Fleet Financials
2Q Revenues Up — Profits, Too
PatriciaSmith
Senior Editor
Second quarter revenues were up some from a year ago and profits looked even better. In the truckload segment, empty miles inched up with the uneven economic recovery. But rate improvement continued with tightening capacity in some markets and increased demand for premium services. The big news in the less-than-truckload segment was, of course, Yellow's planned purchase of Roadway, rekindling speculation that further capacity reductions could boost the fortunes of those carriers remaining.
Roadway
When he announced second quarter financial results, Roadway President and CEO James Staley seemed to be laying the groundwork for the Yellow/Roadway union. Roadway posted a 43% rise in second quarter net income, to $6.3 million, and a 13% boost in revenues, to $741.5 million. But Staley said weakness in the economy and excess capacity remains a problem, despite the closure of Consolidated Freightways last fall.
"The business made available from the Consolidated shutdown was quickly and completely absorbed due to economic softness and surplus capacity," he said. "By the second quarter of 2003, continuing economic slowness and seasonal shipping patterns freed additional capacity to the marketplace, increasing pricing pressures."
The long-haul industry experienced significant capacity contraction from the CF closure, he added, but regional markets remain very competitive. That — plus some loss of higher-yield time-critical freight and changes in shipment length and size — impacted Roadway Express's volumes and rates. "This was particularly evident in the retail segment where Express has a significant portion of its business," he said.
Roadway Express revenues for second quarter were $691.2 million versus $606.4 million for the same period a year earlier. Operating ratio was 98.3% versus 98.5%. Revenue per LTL ton was $436.33 versus $428.11.
New Penn, Roadway's next-day ground carrier in the northeast, had revenues of $50.4 million versus $49.6 million. Operating ratio was 88.8% — no change from a year ago. Revenue per LTL ton was $248.25 versus $240.54.
Yellow Corp.
Yellow reported second quarter income of $18.4 million versus $2.6 million a year ago. Operating revenue was $713 million, up 10.4%. Operating income was $32.2 million versus $6.2 million.
Yellow Transportation had operating income of $36.4 million on revenues of $691 million, compared with $10.5 million on $628 million a year ago. Its operating ratio was 94.7% compared to 98.3%. LTL revenue per day was up 10.2%, due mainly to a 5% increase in LTL daily tonnage and a 4.9% improvement in LTL revenue per hundredweight (3.5% excluding fuel surcharges). The company said business volume benefitted primarily from the CF closure and continued growth of premium services.
Meridian IQ, Yellow's freight management division, had operating revenues of $23 million, up 22% from second quarter last year, and operating income of $100,000 compared to a $500,000 loss a year ago.
Overnite
Union Pacific, which bought Overnite in 1986, told analysts it was the right time to sell when it announced plans to shed its trucking unit through an initial public offering. Regulatory filings put Overnite's book value at around $600 million. Analysts said the prospect of economic and freight recovery, coupled with reduced industry capacity due to the Yellow/Roadway deal, should mean UP will get that - and more.
Overnite Holding, which includes Overnite Transportation and Motor Cargo Industries, posted second quarter operating income of $21 million on revenues of $372 million, compared to $18.2 million on $337.1 million for second quarter 2002. Operating ratio was 94.4 versus 94.6 a year ago.
Arkansas Best
ABF Freight System's second quarter revenues were $337.2 million versus $308.1 million. Operating income was $14.6 million versus $12.5 million. LTL tonnage per day was up 2% from a year ago. LTL revenue per hundredweight, excluding fuel surcharges, was $22.71, up 6.1% from a year ago. Approximately one-half of the yield increase — net of fuel surcharges — was a result of changes in the profile of additional freight hauled since the CF closure, the company said.
"Despite the lack of meaningful changes in the soft economy, we continue to be encouraged by the pricing environment," said Robert Young III, president and CEO. "ABF's increases on contracts and deferred pricing agreements have been favorable by historical standards, and the prospects for retention of the July 14 general rate increase are good." He also noted that Yellow's acquisition of Roadway could, over time, "result in opportunities for additional business for ABF and improved pricing due to eventual reductions in industry capacity."
Clipper, Arkansas Best's intermodal marketing company, had first quarter revenues of $33 million, up from $30.4 million a year earlier. Operating income was $726,000 versus $811,000. Revenues for all Arkansas Best operations totaled $377.9 million versus $345.1 million a year earlier. Net income was $15.2 million versus $6.5 million.
