Fleet Management

Earnings Watch: Meritor, Eaton, Wabash National, ArcBest, C.H. Robinson

February 03, 2016

By Evan Lockridge

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Earnings season continues this week and with it are the first numbers from major trucking suppliers, such as Meritor, Eaton and Wabash National, in addition to those from trucking operations ArcBest and C.H. Robinson.

Foreign exchange rates in Europe and Brazil and weak economic conditions in South America pushed net income lower for component manufacturer Meritor Inc. (NYSE:MTOR). Net income fell in the final quarter of 2015, or what Meritor calls its first fiscal quarter of 2016, to $26 million from $29 million a year earlier

Adjusted income from continuing operations totaled $31 million, or adjusted diluted earnings per share of 33 cents, which is 3 cents less than expectations from Zacks Investment Research. This compares to $36 million, or adjusted diluted earnings per share of 36 cents, in the same period last year for the Michigan-based company as sales fell 8% to $809 million in the most recent quarter.

Commercial truck and industrial sales for quarter were $633 million, down $70 million compared to the same period last year while earnings before interest, taxes, depreciation and amortization (EBITDA) was $52 million for the quarter, down $4 million in the same time frame.

Meritor’s aftermarket and trailer segment posted sales of $203 million, down $5 million from the same period a year ago. Segment EBITDA was $20 million for the quarter, down $5 million from a year earlier.

"Despite the impact of lower production expectations in North America, we continue to execute well," said Jay Craig, CEO and president. "Following another strong quarter, we remain committed and on track to achieving our M2016 metrics for margin enhancement, debt reduction and new business wins."

Meritor also revised its guidance for its 2016 fiscal year, calling for:

  • Revenue to be approximately $3.4 billion as compared to the prior outlook, in the range of $3.4 billion to $3.5 billion.
  • Adjusted EBITDA margin is unchanged from the prior expectation of 10.0 percent.
  • Adjusted diluted earnings per share from continuing operations to be in the range of $1.65 to $1.75, compared to the prior outlook of $1.70 to $1.80.
  • Free cash flow to be approximately $110 million as compared to $115 million in the prior outlook.

There are more details on the Meritor website.

Eaton Profit Falls by Similar Margin

Meantime, rival Eaton Corp. (NYSE:ETN) saw a similar decline in its numbers, reporting net income for the fourth quarter of 2015 of $534 million compared to $585 million a year earlier.

Diluted earnings per share fell to $1.15 from $1.24, as operating earnings per ordinary share also fell to $1.17 from $1.27, but was 8 cents better than the forecast from Zacks Investment Research.

Sales in the quarter were $5.1 billion, down 9% from the same period in 2014 for the Dublin, Ireland-based company.

"Our earnings came in above the high end of our guidance range. Organic sales in the fourth quarter declined by 4% compared to the fourth quarter of 2014, reflecting weakness in most of our markets. The impact of currency translation reduced sales by 5 percent,” said Alexander M. Cutler, Eaton chairman and CEO.

"In light of the challenging markets, we were pleased with our performance in the quarter," he continued. "We slightly exceeded our revenue guidance, achieved record fourth quarter segment margins, lowered our structural costs, generated operating cash flow of $742 million, and repurchased $228 million of our shares.”

The company’s vehicle segment posted sales of $841 million in the fourth quarter, down 13% from the fourth quarter of 2014. It reported organic sales declined 6%, and negative currency translation was responsible for 7 percentage points of the downturn. Operating profits were $155 million, down 5% percent from the fourth quarter of 2014.

For the full year 2015, Eaton’s sales were $20.9 billion, 7.5% lower than in 2014, due to a decrease in organic sales of 2% and a decrease of 5.5% from negative currency translation, according to the company. Net earnings for 2015 totaled $1.9 billion compared to $1.8 billion a year earlier, as diluted earnings per share increased from $3.76 to $4.23.

"In 2016, we anticipate our organic revenues will decline between 2% and 4%, reflecting a continuation of sluggish markets around the world," said Cutler. "We expect the impact of negative currency translation to be approximately 2%.

More information about Eaton’s expectations for 2016 and results from last year are on the company website.

Wabash National Sees Record Numbers

Also on the supplier side, trailer manufacturer Wabash National Corp. (NYSE:WNC) reported greatly improved numbers, including record sales for the Indiana-based company.

Net income for the fourth quarter of 2015 was $33.3 million, or 50 cents per diluted share, compared to fourth quarter 2014 net income of $19.1 million, or 27 cents per diluted share. Adjusted earnings for the final quarter of 2015 totaled 51 cents, 10 cents better than expectations from Zacks Investment Research.

