Fleet Financials
Revenues & Profits Up, Finally
Higher revenues and higher profits dominated the financial news from most publicly held for-hire carriers reporting fourth quarter and full year 2003 results. There was general optimism regarding the improving economy and increased demand for freight. At the same time, the capacity squeeze in the truckload segment brought higher rates.
Patricia Smith
Senior Editor
"I anticipate we will continue to see tightened truckload capacity in 2004 due to a more challenging driver market and the impact of the new hours of service rules," said Werner Enterprises Chairman and CEO Clarence Werner. Many carriers, including Werner, said the plan is to limit fleet growth and concentrate on improving operating margins.
Carriers are just beginning to weigh in on the impact of the new hours of service rules, which went into effect Jan. 4. Truckload carriers seemed braced for the biggest productivity hit, but are working with customers to reduce delays or boost detention and multiple-stop charges. Many have raised driver pay, in part to compensate for lost earnings. Less-than-truckload carriers expect only a modest impact on most of their over-the-road operations. One said multiple-stop and detention fees levied by some truckload carriers may even drive larger shipments to LTL carriers.
Arkansas Best
ABF Freight Systems, Arkansas Best's largest subsidiary, had fourth quarter revenues of $348.4 million compared with $344.9 million in fourth quarter 2002. Operating income was $22.8 million versus $27.1 million. Operating ratio was 93.5% versus 92.2%. LTL revenue per hundredweight, net of fuel surcharges, was $23.97, up 2.3%.
Tonnage per day was down 2.3%, but Arkansas Best President and CEO, Robert Young III, noted that monthly LTL tonnage has shown a year-over-year decline since September, the one-year anniversary of the Consolidated Freightways closure; but declines have been less severe each month. "Considering sequential, historical trends versus September, fourth quarter 2003 LTL tonnage is running approximately 2% better than expected," he said. "These business changes are very encouraging and suggest that the improving U.S. economy is benefiting the general freight market." He added that tightening capacity in the truckload segment enabled ABF to increase its truckload tonnage per day by 7%.
For the full year, ABF's revenue was $1.37 billion, up 7.3% from 2002. Operating income was $77.8 million versus $68.8 million. Operating ratio was 94.3% versus 94.6%. Total tonnage per day was about the same as 2002. LTL tonnage per day was up 0.7%. Truckload tonnage per day was down 2.6%.
Arkansas Best's Clipper intermodal marketing operation had fourth quarter revenues of $31.3 million versus $30.3 million a year earlier. Operating ratio was 104.1% versus 98.9%. Excluding cost of its Clipper Express LTL business unit, which was sold to Hercules Forwarding in December, Clipper's operating ratio was 100.1%.
Arkansas Best's consolidated revenues were $387.1 million for the quarter, up 1.5% from fourth quarter 2002. Net income was $14.7 million, compared with $14.5 million. Revenues for the full year were $1.5 billion versus $1.42 billion. Net income after one-time gains and accounting charges, was $46.1 billion versus $16.8 billion.
CNF
CNF's Con-Way Transportation Services had fourth quarter revenues of $577.5 million versus $525.1 million in fourth quarter 2002. Operating income was $58 million versus $36.7 million. Revenues for the year were $2.2 billion versus $2 billion in 2002. Operating income was $195.3 million versus $147.2 million.
Menlo Worldwide Forwarding reported an operating loss of $14 million, including one-time restructuring charges, on revenues of $524.4 million for the quarter. In fourth quarter 2002 its operating income was $4.6 million, including a $5.7 million gain from a contract settlement, on revenues of $497.4 million.
Menlo Worldwide Logistics had fourth quarter operating income of $6.1 million on $252.8 million revenues compared to $8.6 million on $255.9 million a year earlier.
CNF Inc.'s consolidated fourth quarter revenues were $1.35 billion versus $1.28 billion fourth quarter 2002. Net income was $28.9 million versus $22 million. Net income for the full year was $83.8 million versus $93.6 million. Revenues were $5.1 billion versus $4.8 billion.
