Werner, Forward Air Post Double-Digit Declines in 3Q Profit; Marten, TransForce Report Gains
Net income fell 41% at Werner Enterprises Inc. and 24% at Forward Air Corp., while Marten Transport increased year-over-year profits 0.3%.
Werner Enterprises, which ranks No. 15 on the Transport Topics Top 100 list of the largest U.S. and Canadian for-hire carriers, reported $18.9 million in earnings for the quarter, down from $32.1 million one year ago.
Revenues dropped 5% to $508.7 million compared with $534.4 million last year, but when fuel surcharges were eliminated, trucking revenues fell 7% to $336.7 million.
“Third-quarter 2016 freight demand showed gradual improvement from the weak second-quarter freight market. We believe part of this improvement was industry-specific and part was company-specific,” the company wrote in an earnings statement.
Werner Truckload Transportation Services, the company’s largest unit, reported revenue fell 8% to $384.3 million, while operating income plummeted 59% to $19.8 million due to the sluggish freight market, overcapacity and pressure to lower prices on the contractual and spot markets. Average revenue per tractor per week dropped 4.7%, the average loaded trip length fell 3%, and 2% fewer tractors were in service. The company used 7,175 tractors in the truckload segment, or 240 fewer than a year ago, and removed 90 trucks from dedicated contract service, which accounts for about 55% of the truckload business.
“An excess supply of industry trucks relative to sluggish freight demand created a market in which customers pushed harder for contractual rate decreases,” the company said. “We chose to exit from certain contractual business that would have required significant contractual rate decreases for next year, since we believe that this pricing was not sustainable and that freight market conditions would begin to show improvement.”
Werner Global Logistics operating income fell 2.5% year-over-year to $4.9 million. Werner increased average drayage trucks in service from 60 to 75, and trailers rose to 1,590 at quarter’s end from 1,405 a year ago.
Earnings at the company were fractions of a cent below the Bloomberg News forecast consensus from a survey of analysts.
Forward Air, No. 35 on the for-hire TT100, said net income was $11.9 million, or 39 cents, hurt by an increase of about 50% in tax expense. Revenue was 1% higher at $249.7 million.
Forward Air CEO Bruce Campbell said the results reflected a “sluggish operating environment.” The company’s fourth-quarter earnings outlook signaled tough market conditions will continue, with a forecast that profits in the fourth quarter also would trail last year.
Revenue rose at Forward Air’s pool distribution and expedited truckload businesses.
Marten Transport, No. 47, said profits were $8.43 million for the quarter, up slightly from $8.41 million one year ago, or about a penny per share. Revenue fell 0.5% to $170.5 million from $171.3 million one year ago, but expenses declined even more at 0.8% to increase overall income before taxes and interest.
“This quarter, we achieved our sixth consecutive year-over-year increase in quarterly profitability within each of our dedicated, intermodal and brokerage segments,” said CEO Randolph Marten, who added that he expects a soft freight market to continue into 2017.
Revenue in the truckload segment after removing fuel surcharges was $85.5 million, down 1.3% from $86.6 million a year ago, while operating income fell 21% to $6.5 million.
The dedicated contract carriage segment reported operating income increased 40% to $5.5 million. Intermodal operating income was up 43% to $1.6 million. Operating profits in the brokerage unit increased 14% to $1.2 million.
Earnings were a penny higher than the Bloomberg consensus forecast from analysts.
Canadian firm TransForce's earnings rose 24% to C$51.5 million ($39.6 million), or 55 Canadian cents, with help from package and the less-than-truckload business units.
Revenue fell 3% to C$975.5 million.
Profit before interest and taxes at the No. 10-ranked company rose by half at the package and courier business, outpacing a 3% rise in revenue. LTL earnings rose nearly 25% although revenue dipped 6%. The truckload unit that includes extensive U.S. operations fared worse, with profit on that basis declining by 30%, a deeper slide than the 5% revenue drop-off. Truckload is the largest revenue business at C$343.3 million, closely followed by package and courier at C$328.4 million.
Alain Bedard, CEO of the Montreal company, said in a statement, “TransForce recorded solid results in most business segments … even as we continue to face headwinds from an uncertain economy and weak manufacturing activity.”
The Oct. 20 earnings followed lower year-over-year profits reported from Covenant Transport, Heartland Express and Landstar System. Covenant fared the worst, with a 62% drop in profits.
Contributing: Rip Watson
