Fleet Management

Earnings Watch: Saia, Old Dominion, Hub Group

February 03, 2017

By Evan Lockridge

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Two less-than-truckload fleets and a multi-modal and logistics provider reported slightly lower fourth quarter earnings.

Saia Declines But Moving Forward With Expansion Plans

Saia Inc. net income fell 9.1% from a year ago to $10.3 million, or 40 cents per share, compared to 45 cents per share a year earlier. That was 3 cents less than a consensus estimate from analysts. This was despite revenue increasing 4.4% to $300.2 million. Operating income fell 2.4% to $17.2 million, as the Georgia-based less-than-truckload carrier faced higher insurance costs and expenses related to investments in the fleet.

During the quarter LTL shipments per workday increased 2.1% from the 2015 quarter while LTL tonnage per workday increased 1.4% and LTL revenue per hundredweight increased 5.1%.

Saia said it was encouraged by shipment and tonnage per workday trends in the fourth quarter. Photo: Evan Lockridge
Saia said it was encouraged by shipment and tonnage per workday trends in the fourth quarter. Photo: Evan Lockridge

"We were encouraged by shipment and tonnage per workday trends in the fourth quarter and our results reflected some of the same themes we saw in the business all year," said Saia President and CEO Rick O'Dell. "We continued our very positive pricing actions and saw fourth quarter contractual renewals average 5.2%."

Saia full-year 2016 results showed net income fell 12.7% from 2015 to $48 million as earnings per share slid to $1.87 from $2.16. Revenue was essentially unchanged at $1.2 billion.

In contrast to the fourth quarter, Saia operating metrics for all of last year were mixed, with LTL shipments down 0.7% and LTL tonnage down 2.4%. However, LTL revenue per hundredweight was up 3.2%.

According to O’Dell, Saia continued to see productivity improvements across its network, which offset some ongoing cost challenges.

“The year-over results were impacted by a couple of trends. First of all, depreciation and amortization expense was up 17.2% in the fourth quarter, a reflection of the significant investments we are making in our fleet, real estate and information technology,” he said. “The other significant expense item was our claims and insurance line, which increased by more than $4 million in the fourth quarter versus the prior year. The increase was not the result of one or two major accidents, rather it reflects the general inflationary trends in the costs of settlement and litigation in the trucking industry.”

Saia also announced it is moving forward with plans to begin service in select markets in Pennsylvania and New Jersey in the second quarter, what O’Dell said are the first steps in a multi-year plan of becoming a 48-state LTL service provider.

Old Dominion Profit Slips Despite Higher Revenue

While Old Dominion Freight Line Inc. pulled in more business in both the final quarter of last year and all of 2016, profit for the North Carolina-based LTL carrier slipped in both periods.

Net income for the October-December period fell 5.1% from a year earlier to $68.5 million, or from 85 cents to 83 cents per share, as revenue inched up 1.5% to $745.7 million. The per share performance was 3 cents less than one consensus estimate from analysts.

For the year, net income was still healthy despite a 2.9% drop to $295.8 million, or down 1 cent per share from 2015 to $3.56 per share, as revenue increased 0.6% to $3 billion.

“We believe Old Dominion performed well during the fourth quarter and all of 2016, particularly given the challenges we faced from the economy and headwinds created by the strategic elimination of certain non-LTL services," said David S. Congdon, vice chairman and CEO. "We were encouraged by the improving operating environment as the fourth quarter progressed, and our momentum has carried over into January."

In a quarter with one less business day than a year earlier, revenue per day increased 3.2%, driven by a 0.3% increase in LTL tons per day and a 2.6% increase in LTL revenue per hundredweight.

LTL revenue per hundredweight, excluding fuel surcharges, increased 1.6%, but was hurt by a 2.5% increase in LTL weight per shipment and a 0.5% decrease in average length of haul.

“Our pricing philosophy remains the same, however, and we continue to characterize the pricing environment as stable,” Congdon said.

Hub Group Falls, Beats Expectations

On the multimodal and logistics side, Hub Group Inc. fourth quarter net income slid to $18.2 million in the fourth quarter of 2016 from $22.4 million a year earlier. Earnings per share dropped to 55 cents from 63 cents, but that was better than the 47 cents expected to a consensus estimate from Wall Street analysts.

Fourth-quarter revenue rose to $978.6 million, compared with $890.3 million for the fourth quarter 2015. Operating income for the quarter dropped to $30.8 million from $35.3 million a year earlier.

“The operating income decline was driven by our strategic investments in our people and technology. We believe these investments provide a solid foundation for the future,” said Dave Yeager, Hub’s chairman and CEO.

The company’s Hub segment saw fourth quarter operating income fall 14% to $24.3 million as revenue increased 13% to $754.1 million.

The fourth quarter started out slowly but gained momentum as the quarter progressed, according to the company. 

“We were successful executing our strategy of targeting specific verticals and customers and providing our customers with multimodal solutions,” Hub said in a statement. “This resulted in growth in all of our service lines.”

Fourth quarter intermodal revenue increased 5% to $468 million, reflecting volume growth of 5%. Intermodal gross margin fell from the prior year because of lower prices and rail cost increases, according to the company. Volume growth, lower dray costs and improved mix and lane balance partially offset the decline.

Truck brokerage revenue increased 46% to $130 million this quarter compared to last year. It handled 33% more loads.

“During the quarter, we saw surges in demand from retail and e-commerce customers. Truck brokerage gross margin increased because of an increase in new business and seasonal business,” Hub said.

Fourth quarter Unyson Logistics revenue increased 17% to $156 million, due primarily to growth, with a record number of new customers, according to the company.

Costs and expenses rose $8.6 million to $64.5 million in the fourth quarter of 2016, as salaries and benefits increased $6.4 million due to higher headcount, annual employee raises and an increase in bonus expense, Hub said. General and administrative costs are $1.9 million higher because of an increase in information technology costs, including costs for a new transportation management system.

Hub’s Mode segment also reported mixed numbers, with operating income down 6% to $6.5 million in the fourth quarter, while revenue increased 6% to $256.4 million during what the company call a “competitive environment.”

Revenue consisted of $131 million in intermodal, which was flat, $80 million in truck brokerage, which was up 4%, and $45 million in logistics, which was up 33%. 

Hub also reported full year earnings increased to $74.8 million from $71 million in 2015, while revenue inched higher to $3.57 billion from $3.53 billion.

For 2017 Yeager said Hub plans to increase its market share by increasing its intermodal business and is increasing its fleet 10% while investing in technology.

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