Fleet Financials
More freight, fewer carriers boosts profits for most.
Third-quarter financial results brought a flood of higher revenue and profits, but optimism regarding the economy was guarded at best. For most less-than-truckload carriers, it was the demise of Consolidated Freightways that contributed most to their bottom lines. On the truckload side, fewer carriers, pursuing gradually increasing freight, meant higher revenue and profits.
Yellow Corp.
Chairman, President and CEO Bill Zollars said the economy, as it relates to their business, appeared to be leveling out, "with little movement in either direction." But the closure of Consolidated Freightways bumped Yellow's revenue by about 15%.
Yellow Transportation had third-quarter revenue of $662 million compared to $637 million a year earlier. LTL revenue per day, excluding fuel surcharge, was up 5%, due to a 1.9% increase in LTL daily tonnage and a 3% improvement in revenue per hundredweight. Operating income, excluding unusual items, was $23.3 million, up 40% from a year ago. The third quarter operating ratio was 96.5% compared to 97.4% the prior year.
For all divisions, the company posted third-quarter operating income of $13.5 million on revenue of $682 million. That included about $5.7 million in costs related to the spin-off of SCS Transportation, which went public in October. Revenue was up 6.7% from third quarter 2001. Operating income was up 59%, excluding unusual items.
ABF Freight
Robert Young III, president and CEO of ABF parent Arkansas Best, said it was difficult to determine the ultimate effect of CF's closure on their business since more than half of the defunct carrier's business was under contract, much of it to be renewed in the fourth quarter. He also noted that some of the CF business was being handled on a 60- to 90-day trial period, which meant it hadn't found a permanent home "and may not do so until next spring."
AFB Freight Systems posted third-quarter revenue of $336 million compared to $330 million a year earlier. Operating income was $23.7 million compared to $22.1 million. Higher insurance costs held the operating ratio to 92.9% vs. 93.3% last year. ABF's revenue per hundredweight, reported on a "billed revenue" basis, was up 5.3% from the third quarter last year.
Old Dominion
Multi-regional LTL carrier Old Dominion Freight Line had a 74.7% increase in net income for the quarter and a 16.3% increase in revenue over third quarter 2001. Chairman and CEO Earl Congdon said most of the credit goes to a long-term growth strategy that focuses on leveraging its service center network, faster transit times, high quality service and expanded coverage. But he also noted that some CF business came its way.
Revenue for the quarter was a record $149.93 million compared to $128.96 million a year ago. Net income was $6.4 million compared to $3.66 million. LTL tonnage was up 13.8%, LTL shipments were up 14.6%. LTL revenue per hundredweight was up 4%, revenue per LTL shipment was up 3.5%. Operating ratio was 91.9% compared to 94.0% a year ago.
Overnite
Overnite posted its best quarter since 1994 with net income, excluding a one-time tax adjustment of $18.6 million on $349.6 million revenue. For the same period a year ago, the Richmond, Va.-based Union Pacific subsidiary had net income of $14.5 million on $327.6 million revenue.
"While the economy remains weak, the demise of a large LTL competitor provided incremental tonnage in September and supported firming prices," said CEO Leo Suggs.
The combined operating ratio for Overnite Transportation and Motor Cargo Industries, which Overnite bought early this year, was 92.7% which Suggs said was the best in eight years. The pro forma ratio for third quarter 2001 was 93.7%.
Overnite got even more good news in October when the Teamsters pulled out of its strike, ending a three-year battle to unionize the company.
CNF Inc.
Former Consolidated Freightways parent CNF Inc. reported consolidated operating income of $43.5 million on third quarter revenue of $1.23 billion for its Con-Way, Emery Forwarding and Menlo Worldwide Logistics units. For the same period last year the company reported a $5.4 million loss on $1.18 billion.
Con-Way Transportation Services, its LTL carrier network, had operating income of $41.6 million on revenue of $527.7 million, compared with $42.6 million on $491.2 million third quarter 2001.
USFreightways
USFreightway said its LTL shipments for the quarter were up 5.9% and LTL tonnage was up 5.4%. Tonnage in September, following the CF bankruptcy, was 7.5% higher than September 2001. Shipments were up 8.6%.
Revenue for the LTL division was $483.3 million compared to $461.4 a year ago. Operating income was $30.6 million vs. $30.7 million last year. Revenue per hundredweight before fuel surcharges was down 0.3%. Average revenue per shipment, including fuel surcharges, was down 1.2%.