Old Dominion Freight Line
Old Dominion's fourth quarter revenues totaled $174 million, up 16.2% from fourth quarter 2002. Net income was $7.7 million, up 41.5%. Operating ratio for the quarter was 92.2%, compared to 93% a year earlier. LTL tonnage was up 14.6%; LTL shipments up 11.3%. Revenue per hundredweight was $14.38 versus $14.18 in fourth quarter 2000.
Full-year revenues totaled $667.5 million, up 17.8% from 2002. Net income was $27.6 million, up 49.5%. Operating ratio for 2003 was 92.3% versus 93.6% for 2002.
SCS Transportation
SCS had consolidated fourth quarter revenues of $207.5 million, up 6.8% from a year earlier. Net income was $4.6 million, up 50%. Full year revenues totaled $827.4 million, up 6.7% from 2002. Net income was $14.9 million, up 23.8%. The company noted that, while its Saia and Jevic LTL operations achieved significant growth, the holding company had higher fourth quarter expenses due primarily to an increase in self-insurance reserves.
Saia had fourth quarter revenues of $129.6 million, up 5.2% from fourth quarter 2002. Operating income was $7.4 million, up 28.9%. Operating ratio was 94.3% versus 95.3%. LTL tonnage was up 4.7%. Revenue per hundredweight, excluding fuel surcharges, was down 0.5% due mainly to a higher LTL average weight per shipment.
Jevic's fourth quarter revenue was $77.9 million, up 9.6%. Operating income was $3 million, up 39.4%. Operating ratio was 96.2% versus 97%. LTL revenue, excluding fuel surcharges, rose 9.8% due to a 7.7% increase in tonnage combined with a 2.2% rise in LTL revenue per hundredweight.
Overnight Corp.
Overnite reported fourth quarter revenues of $378.1 million, up 7.7% from a year earlier. Net income was $10.5 million before non-recurring costs associated with the Union Pacific Corp.'s divestiture of Overnite. Net income in fourth quarter 2002 was $8.7 million. Operating income before divestiture costs was $18.8 million, up 22.8% from a year earlier. Operating ratio was 95% compared to 95.6%.
Full-year revenues were $1.48 billion, up 9.1% from 2002. Net income was $41.3 million before divestiture costs, up 17.9%. Operating income was $74.3 million, up 18.4%. Operating ratio for the year was 95% versus 95.4%.
Yellow Roadway Corp.
Yellow Roadway had fourth quarter revenues of $903 million including revenues of Roadway Corp., acquired on Dec. 11. Excluding Roadway, revenues were $762 million, up 6.4% from fourth quarter 2002. Operating income was $6.7 million or $13 million without Roadway versus $12.5 million a year earlier. Revenues for the full year totaled $2.93 billion, excluding Roadway, up 11.6% from 2002. Consolidated revenues were $3.07 billion. Operating income, after adjustments, was $117.4 million, excluding Roadway, compared to $55.3 million.
Yellow Transportation had fourth quarter revenues of $722 million, up 4.3% from a year earlier. Operating income was $39.9 million, the most profitable fourth quarter in the carrier's history. This compares to $21.2 million fourth quarter 2002. LTL revenue per day was up 4.7%, tonnage per day was up 1.1%. LTL revenue per hundredweight was up 3.5% excluding fuel surcharges. Adjusted operating ratio was 94.5%, a 1.2 point improvement.
Roadway is operating under a new accounting basis since the acquisition, thus fourth quarter results were not comparable with other periods. The company said Roadway Express tonnage per day was down 6.4% from fourth quarter 2003 but this was a drop from increased volumes following the closure of Consolidated Freightways. Comparisons improved throughout the quarter and volumes into January were within 2% of January 2003 volumes. LTL revenue per hundredweight was up 3.9%.
Meridian IQ fourth quarter revenues were $42 million, up 60%. Operating income was $1 million, up 237.1% from a year ago.
