Fleet Management

Earnings Watch: Werner, Covenant See Double-Digit Gains; Marten Nearly Unchanged

October 19, 2017

By Evan Lockridge

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Three trucking fleets issued their third quarter earnings reports on Thursday, with two showing profits increasing significantly from the same time a year earlier, while the third was healthy but nearly the same as it was a year earlier.

More Freight Lifts Werner Earnings

Werner Enterprises Inc. reported net income surged 19% in the third quarter, totaling $22.5 million, while earnings per share improved to 31 cents from 26 cents a year earlier.

The earnings include a gain on the sale of real estate of $6.5 million, or 6 cents per share, plus $3.4 million of losses on equipment sales, or 3 cents per share.

Revenue edged higher by 4%, totaling $528.6 million.

Third quarter 2017 freight demand in the Nebraska-based company’s truckload fleet improved throughout the quarter, according to the company.

“In July and August 2017, freight trended better than normal, and meaningfully better than the challenging freight market of third quarter 2016,” the company said in a statement. “As we moved into September, the freight market strengthened further due in part to the significant disruption caused by two major hurricanes in south Texas and Florida.”

Werner said the hurricanes resulted in short-term costs in September due to out-of-route miles, higher fuel costs, equipment issues and driver domicile issues, and the multiple days of school closings at its Florida-based driving schools negatively impacted driver hiring.

“At the same time, these events improved spot market pricing and further widened the positive gap between demand and capacity, which better positions the freight and contractual rate markets going forward,” the company said. “Freight volumes thus far in October 2017 have been seasonally better than normal."

Werner ended the third quarter 2017 with 7,375 trucks in its truckload segment, a year-over-year increase of 200 trucks and an increase of 60 trucks from the second quarter. Its dedicated unit ended the quarter with 3,955 trucks (54% of its total truckload segment fleet) compared to 3,825 trucks at the end of third quarter 2016.

Covenant Transportation Group Profit Leaps

The parent to trucking companies Covenant Transport, Southern Refrigerated Transport (SRT) and others, reported its profits skyrocketed 58.6% in the third quarter. Covenant Transportation Group Inc. had net income of $4.6 million, or 25 cents per share, compared with net income of $2.9 million, or 16 per share, in the third quarter of 2016.

Total revenue for the Tennessee operation was $178.6 million, an increase of 8.6% compared with the third quarter of 2016.

"Overall, freight demand was strong and trucking capacity was tight during the third quarter. The market improved each month and has continued at a strong level in October. Equipment utilization measured by miles per tractor improved in July and August,” said Chairman and CEO David R. Parker. “However, significant disruption of freight activity from the two hurricanes depressed September utilization.”

He noted the operating loss at SRT, Covenant's solo-driver refrigerated truckload subsidiary, narrowed from the second quarter and “reflected a substantial improvement over the operating loss SRT recognized in the third quarter of 2016.”

Parker said the improved year-over-year results reflect improvement in average rate per total mile, as well as better utilization, even with the disruption to SRT’s freight network resulting from the hurricanes in the third quarter.

Marten Transport Remains Steady

In contrast, Marten Transport Ltd. reported net income was nearly the same in the third quarter, totaling $7.9 million, or 14 cents share, compared with $8.4 million, or 15 cents per share, a year earlier.

Revenue in the most recent quarter was also nearly unchanged from the same time in 2016, totaling $170.7 million for the Wisconsin-headquartered company.

“The improvement in our revenue per tractor for the third quarter did not offset the increase in our operating expenses related to insurance and claims and fuel, the decrease in our gain on disposition of revenue equipment and the negative impact of the recent hurricanes on our Texas and Southeast operations,” said Chairman and CEO Randolph L. Marten.

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