Winter Cuts 1Q Profits For Trucking Services

This story appears in the May 5 print edition of Transport Topics.

Several more publicly traded fleets released quarterly earnings that were punished by winter weather, joining carriers that earlier reported results that were better and worse from the effect of storms and extreme cold.

Earnings declined, year-over-year, at Con-way Inc., Saia Inc., Roadrunner Transportation Systems and Celadon Group. YRC Worldwide’s loss nearly tripled, and the loss at Covenant Transportation Group was reduced.

Con-way’s first-quarter net income slipped 7.9% to $12.9 million, or 22 cents a share. Storms and cold weather reduced profits before interest and taxes by an estimated $20 million, or about 40%.

Con-way ranks No. 3 on the Transport Topics Top 100 list of the largest for-hire carriers in the United States and Canada.

Celadon estimated the weather effect at 13 cents to 15 cents per share in the quarter that saw earnings decline 20.5% to $3.5 million, or 15 cents.

“As everyone is aware, weather had a major impact,” Celadon CEO Paul Will said on a conference call, reeling off specific effects that included

$4 million from reduced miles, $1 million in added fuel costs to run engines, $1 million in maintenance costs and $1.5 million tied to rates and network issues.

At YRC, weather reduced operating income by about $20 million in a quarter when the loss on that basis was $32.4 million. The net loss worsened to $70.2 million, or $3.95 per share, from $24.5 million, or $2.93.

James Welch, CEO at YRC, said it was the worst winter in his career of more than 30 years of trucking.

Saia CEO Richard O’Dell said the company’s 6.3% decline in net income to $8.6 million, or 34 cents, “was very gratifying, given the disruptive weather patterns that challenged our entire industry.” Revenue rose 9.5% to $300 million at No. 22 Saia.

Covenant narrowed its first-quarter loss to $1.4 million, or 9 cents per share, from $2 million, or 13 cents, and USA Truck lowered its first-quarter loss to $1.6 million, or 15 cents, from $2.5 million, or 24 cents.

Woven into the results was positive commentary about the second quarter and the year ahead as freight networks return to normal.

For example, Douglas Stotlar, CEO of Con-way, said, “We exited the quarter in a strong demand environment with improving operating fundamentals.”

At Covenant, CEO David Parker said, “Freight is very strong throughout the United States.”

Each company’s report also detailed revenue and performance for individual business units, such as less-than-truckload and truckload, as well as company-specific earnings effects.

At Con-way, the LTL unit improved revenue to $848 million, or 2.5%, and profit before interest and taxes climbed 16%. However, profitability on that basis slipped 5% to $6.2 million, and revenue rose 3.6% to $406.4 million. Con-way Truckload’s profit declined 36% to $6.4 million as revenue fell 1%.

On a companywide basis, the earnings decline was driven by higher taxes. Revenue rose 2% to $1.37 billion.

Like Con-way, TT100 No. 5 YRC had results from multiple units as well as other earnings factors. YRC’s national LTL unit amassed a $32.4 million loss, reversing a year-earlier profit, and regional unit profit slipped 29% to $7.9 million despite an 11% rise in revenue to $446 million.

YRC said its earnings were hurt by $13.1 million in claims costs and distractions relating to implementation of a union contract change. Revenue rose 4.2% to $1.21 billion.

Likewise, No. 24 Roadrunner had a variety of results. LTL revenue inched up 1.5%, but profitability fell nearly 40% to $6.3 million. Acquisitions helped the truckload unit to fare better, as revenue jumped 32% to $193.9 million, and earnings before interest and taxes rose 24%.

Roadrunner’s logistics business raised profits more than 50% as revenue driven by acquisitions more than doubled. Companywide revenue climbed more than 25% to $382 million.

Celadon, No. 44 on the TT100, raised revenue almost 30% to $193.2 million, aided by a 60% increase in its non-asset-based business.

Covenant, No. 41, also noted better results in its brokerage business, which posted a $541,000 profit and reversed a year-earlier period loss as revenue rose nearly 50%. However, trucking revenue slipped nearly 5% as the tractor fleet was reduced by 6.8% and revenue dipped 2.3%,

USA Truck, No. 52, told a similar story, including profit that quadrupled to $5.1 million at its brokerage business, and the loss widened at its asset-based truckload unit to $6.1 million. Its revenue climbed 10% to $145.5 million.