USF Corp.
USF reported combined fourth quarter income from continuing operations of $18.7 million compared to $13.6 million a year earlier. Revenues were $546.6 million compared to $580.7 million. Full year income from continuing operations was $44 million versus $33 million for 2002. Revenues were $2.29 billion versus $2.25 billion.
USF Holland had fourth quarter revenues of $232.3 million, down 5.3% from a year earlier. Its operating ratio was 91.6% for the quarter, compared to 91.8% fourth quarter 2002. USF Bestway revenues were $38.8 million, down 2.7%. Operating ratio was 97.7% versus 93%. USF Red Star revenues were $52.7 million, down 19.8%. Operating ratio was 82.1% versus 103.1%. USF Reddaway revenues were $72.8 million, up 1.5%. Operating ratio was 89.9% versus 87.5%.
USF Dugan revenues were $54.3 million, down 2.4%. Operating ratio was 98.2% versus 101.1%. The USF Glen Moore truckload operation had revenues of $31.4 million, up 2.5%. Operating ratio was 95.5% versus 95.7%. Logistics Group revenues were $67.3 million, down 9.4%. Operating earnings were $4 million, down 25.2%.
Covenant Transport
Covenant posted fourth quarter net income of $4.1 million, up 23% from fourth quarter 2002. Revenues excluding fuel surcharges were $143.1 million, up 3% from a year earlier. Operating income was $8.8 million, up 12.8%.
Full year net income was $12.2 million, up 47% from 2002. Revenues were $546.8 million, up 1%. Operating income was $25 million, up 13%.
Fourth quarter revenue per tractor per week was $2,967, up 3.8% from fourth quarter 2002. Average revenue per loaded mile was $1.272, up 3.2%.
To reduce maintenance costs, the company reduced the average age of its fleet from 26.3 months to 19.1 months in 2002. The number of tractors in its fleet was 3,752 at the end of the year, only slightly higher than 2002. Because Covenant has reduced its average length of haul over the past few years, it decided to increase the size of its fleet, operating with a higher trailer to tractor ratio, Parker said. Its trailer count at the end of 2003 was 9,255 versus 7,485 a year before.
Heartland Express
Heartland posted fourth quarter revenues of $103 million, up 12% from a year earlier, and net income of $19 million versus $11.2 million. Results included a $5.4 million adjustment in insurance reserves. Operating ratio was 72.1% (80.1% before the adjustment) versus 82.3%.
Full year revenues totaled $405.1 million, up 18.9% from 2002. Net income was $57.2 million versus $42.8 million the previous year.
J.B. Hunt
J .B. Hunt Transport Services had record annual net earnings of $95.5 million for 2003, up from $51.8 million for 2002. Total operating revenue was $2.4 billion compared with $2.25 billion the previous year. Operating income was $186 million, up 84%. The company's overall operating ratio was 95.5% versus 92.4%.
Fourth quarter net earnings were $34.2 million versus $14.7 million for the same period a year ago. Total operating revenues were $640.7 million versus $597.7 million.
Fourth quarter operating ratio for the truck segment was 92% versus 94.3% in fourth quarter 2002. The company said this was the eleventh quarter in a row that the segment had shown a year-over-year ratio improvement. Tractor utilization was down slightly but net revenue (excluding fuel surcharges) per tractor per day was $598, up 6% from a year earlier. Loaded rate per mile was up 6.1%. Empty miles were 10.3% versus 9.3% fourth quarter 2002. However Hunt said most of the increase was the result of some customers' willingness to pay for the repositioning of equipment as capacity tightened. The average number of trucks in the fleet was 5,554 versus 5,589. The carrier said it has no plans to add significant capacity in its truck segment until satisfactory margins are achieved.
Hunt's intermodal segment had a fourth quarter operating ratio of 90.1% compared to 91.1% a year earlier. Revenues were $255 million versus $218 million. Asset utilization improved significantly and freight mix changes led to a 3.3% increase in operating revenue per load.