CNF
CNF's Con-Way Transportation Services had second quarter operating income of $43.6 million, up 24% from a year ago. Revenues were $541.4 million, up 7%. The company said tonnage per day was essentially flat.
Menlo Worldwide, which includes freight forwarding and logistics operations, had a $3.9 million operating loss on revenues of $695.4 million versus $10.5 million income on $681.4 million a year ago.
CNF consolidated net income was $16.3 million versus $19.8 million second quarter 2002. Operating income was $37.3 million versus $43.9 million. Revenues were $1.24 billion versus $1.19 billion.
Old Dominion
Thomasville, N.C.-based Old Dominion Freight Lines posted second quarter revenues of $163.8 million, up 17.3% from a year ago. Net income was up 49.3% to $6.5 million. Its operating ratio was 92.6% versus 93.8%.
LTL shipments were up 13.4% for the quarter, LTL tonnage was up 10.1%. LTL revenue per hundredweight increased 7%, excluding fuel surcharges.
SCS Transportation
SCS Transportation reported second quarter revenues of $208.3 million, up 6% from the prior-year period. Operating income was $8.9 million, up 31.7%. Net income was $3.9 million, up 26.8%.
Saia revenues were $133.1 million versus $124 million in second quarter 2002. Excluding fuel surcharges, revenues were up 5.6%. Operating income was $7.9 million, up 31.5%. Second quarter operating ratio was 94.1% versus 95.2% a year earlier. LTL tonnage per day was up 3.7%. LTL revenue per hundredweight, excluding fuel surcharges, was up 1.8%.
Jevic second quarter revenues were $75.1 million versus $72.5 million a year ago. Operating income was $1.6 million versus $800,000. Operating ratio was 97.9% versus 98.9%. Revenue per day, excluding fuel surcharges, was up 3.6%. Total revenue per hundredweight improved 7%, which the company credited to an increasing mix of higher-yielding LTL tonnage and some stabilization of pricing. It also noted that a shortage of drivers required additional purchased transportation expenses.
USF Corp.
USF Corp. had net income from continuing operations of $8.1 million on operating revenues of $567.1 million, compared with $13 million on $571.2 million for second quarter 2002. Second quarter 2003 results included a $1.2 million after-tax charge related to retirement cost for the company's former CEO.
LTL operating earnings were $25.3 million versus $28.5 million for the same period a year ago. The LTL group's operating ratio was 94.5% compared to 94%. Second quarter LTL group revenues totaled $472.5 million, a 0.6% decrease from last year. Revenue per working day was up 1.8%.
The company said relatively flat revenues were due mainly to lower revenues from USF Red Star and USF Logistics. Red Star exited some terminals and shed some unprofitable business as part of a plan to focus on core markets. USF Logistics suffered from the bankruptcy of a major customer.
Boyd Bros.
Flatbed hauler Boyd Bros. Transportation had second quarter operating revenues, including fuel surcharges, of $34.4 million, a 4% increase over the same period last year. Logistics revenues for the quarter were $2.3 million versus $1.8 million. Pre-tax income was $1.1 million, up 8% from a year ago. Net income was $654,291, up 5%.
Frozen Food Express
Refrigerated carrier Frozen Food Express reported second quarter income from trucking operations of $2.9 million compared with $800,000 a year earlier. Revenues were $96.4 million, up 14.2%. Excluding fuel surcharges, trucking revenues were up 12.4% from second quarter 2002. Operating ratio was 97% versus 99%. The company said about half the improvement was due to lower claims and insurance expenses, which were about 2.9% of freight revenue this quarter versus 4.4% in 2002.
Chairman and CEO Stoney (Mit) Stubbs Jr. said that, like many other trucking companies, FFE has raised deductibles in order to reduce premiums. But it also means that "one serious traffic accident can profoundly and negatively impact any quarter's profits," he added. "Our trucks traveled more than 60 million miles in this year's second quarter without a serious accident, but the issue is always there."
Revenues from the company's non-freight business were $6 million, up 46% from a year ago. The loss reported for that business was $381,000 versus $117,000 second quarter last year. Consolidated revenues were $102.5 million versus $88.5 million. Pre-tax income was $3.6 million versus $505,000. FFE said about a third of pre-tax income this quarter came from transactions related to life insurance investments and are not expected to be a continuing source of income.
Heartland Express
Heartland posted second quarter revenues of $102.8 million, up 21.9% from a year earlier, and net income of $12.6 million, up 14.6%. Its operation ratio was 81.9% versus 81.1%.
