes. However, the impact on pricing from the weak freight environment continues to negatively impact overall operating revenues and income.”
Total transportation profit before interest and taxes fell nearly 25% to $6.92 million.
Heartland matched the average analyst forecast. Universal met its earnings expectations announced earlier this month.
Universal’s logistics business revenue rose to $78.2 million, a 4% improvement. However, profit before interest and taxes at that unit declined 17% to $10.6 million.
Heartland, based in North Liberty, Iowa, ranks No. 41 on the Transport Topics Top 100 list of the largest U.S. and Canadian for-hire carriers. Roadrunner ranks No. 16, Knight is No. 29, Universal is at No. 30 and Covenant is No. 43.