Fourth quarter operating ratio for the DCS segment was 91.3% versus 97.9% a year earlier and the best in 16 quarters. Revenue was $170 million, about the same as a year earlier. The fleet declined 8%, but revenue per tractor per day was up 10%. Operating income was a record $14.8 million versus $3.5 million.
Knight Transportation
Knight's fourth quarter revenues were $87.1 million, up 14% from a year earlier. Net income was $10 million, up 22%. Operating ratio for the quarter was 80.7% versus 81.3% fourth quarter 2002. Average revenue per loaded mile was $1.449 versus $1.414. Empty mile factor was 10.8% versus 10.4%. The company added almost 300 new tractors to its fleet during the quarter, bringing the total to 2,418. Chairman and CEO Kevin Knight said seating the extra trucks was a "temporary challenge" which has reversed. The trailer fleet is 6,212 units versus 5,441.
Revenues for 2003 were $326.9 million, up 17% from 2002. Net income was $35.5 million, up 27.2%. The carrier opened its 15th operations center in February. Knight said they plan to open two more this year and will add another 350-400 tractors system-wide.
Landstar System
Landstar reported record fourth quarter income of $15.1 million, up from $14.5 million for the same period in 2002. Consolidated revenues including fuel surcharges were a record $434 million, versus $394 million.
Revenues for the full year were a record $1.6 billion compared to $1.5 billion for 2002. Net income was a record $50.7 million versus $49.2 million. Landstar's carrier group had 2003 revenues of $326.1 million, compared with $299.4 million. The group's operating income was $27.9 million versus $23.9 million. Revenue per loaded mile was $1.72 versus $1.67. The multimodal services group had revenues of $100.7 million versus $87.7 million a year earlier. Operating income was $3.7 million, up from $2.8 million the previous year.
Marten Transport
Marten's fourth quarter operating revenues, including fuel surcharges, were $85.2 million, up 11.7% from fourth quarter 2002. Net income was $3.5 million versus $579,000 a year earlier. Full year operating revenue was $337.7 million, up 14.2% from 2002. Net income was $11.8 million versus $6 million.
Average operating revenue per tractor per week was $2,955, up 6.1%. Average freight revenue per tractor per week was $2,846, up 5.8%. Operating ratio was 93.3% versus 98.2% for fourth quarter 2002.
Schneider National
Schneider is privately held but the company did release a statement regarding its 2003 performance. Consolidated revenue was up more than 10% from 2002. Revenue from its brokerage operation was up 16%, intermodal was up 17%, truckload services up 6%. Schneider Logistics reported a 16% increase in managed freight.
Swift Transportation
Swift posted fourth quarter net earnings of $26.7 million on operating revenues of $637.6 million, compared to $16.2 million on $560.1 million for the same period a year ago. Operating income was $45.8 million versus $30 million.
For the full year, net earnings were $79.4 million versus $59.6 million. Revenues were $2.4 billion compared to $2.1 billion. Operating revenues were $79.4 million versus $59.6 million.
Revenue per tractor per day was $549 in the fourth quarter, up from $528 a year earlier. Revenue per loaded mile was $1.4837 versus $1.4221. Deadhead percentage was 13.25%, down from 13.79%. At the end of the year the carrier had 14,344 company tractors and 3,692 owner-operator tractors in its fleet. This compares to 12,939 company tractors and 3,152 owner-operator tractors at the end of 2002.
Swift Chairman and CEO Jerry Moyes confirmed reports that the Federal Motor Carrier Safety Administration had proposed a "conditional" rating after a safety review, but Swift is disputing the proposal and anticipates a positive outcome. He also noted that the only area of dispute involves the accuracy of driver log documentation and no operational safety issues were raised by the FMCSA compliance review.