Net sales for the most recent quarter increased 3% to a record $544 million from $527 million a year earlier while operating income increased 60% to $54.7 million.

“New trailer shipments of 64,700 for the year exceeded our previous guidance due to strong customer pick-up and represents an increase of 7,350 trailers, or 12.8%, as compared to the previous year,” said Dick Giromini, president and CEO. “We look forward to 2016 with a healthy backlog of orders totaling $1.2 billion, representing an increase of 10% as compared to the prior year period, and a trailer demand expected to be well above replacement levels for a fifth consecutive year.”

For all of 2015, Wabash reported net income of $104.3 million, or $1.50 per diluted share, on record net sales of $2.03 billion, compared to net income of $60.9 million, or 85 cents per diluted share, on net sales of $1.86 billion 2014.

You can find more details on the Wabash National website.

ABF Parent's Quarterly, Annual Profits Fall

Back on the trucking side of earnings season, the parent of less-than-truckload carrier ABF Freight and other firms saw a steep decline in its fourth quarter profits.

Arkansas-based ArcBest Corp. (Nasdaq: ARCB) had fourth quarter 2014 net income of $5 million, or $0.19 per diluted share compared to fourth quarter 2014 net income of $14.5 million, or $0.53 per diluted share.

On an adjusted basis, ArcBest's fourth quarter 2015 net income was $5.5 million, or 21 per diluted share, 20 cents less than Zachs Investment Research’s expectations, which compares to fourth quarter 2014 net income of $11.9 million, or 44 cents per diluted share.

Revenue in the final three months of 2015 was $648.1 million compared to revenue of $664.8 million in the fourth quarter of 2014, a decrease of 2.5 percent.

ABF saw revenue fall 5% to $461.5 million, which the company attributed to lower fuel surcharges while tonnage per day fell 4.9%. Total billed revenue per hundredweight decreased 1.1% compared to the prior year, which included the impact of lower fuel surcharges in 2015. Excluding fuel surcharge, the percentage increase on ABF Freight's traditional LTL freight was in the mid-single digits.

In the company’s asset-light logistics operation, which includes Panther Premium Logistics, revenue increased 6% to $198.3 million while fourth quarter 2015 EBITDA earnings declined to $7.1 million compared $9.4 million a year earlier.

Panther Premium Logistics' fourth quarter 2015 revenue and operating margin were below the same period of 2014, according to the company. And although its shipment levels increased, average shipment size declined compared to the historically strong 2014 period when spot truckload market capacity was constrained and fuel surcharges were higher, according to the company.

ArcBest's other asset-light logistics companies-- ABF Logistics, FleetNet America and ABF Moving-- each reported increased fourth quarter revenue resulting from additional new customers and increased business from existing customers.

"While weakness in the industrial and manufacturing segments of the economy accelerated toward the end of 2015, we made significant progress throughout the year to improve operations at ABF Freight and also provide the full suite of complementary asset-light logistics services our customers seek from us," said ArcBest President and CEO Judy R. McReynolds. "By the end of 2015, 23% of the ABF Freight account base also transacted business with ABF Logistics or Panther. In 2011, that figure was just 6%.”

The company’s 2015 net income fell to $44.9 million from $46.2 million in 2014 while revenue totaled $2.7 billion, an increase of 2%.

There is more information on the ArcBest website.

Freightquote.com Purchase Helps Push C.H Robinson Higher

Also on the trucking side, results were better for logistics powerhouse C.H. Robinson Worldwide Inc. (NASDAQ: CHRW), which saw double-digit improvements in its profits for the final quarter of 2015 and all of last year while revenue failed to increase.

Quarterly net income rose to $126.6 million, or 88 cents per diluted share, 1 cent better than expectations from Zacks Investment Research, compared to $112.9 million a year earlier, or 77 cents per diluted share, due in large part to an earlier acquisition. This happened as revenue fell 4.4% to $3.2 billion.

“Our truckload net revenues increased 13.4% in the fourth quarter of 2015 compared to the fourth quarter of 2014,” the Minnesota-based company said in a news release. “Organic truckload net revenues increased approximately 10% in the fourth quarter of 2015 compared to the fourth quarter of 2014. Our acquisition of Freightquote.com on Jan. 1, 2015 contributed approximately 3.5 percentage points to our truckload net revenue growth in the fourth quarter of 2015. Our North American truckload volumes increased approximately 5% in the fourth quarter of 2015 compared to the same period of 2014.”

The company saw a 41.1% increase in less-than-truckload revenues while intermodal revenue rose 13.7%.

For all of 2015, C.H Robinson reported a net profit of $510 million, up 13.3% from 2014 while revenue was flat at $13.47 billion.

You can find more details on the C.H. Robinson website.

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