Fleet Management

Earnings Watch: Hub Group, Roadrunner, ODFL, YRC Worldwide

February 04, 2016

By Evan Lockridge

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Multi-modal freight transporter Hub Group Inc. (NASDAQ: HUBG) has reported increases in fourth quarter 2015 and full year profits as revenue for both periods drifted lower for the Illinois-based operation.

Net income totaled $22.4 million for the fourth quarter, or diluted earnings per share of 63 cents, 7 cents better than expectations from Zacks Investment Research, compared to $16.4 million a year earlier or 45 cents per share.

Total revenue decreased 3% to $890 million, primarily due to lower fuel surcharges, according to the company.

The company’s Hub segment revenue decreased 4% to $669 million compared to the fourth quarter while intermodal revenue decreased 4% to $446 million. Truck brokerage revenue increased 6% to $89 million as Unyson Logistics revenue decreased 10% to $134 million. Operating income was $28.4 million, an increase of 49% compared to the prior year.

Revenue for the company’s Mode Transportation segment, which operates mainly with independent business owners, decreased 1% to $242 million compared to the fourth quarter 2014. Operating income was $6.9 million, an increase of 22% compared to the prior year period.

For all of 2015, Hub Groups net income totaled $71 million compared to $51.6 million a year earlier. Diluted earnings per share for 2015 was $1.97, up from $1.40 in 2014. Excluding certain items, adjusted earnings per share was $2.01 for the year compared to $1.77 in 2014.

Total revenue last year fell 1% from 2014 to $3.5 billion.

More numbers can be found on the Hub Group website.

Roadrunner Sees Small Drop in Profits

In contrast, the asset-light transportation and logistics service provider Roadrunner Transportation Systems Inc. (NYSE: RRTS) reported that profits declined slightly in the final three months of last year as freight volumes across most end markets and fuel surcharge revenue fell.

Net income was $12.1 million in the final quarter of 2015 compared to $12.4 million a year earlier as diluted earnings per share were unchanged at 32 cents for the Wisconsin-based operation. But that beat expectations from Zacks Investment Research by a penny.

Revenue for the quarter decreased 7.8% to $490.9 million while operating income was $24.3 million, compared to $24.2 million for the prior year quarter.

Net income for 2015 totaled $48 million, down from $52 million in 2014, as diluted earnings per share also slid to $1.23 from $1.32.

Revenue for 2015 increased 6.5% from 2014 to $2 billion. Operating income was $96.7 million, compared to $95.7 million for the prior year.

According to MarkDiBlasi, CEO of Roadrunner, the drop in revenue in the final quarter of 2015 was primarily due to the decline in freight volumes across most end markets, net of new business, and the decrease in fuel surcharge revenue, which reduced revenue by $33.3 million quarter-over-quarter.

“While our focus over the past several years has been on strategic growth and acquisition initiatives to position us for the long term, our focus in 2016 will be to continue to enhance cash flow from operations and to reduce our leverage ratio towards our long-term goal of less than 2.5 times EBITDA,” he said.

Roadrunner’s truckload revenues decreased 2.1% to $305 million for the fourth quarter of 2015 from the same time in 2014 primarily due to lower fuel surcharge revenues, which decreased $22.9 million quarter-over-quarter. Despite soft demand in certain end markets and a significant decline in spot market pricing, TL operating income increased 12.5% from the fourth quarter of 2014 to a high of $22.1 million for the most recent quarter.

Less-than-truckload (LTL) revenues decreased 16% to $118.4 million for the fourth quarter of 2015 from a year earlier due to a combination of lower fuel surcharge revenue, which decreased $9.6 million quarter-over-quarter, and weak freight demand in the general industrial markets Roadrunner serves, according to the company. LTL operating income was $1.2 million, for the fourth quarter of 2015, compared to $2.8 million, for the fourth quarter of 2014.

“We are implementing sales and productivity initiatives in our LTL segment to mitigate the weak economic environment. We expect these initiatives will take several quarters to achieve their full impact,” the company said in a news release.

You can find more details on the Roadrunner Transportation website.

ODLF Improves Despite Freight Market

Meantime, the mainly LTL carrier Old Dominion Freight Line Inc. (NASDAQ: ODFL) saw its fourth quarter net income increase 3.4% from a year ago to $72.2 million as it hauled more freight in a weaker economic enviornment while basic and diluted earnings per share increased to 85 cents from 81 cents. The per share performance was off by 1 cent of expectations from Zacks Investment Research.

Revenue during the quarter totaled $734.6 million, 1.9% higher for the quarter from a year earlier for the North Carolina-based fleet that has nearly 18,000 full-time employees.

“Old Dominion produced solid financial results for the fourth quarter, despite a soft economic environment and strong comparable results for the fourth quarter of 2014. We believe that we gained market share during the fourth quarter based on increases in both shipments and tonnage,” said David S. Congdon, vice chairman and CEO.