USF Reddaway revenue was up 4.6% and its operating ratio was 86.8% vs. 88.7% a year ago. USF Bestway revenue up 5.3%, operating ratio was 92.9% vs. 94%. USF Holland revenue up 3.7%, operating ratio was 92.3% vs. 91.5%. USF Red Star revenue 6.8%; ratio was 101.5% vs. 100.9%. USF Dugan increased revenue 6.8%, ratio was 99.2% vs. 97.7% .
USF Glen Moore, USFreightway's truckload carrier, had revenue of $29.6 million, up 20.8% from third quarter 2001. Operating earnings were $1.6 million compared to $400,000 a year ago. Operating ratio was 94.7% vs. 98.5%.
Combined revenue was $634.5 million, including the company's USF Worldwide freight forwarding business USF Worldwide Logistics, which it sold in October. Net income was $5.3 million. Third quarter 2001 revenue totaled $618.6 million, net income was $9.7 million.
Cannon Express
The Springdale, Ark., carrier said it suffered from a shortage of qualified drivers and a soft market. Revenue for its fiscal fourth quarter, which ended June 30, was $19.5 million compared to $21.9 million a year earlier. Net loss was $5.3 million compared to $4.2 million. For the full year, revenue was $79.08 million compared to $85.8 for fiscal 2001. Net loss was $12.2 million compared to a loss of $7.3 million.
Cannon has hired a transportation management consulting firm, CFOex, to implement a plan aimed at reducing expenses and increasing equipment utilization and revenue. The company is negotiating with its lenders and key vendors for extended credit terms. It has also identified certain assets for disposition, including real estate and an airplane.
Covenant Transport
'Third quarter freight demand was like a rollercoaster, with a very strong July followed by a weak August, a modest rebound in mid-September, and the shut down at the West Coast ports to end the quarter," said Covenant Chairman, President and CEO David Parker.
The Chattanooga, Tenn.-based truckload carrier ended the quarter on a 2% revenue drop, to $135.3 million, but net income was up 327% to $3.6 million. Parker said the firm also improved after-tax cost by about 2 cents per mile and paid down some $18 million of debt during the quarter, ending with a debt-to-total capitalization ratio of less than 30%. Average revenue per tractor per week was $2,819 vs. $2,774 for the same period last year. Average revenue per loaded mile was $1.218, up 1%. Net margin was 2.7% compared to 0.6% a year ago.
Celadon Group
Celadon's truckload operation posted operating income of $3.62 million on revenue of $91.63 million in its first fiscal quarter, which ended Sept. 30. Operating income a year ago was $2.11 million on $81.61 million revenue. Average revenue per loaded mile was $1.298, up from $1.268. Average revenue per tractor per week, including fuel surcharge, was $2,493 vs. $2,528. Operating ratio was 95.8% vs. 97%.
Chairman and CEO Stephen Russell noted that improved yield management and continued expense reduction offset the effects of a soft economy. "The percentage of our business dependent on new car production also dropped measurably, with a positive shift to consumer non-durables," he added.
TruckersB2B, Celadon's online shopping web site, had an operating income of $321,000 on revenue of $1.9 million compared to $111,000 on $1.26 million last year. Revenue reflects fees and rebates, but not the value of goods and services sold via the web site.
Consolidated revenue was $93.56 million compared to $82.87 million a year ago. Net income before one-time charges was $1.4 million compared to $142,000 a year ago. During the quarter the company completed a $55 million revolving credit facility, which was used to repay an existing credit facility and provide for ongoing working capital needs.
Heartland Express
Coralville, Iowa-based Heartland Express posted third quarter net income of $11.1 million, up 20.2% from a year ago. Revenue was up 23.3% to $91.1 million. Results include Great Coastal Express, acquired in June. Heartland's operating ratio was 82.3% compared to 82.5% a year ago. Net margin was 12.2% vs. 12.7%.
J.B. Hunt
J.B. Hunt posted its highest-ever third-quarter income: $16.8 million on total revenue of $583 million. That compares to net earnings of $4.5 million on $537 million a year ago.
Revenue for the truck segment was up 2.4%. Operating ratio was 95.3% vs. 97.7% a year ago. Net revenue, excluding fuel surcharges, per tractor per week was $2,830, up 6.6% from a year ago. Loaded per mile revenue, excluding fuel charges, increased 5.2%. Empty miles were 9.1% vs. 11.6% a year ago. The fleet has been reduced from 5,847 trucks to 5,631 over the past years, but the company said it won't add capacity until "satisfactory" margins are achieved.
Dedicated segment revenue was up 19.3%. The operating ratio was 97.5% compared to 98.8% a year ago. Hunt said some 300 trucks that had been idle for several months are now on the road with new projects. With a full quarter's worth of revenue from those projects, fourth-quarter margins should improve.