USA Truck
USA Truck has fourth quarter revenues, before fuel surcharges, of $74.2 million, up 10.2% from fourth quarter 2002. Net income was $1.1 million, up 116.4%. Full year revenues were $286.1 million, up 6.5% from 2002. Earnings were $3.4 million, up 28.9%. Fourth quarter operating ratio was 95.7% versus 96.7%. Revenue per mile was $1.242 versus $1.245. Empty mile factor was 8.6% versus 8.71%.
U.S. Xpress Enterprises
U.S. Xpress had fourth quarter net income of $2.6 million on revenues of $239.6 million, compared to $1.4 million, before one-time charges, on $229.4 million for the same period in 2002. Profit for the year was $7.6 million on $930.5 million revenues versus $3.2 million on $862.3 million revenues.
Fourth quarter operating revenue for the truckload business, net of fuel surcharges, was $204.6 million, up 2% from a year earlier. Operating income was $6.3 million, down 0.3%. Operating ratio was 97.2% versus 97.3% fourth quarter 2002. Revenue per mile, net of fuel surcharges, was $1.329, up 4.6%. Empty mile factor was 10.12% versus 9.75%. Average number of tractors in the fleet was 5,342, down 1.7%.
Xpress Global Systems had revenues of $36.1 million, up 13.8% from fourth quarter 2003. Operating income was $492,000 versus $38,000 a year earlier.
Werner Enterprises
Werner reported fourth quarter revenues of $380.2 million, up 8% from a year earlier. Net income was up 22%, to $21.5 million. The company said this was the ninth consecutive quarter it had posted year-over-year revenue and income increases. Average revenue per truck per week, net of fuel surcharges, was $3,053, compared with $2,969 for fourth quarter 2002. Average revenue per loaded mile was $1.47, up 5.8% from a year earlier.
Revenues for the year totaled $1.46 billion, up 9% from 2002. Net income was $73.7 million, up 20%. At the end of the year Werner had 7,430 company tractors and 920 owner-operator tractors in its fleet, compared to 7,180 company tractors and 1,020 owner-operators at the end of 2002. The company said the number of trucks in dedicated service now represents about one-third of the total truck fleet, compared with one-fourth a year ago. It also noted that the dedicated fleet business tends to have lower miles per trip, a higher empty mile percentage, a higher rate per loaded mile and lower miles per truck per month, thus affecting Werner's overall operating statistics. The number of trailers in the fleet totaled 22,800, up from 20,880 in 2002.
Average age of Werner's tractors is 1.6 years but the company said it will extend that on a portion of its trucks scheduled to be sold or traded in 2004 as it continues testing on the EPA-compliant engines.
Used truck prices have improved and Werner has expanded its Fleet Truck Sales network from 15 locations to 16. The company has also expanded its brokerage and intermodal service offerings, which is expected to increase non-trucking revenues in 2004 and improve the overall operating margin and return on assets.
Ryder System
Ryder reported fourth quarter earnings of $39.4 million, up 22% from a year earlier. Revenues totaled $1.22 billion, up 1%. Full year earnings, before accounting changes, were $135.5 million, up 20% from 2002. Revenues were $4.8 billion, up 1%.
The Fleet Management Solutions business segment had fourth quarter revenues of $811.3 million, compared with $804.7 million fourth quarter 2002. Dry revenues (excluding fuel) were $655 million, up 1% from a year earlier. Full service lease and programmed maintenance revenue increased 1%. The company said higher revenues in the U.K. and Canada offset softness in the U.S. market. Commercial rental revenues were up 9%, driven primarily by better pricing. Pre-tax earnings for the unit were $55.2 million, down 13% due mainly to higher pension expenses.
Ryder's Supply Chain Solutions had fourth quarter revenues of $351.5, up 2% from a year earlier. Pre-tax earnings were $14.2 million versus a $1.1 million loss in fourth quarter 2002.
Dedicated Contract Carriage revenues totaled $130.4 million, down 2%. Pre-tax earnings were $11.1 million compared with $7.9 million.