J.B. Hunt
J.B. Hunt Transportation Services had second quarter net earnings of $25.1 million versus $15.5 million for second quarter 2002. Operating revenues were $600 million versus $557 million.
Truck segment revenues fell 2%, to $208 million for the quarter. Operating ratio was 94%. Despite a decline in miles per tractor attributed to the sluggish economy, net revenue per tractor per day was $541, excluding fuel surcharges, a 1% improvement over a year ago. Hunt said utilization was "less than acceptable" but the loaded rate per mile, excluding fuel surcharges, was up 5.1% due to the company's yield management initiatives and price increases.
Empty miles were 10% for the quarter versus 9.1% a year ago, in part because of sagging post-Easter demand but also because a business spike at the end of June required some repositioning of equipment. Hunt noted that many customers paid them for the empty miles, but the company still includes them in its empty mile percentage. At the end of the second quarter, fleet size for the truck segment was down some 300 units from a year ago. Hunt said it has no plans to add capacity in the truck segment until satisfactory margins are achieved.
Revenues in its intermodal segment were $226 million, up 14% from second quarter 2002. The operating ratio was 90.3%. In 2002 the company replaced one-third of its container fleet and a substantial portion of its dray fleet, both of which helped reduce dray costs per load by some 3%. Hunt said intermodal demand was strong throughout the quarter and revenue per loaded mile, excluding fuel surcharges, was up 0.7%.
The company's dedicated services segment had revenues of $169 million, up 12% from a year ago. Its operating ratio was 92.9%, its best in 12 quarters. Revenue per tractor per day was up 7.8%. Idle capacity declined 66% from a year ago, loaded miles per load increased 11%, backhaul volume was up 5%, revenue per backhaul load was up 4%.
Knight Transportation
Knight's second quarter income was $8.95 million, up 33.5% from a year ago. Revenues before fuel surcharges were $81.8 million, up 19.7%. Operating ratio was 81.7% versus 83.4% and the carrier's best second quarter ratio since 1998. Empty miles were 10.7% versus 10.2% a year ago. Average revenue per loaded mile was $1.432, up 3.8%. At the end of the quarter the company had 2,033 company tractors in the fleet versus 1,749 at the end of second quarter 2002. The number of owner-operator tractors hauling for Knight went from 199 to 234. Trailer count rose from 5,021 to 5,876. Knight said they expect to add 150 to 175 tractors during the second half of this year.
Landstar
Landstar System reported record second quarter net income of $13.6 million on revenues of $390.1 million compared to $12.2 million on $391.2 million for the same period a year ago. Operating income was $22.6 million versus $21 million.
The carrier group had revenues, excluding fuel surcharges, of $303.2 million versus $310 million a year ago. Revenue generated through business capacity owners (independent contractors leased to Landstar carriers) was $260.4 million versus $277.9 million. Revenue from other third-party truck capacity providers (brokers) was $42.9 million, up 28% from last year. Revenue per loaded mile was $1.73, up from $1.68.
The multimodal services group posted revenues of $79.9 million compared to $74.3 million. Close to $12 million of that came through business capacity owners, $43.9 million through other third-party truck capacity providers, and $24.1 million through rail and air carriers.
Marten Transport
Marten's second quarter operating revenue was $84.2 million, up 13.7% from a year earlier. Excluding fuel surcharges, the increase was 10.6%. Net income was $3.5 million, up 24.5%.
Average operating revenue per tractor per week, excluding fuel surcharges, was $3,004 versus $2,913. Average freight revenue per tractor per week was $2,872 versus $2,864. Marten's operating ratio was 92.8%, compared with 93%. Excluding fuel surcharges, the ratio was 92.5% versus 92.9%. Non-revenue mile percentage was 6.3% versus 6.5%.
Swift Transportation
Swift posted second quarter revenues of $584.9 million, up 10.7% from the same period a year ago. Excluding fuel surcharges, the increase was 7%. Net earnings were $19.2 million versus $17.7 million after one-time expenses. Operating income was $34.7 million versus $35.8 million.
Revenue per loaded mile averaged $1.4439 compared to $1.4079. Deadhead percentage was 14.68%, up slightly from 14.22%. At the end of June, Swift had 13,039 company tractors in service and 3,307 owner-operator tractors, compared to 12,663 company tractors and 3,336 owner-operator tractors a year ago.
Transport Corp.