Intermodal segment revenue was up 6.7%. Revenue per loaded mile, excluding fuel surcharge, was down 0.5% compared to a year ago, but revenue per load increased by 1.3% due to a longer average length of haul.
Knight Transportation
Knight said it was hampered by slow tractor deliveries, but still posted a 14.1% increase in revenue for third quarter to $72.8 million. Net income was up 18.7% to $7.4 million. Operating ratio was 82.8%, about the same as last year. Empty mile factor was also unchanged at 10.8%. Average transportation revenue per mile was $1.253, up from $1.229 a year ago.
Landstar System
Landstar System posted third-quarter net income of $13.9 million on combined revenue of $387.7 million. Both were company records. Net income in third-quarter 2001 was $11.9 million, revenue totaled $355.7 million.
Revenue for the carrier group was $298.9 million of revenue compared with $276.5 million a year ago. Operating segment for the group was $22.45 million compared to $18.45 million. The multimodal services group had revenue of $80 million vs. $73.2 million. Operating income was $2.22 millions vs. $1.715 million. Combined operating margin was 6.1% compared with 5.9% a year ago.
Jeff Crowe, chairman and CEO, said that brokerage revenue for the carrier group was up almost 15% as the company continues to expand utilization of broker carrier capacity. Truck capacity provided by business capacity owners (i.e. owner-operators) was down some, due to "a difficult recruiting environment."
P.A.M. Transportation
Third-quarter operating income for the Tonitown, Ark., truckload carrier was $6.97 million, up 56% from the same period a year ago. Operating revenue was $65.03 million, up 21.2%. Net income was $3.96 million vs. $2 million last year. Operating ratio was 89.3% vs. 91.7% .
As of Sept. 30, cash on hand exceeded total debt which, said P.A.M. President Robert Weaver, is "an accomplishment we are extremely proud of and one that places us in very elite company."
Swift Transportation
Swift pared its deadhead mile percentage from 14.58% to 13.68% in third quarter. Revenue per loaded mile was $1.41 compared to $1.40 a year ago. Revenue per tractor per day was $509 vs. $519.
Revenue for the quarter was $537.0 million compared with $536.4 million last year. That included fuel surcharge revenue of $10.5 million this quarter and $15.4 million a year ago. Net earnings were $16.3 million compared to $2.8 million last year.
Transport Corp. Of America
The carrier is still feeling the loss of its Sears business but emphasizes that they are recovering. Paid miles are up 1.5% from a year ago, revenue per tractor per week is up 2.1%, to $2,746. Percentage of empty miles was 11.3% vs. 12.4% last year.
The Minneapolis-based truckload carrier posted third-quarter revenue of $69 million vs. $70.3 million a year ago. Net income for the period was $254,000 compared with $478,000.
U.S. Express Enterprises Inc.
Revenue for the U.S. Express truckload was up 5.5% from a year ago, to $193.76 million excluding fuel surcharges. Operating income was up 18.1% to $5.8 million. Average revenue per tractor per week was up 2.7%, to $2,732. Revenue per mile, net of fuel charge, was $1.261 vs. $1.228 a year ago.
The company's CSI/Crown transportation and distribution services had a 24% increase in revenue, to $30.1 million. The division made $40,000 compared to a $734,000 loss the same period last year.
Consolidated operating revenue was $220.1 million, up 6.1% from a year ago. Net income was $1.1 million vs. $304,000.
USA Truck
The Van Buren, Ark.-based medium-haul truckload carrier said stronger freight demand, plus a noticeable decline in industry capacity, allowed it to raise its rates slightly and bring its empty mile factor below 9% for the first time since fourth quarter 1999. Net income for the quarter was $1.27 million, up 115.7% from a year ago. Revenue before fuel surcharges was $70.65 million, up 12.4%. Operating ratio was 95.2% vs. 96.4% a year earlier. Revenue per mile was $1.22 vs. $1.167. Average miles per tractor per week was 2,343 compared to 2,403.
The company said its decision to extend the lives of its tractor fleet this year rather than trade is working well so far, but it's watching the tractor markets closely and will start trading the oldest tractors for new ones "as soon as used market prices meet management expectations and the new EPA-compliant engines are proven in the field."
Werner Enterprises
Werner said its daily ratio of loads available to trucks available began improving in mid-April and was still getting better as financial reports were issued in mid-October. Demand was strong in most geographic markets and most freight markets during the third quarter. Customers in the Omaha-based truckload carrier's biggest freight market — retail and consumer products — had solid increases in shipments from a year ago.
"Truck capacity is being constrained due to limited fleet growth at most truckload carriers, trucking company failures that are putting capacity out of the market, and minimal industry-wide additions due to significant concerns with new truck engines manufactures after Oct. 1," said Chairman and CEO Clarence Werner.