He said Old Dominion’s revenues for the fourth quarter reflect the combined impact of a 3% increase in LTL tons and a 0.2% decline in LTL revenue per hundredweight. Tonnage in the fourth quarter included an increase in LTL shipments of 8.2% that was partially offset by the 4.8% decrease in LTL weight per shipment.

“Our revenue and yield were both negatively affected by a significant decline in fuel surcharges as compared with the fourth quarter of last year.” Congdon said. “The pricing environment remained relatively stable during the quarter, however, and we were pleased with the 6.1% increase in LTL revenue per hundredweight, excluding fuel surcharges.”

For 2015, ODFL saw its net income rise 13.9% from the year before to $304.7 million while basic and diluted shares increased to $3.57 from $3.10. Year-over-year revenue moved 6.6% higher to $2.97 billion.

The company said its operating ratio increased slightly to 84.5% for the fourth quarter of 2015 as compared to the same quarter of last year, primarily due to higher costs for salaries, wages and benefits as well as increased depreciation. This was partially offset by the reduction in operating supplies and expenses as well as productivity improvements in platform and P&D operations.

A more detailed look at the company’s financial performance is on the ODFL website.

YRC Worldwide Barley Makes an Annual Profit

Also on the LTL side, YRC Worldwide (NASDAQ:YRCW) announced it managed to barely have a profitable 2015 after losing tens of millions of dollars a year earlier, but moved back into the red in the final quarter of last year.

Net income in 2015 for Kansas-based parent to YRC Freight and other carriers was $700,000 compared to a loss of $67.7 million in 2014, or diluted earnings of 2 cents per share compared to a loss per diluted share of $3.00.

Total revenue last year slipped to $4.8 billion from $5.1 billion in 2014.

For the final quarter of 2015 it recorded a net loss of $23.5 million, or a loss of 73 cents per diluted share, missing a consensus estimate of earnings of 20 cents from Zacks Investment Research, compared to a profit of $6.2 million, or earnings of 16 cents per diluted share a year earlier.

Revenue for the quarter fell to $1.14 billion from $1.22 billion in the 2014 quarter.

Its operating loss of $15.3 million in the recent quarter included more than $29 million for non-union pension settlement charges and property disposals. This compares to operating income of $31.2 million a year earlier.

"In 2015, we successfully executed our strategy of improving price, freight mix and profitability over volume and market share while lowering our consolidated operating ratio to 98.1," said James Welch, CEO. "Despite the challenges of decreasing fuel surcharge revenue and a flattening economy in the second half of the year, our full-year operating income more than doubled prior year results even after the impact of a non-cash pension settlement charge.”

At the company’s nationwide operations, YRC Freight, fourth-quarter tonnage per day decreased 6.8% while it fell 2.6% at the regional segment that includes the fleets Holland, Reddaway and New Penn. For all of 2015 tonnage per day decreased 5.8% at YRC Freight and 1.9% at the regional segment compared to 2014.

At YRC Freight, excluding fuel surcharge, fourth quarter 2015 revenue per shipment increased 4.4% and revenue per hundredweight increased by 4.2% when compared to the same period in 2014.

Full-year 2015 revenue per shipment excluding fuel surcharges increased 7.7% at YRC Freight and revenue per hundredweight increased by 6.1% when compared to 2014.

At the regional segment, excluding fuel surcharge, fourth quarter 2015 revenue per shipment increased 3.4% and revenue per hundredweight increased by 3.3% compared 2014.

Full-year 2015 revenue per shipment excluding fuel surcharges increased 5.6% at the regional segment and revenue per hundredweight increased by 4.6% compared to 2014. Including fuel surcharge, revenue per shipment increased 0.2% and revenue per hundredweight decreased 0.7%.

When it comes finances, which YRC Worldwide has had plenty of trouble with in recent years, the company said that at the end of 2015, it had cash, cash equivalents and credit totaling nearly $210 million. Last year, cash provided by operating activities was $140.8 million compared to $28.5 million in 2014.

"We would obviously like for the freight environment to be better and improve throughout 2016,” said Welch. “We will stay the course and remain focused on providing our customers excellent service, improving our freight mix and profitability which we believe ultimately drives long-term shareholder value.”

In the meantime, YRC Worldwide is banking on what it says is some experienced help, announcing last month the appointment of three key executives whose credits include some big fleet names.

Chet Richardson was named vice president of transportation. He is a former Con-way Freight executive with 31 years of experience in the LTL industry.

Paul Lorensen is leading the central divisions operations as division vice president. He also comes from Con-Way Freight with 31 years of industry experience.

Don Hinkle was named the new vice president of equipment services. Hinkle has spent more than 23 years in all areas of terminal operations as well as fleet maintenance. A previous YRC Freight employee, Hinkle returned to the company following 13 years with FedEx Freight.

There’s more information about YRC Worldwide website.

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