Minneapolis-based Transport Corp. of America posted second quarter revenues of $65.6 million, down 4.9% from second quarter 2002, and a net loss for the quarter of $837,000, compared to a net income of $208,000 a year ago.
The company noted that it was able to reduce deadhead miles from 11.8% to 10.6%, despite a soft freight environment in many of its key geographic markets. Trucking revenue per loaded mile was $1.339 versus $1.411. Average revenue per mile was $1.251 versus $1.245. Miles per tractor was off 1.9%. Revenue per tractor was down 1.4%.
U.S. Xpress
U.S. Xpress reported operating revenues of $231.9 million versus $215.6 million for the second quarter 2002. Revenues excluding fuel surcharges were $197 million. Operating income was $6.9 million, up 10.7%. Net income was $2.2 million versus $931,000. Revenue per loaded mile was up 2.9%.
USA Truck
Medium-haul truckload carrier USA Truck had second quarter operating revenues, before fuel surcharges, of $72.3 million, up 4.8% from second quarter 2002. Net income was $1.9 million, up 153.8%. Empty mile factor was 9.24% versus 9.17%. Revenue per mile, before fuel surcharges, was $1.240 versus $1.208. Operating ratio was 94.5% compared to 96.1%.
Chairman and CEO Robert Powell said freight volumes generally improved during the quarter but were inconsistent among various geographic regions of the country - causing an uptick in empty miles as equipment was repositioned between regions.
"It is unclear whether the improving freight volumes are a product of an overall increase in shipper demand or reduced capacity in the truckload industry," he said. "Regardless of the volume's source, it set the stage for the firming of rates, to which our increased revenue per mile attests."
Werner Enterprises
Werner reported its seventh consecutive year-over-year gain in operating revenues and earnings. Second quarter revenues were $362.3 million, up 6% from second quarter 2002. Net income was $19.9 million, up 20%. Average revenue per loaded mile, net of fuel surcharges, was $1.42, up 4.9%. Average percentage of empty miles was 10.52% versus 9.31%.
Chairman and CEO Clarence Werner said freight demand "ranged from flat to slightly better" than the same period a year ago, but revenue per total mile was up 3.5% and the company's operating margin increased from 8% of revenues to 8.7%.
Werner significantly increased truck purchasing prior to last year's Oct. 1 changeover to new emissions standards and continued to bring pre-October trucks into service through the second quarter. Average age of trucks in the Werner fleet is 1.4 years. At the end of June it had 7,225 company trucks in service, up from 6,800 a year earlier, and 925 owner-operator units versus 1,150.
The company said it continues ongoing testing of the new engines, in particular Caterpillar's ACERT and Detroit Diesel's EGR. Werner will take delivery of 325 model year 2004 trucks with Caterpillar ACERT engines in third quarter 2003 and plans to purchase more Cat ACERT and Detroit Diesel EGR engines during the remainder of this year.
Allied Holdings
A 5.8% decline in vehicle deliveries, due mainly to lower OEM production, drove a 3.7% decline in Allied Holdings' second quarter revenues to $230.1 million. Revenues — excluding its Canadian operations and Axis logistics and management services — were $175.6 million versus $186.2 million a year ago. Operating income was $1.1 million versus $1.3 million.
Ryder System
Ryder posted consolidated earnings of $34.7 million for the quarter, up 18% from the year-earlier period. Revenue was $1.2 billion, down 1%.
The company's Fleet Management Solutions business segment, which includes truck rental and full-service leasing, had revenues of $645.7 million excluding fuel, down 2% from a year ago. Full service lease and programmed maintenance revenues were 1% lower than a year ago, but commercial rental revenues were up 5%. Pre-tax earnings for the segment were $52.1 million, down 6% from a year earlier due to lower leasing demand and a significant increase in pension expenses.
Despite signs of modest improvement in leasing demand during the quarter, Ryder Chairman, President and CEO Gregory Swienton said they don't expect significant improvement "until there is a better sense among customers that a recovery is under way." The company also reported some improvement in rental and used truck pricing.
Ryder's Supply Chain Solutions logistics management segment had revenues of $345.7 million, down 4% from a year ago. Operating revenue was $239.5 million, down 5% due to economy related volume reductions and non-renewal of some unprofitable business. Pre-tax earnings for the segment were $9.6 million compared to a $2.2 million loss for second quarter 2002.
Dedicated Contract Carriage had revenues of $128 million, about the same as second quarter last year. Operating revenue was $127.1 million, also about the same as last year. Pre-tax earnings were $8.3 million versus $8.4 million.