The company's third-quarter operating revenue was $336.1 million compared to $322.6 million last year. Net income was $16.8 million vs. $12.5 million. Average revenue per loaded mile was up 2.3%. Average revenue per truck per week was up 1.8%. Average empty miles was 9.6% compared to 10.02% a year ago. Operating ratio was 91.9% vs. 93.6%.
In September the average age of Werner's fleet was 1.2 years, down from 1.5 years last December. The company was bringing on new trucks ordered to beat the Oct. 1 deadline for new emissions standards. That will bring the average age to one year. It also noted that concern over the new engines has improved the resale value of its used trucks. Werner sold more trucks this year than last year, but gains on used-truck sales were $600,000 in third quarter vs. a $100,000 loss for the same period last year.
The company recently announced a $190-million expansion program aimed at growth in three sectors: refrigerated, regional and dedicated services. Werner said it will add 500-600 trucks and drivers and 100-150 support staff employees over the next two years.
Boyd Bros.
Flatbed hauler Boyd Bros. posted after-tax net income of $495,074, a 115% increase over the same period a year ago and the second quarter in a row it has seen year-over-year income improvement over 100%. Revenue was up 2% to $33.18 million.
President and CEO Gail Cooper credits "continued focus on operational processes and enhanced organizational communication." She said, "improving performance, increasing accountability and providing proper incentives for better executions have allowed us to expand our revenue base with new accounts, while maintaining strong ties to existing customers, and control the growth of our expenses."
Mullen Transportation
One of the economy's weak points — capital spending — continued to hurt Mullen Transportation. Its trucking segment was $42.4 million, down 14% from a year ago. Operating income was $5 million vs. $6.6 million last year. Oilfield services revenue was $24.9 million, down 33.4%. Segment operating income was $4.2 million, down 53%. Net income for all operations was $3.5 million vs. $6.5 million last year.
Frozen Food Express
Most of the Dallas-based temperature-controlled carrier's third-quarter growth was due to stronger demand for its full-truckload services, but "we're beginning to see some light shine on our LTL operations," said Chairman and CEO Stoney Stubbs Jr. "More like moonlight, rather than sunshine, but light nevertheless."
Combined revenue for all operations totaled $92.855 million for the third quarter compared to $98.129 million a year ago. Net income was $3.38 million compared to $277,000. The company reported an operating loss of $43,000 compared to an operating profit of $818,000 last year.
Stubbs said higher demand for truckload services is due partly to an improving economy, but also to the fact that low freight demand and high costs "have taken thousands of trucks off the road, improving business for those truckers who have survived."
This stronger demand allowed them to raise some rates which, Stubbs noted, was "something we've not been able to do for some time." Demand for the company's temperature-controlled LTL service began to weaken in 1999. "We're still tweaking it," he said, "but after two years of fighting this thing, we're beginning to see some improvement."
The fourth quarter is usually a wild card, Stubbs noted, adding that "It's a little early for us to be forecasting clear and sunshiny skies for the remainder of the year."
Marten Transport
Refrigerated carrier Marten Transport posted record revenue of $74.7 million for the third quarter compared with $70.8 million for the same period last year. Third-quarter net income increased 14.9% to $1.86 million. Its operating ratio was 95.3%, up from 94.8% for the same period last year.
"The operating environment was clearly less favorable in the third quarter than in the second quarter of this year, though we were encouraged by the resilience of freight demand during the period and generally pleased with the effectiveness of our expense and fleet management," said President and Chairman Randy Marten. He also noted that the company had slight improvements in revenue per tractor and revenue per mile.
Allied Holdings
Vehicle hauler Allied Holdings cut its losses in third quarter and posted its first year-over-year revenue increase since the second quarter of 2000. Revenue for all operations, including distribution, transportation, inspection and dealer prep services, totaled $204.0 million, up 4.4% from the same period a year ago. Net loss was $6.5 million compared to a $12.6 million loss a year ago.
Revenue, excluding Allied Automotive Group-Canada and the Axis logistics operations, totaled $171.85 million vs. $163.38 million third quarter 2001. Operating loss was $3.84 million vs. a $10.0 million loss a year ago. Operating ratio was 102%, down from almost 107%. Average active rigs dropped to 2,982 from 3,282.
Quality Distribution
Chemical hauler Quality Distribution posted third quarter operating income of $8.8 million on revenues of $132 million vs. $9.4 million on $130.4 million for third quarter 2001. The decrease was blamed mainly on higher costs for liability insurance and driver recruiting. Net income was $300,000 vs. a $1.8 million loss a year ago. Operating ratio before special charges was 93.3%, vs. 92.8%.
