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Earnings Watch: Swift Profit Up 4.7%, Paccar Down Nearly 20%

October 25, 2016

By Evan Lockridge

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At a time when many trucking companies are reporting lower third quarter earnings, Swift Transportation (NYSE: SWFT) bucked the trend with a 4.7% increase driven by its dedicated operations, while truck and engine manufacturer Paccar (NASDAQ: PCAR) saw earnings fall by 19.7%.

Arizona-based Swift reported net income increased to $38 million, or 28 cents per share, up from $36.3 million, or 25 cents per share, a year earlier. This includes the $7.1 million retirement package for President CEO Jerry Moyes, who is set to leave at the end of the year. The company’s adjusted earnings of 34 cents per share beat a consensus estimate from analysts.

Total revenue moved lower, to $1.01 billion from $1.06 billion a year ago. Revenue minus fuel surcharge fell to $929.7 million from the year-ago $955 million.

"Excess industry capacity, excess customer inventories, and sluggish demand have combined to cause persistent pressure on freight volumes and pricing,” the company said in its letter to shareholders.

According to the company, during the quarter its average operational truck count declined by 110 trucks from the second quarter and by 581 trucks compared to a year ago, “to drive improvements in asset utilization as the truckload market continued to be challenging throughout the third quarter.”

Swift’s dedicated operation saw a 8.9% year over year increase in revenue minus fuel surcharges, hitting $234.4 million. Weekly revenue less fuel surcharges per tractor improved 8.1% year over year, due to improvements in pricing and freight mix, Swift said. Its average operational truck count increased 130 trucks over the second quarter, due to growth with its existing dedicated customer base.

Swift's truckload segment, however, saw lower revenue compared to a year ago. Revenue minus fuel surcharges for the third quarter of 2016 was $469.1 million, down from $489.5 million in the third quarter of 2015.

Total loaded miles driven dropped 1.8% year over year, primarily due to a 3.2% reduction in average operational truck count. That was partially offset by a 1.4% increase in loaded miles per tractor per week, according to the company.

Swift refrigerated revenue minus fuel surcharges for the third quarter of 2016 was $75.1 million, compared to $81 million in the third quarter of 2015. However, weekly revenue minus fuel surcharge per tractor increased 2.9% year over year, “due to a significant increase in asset utilization.”

Intermodal revenue minus fuel surcharges for the third quarter of 2016 was $83 million, compared to $88.1 million a year earlier. Revenue minus fuel surcharge per load increased 1.4% year-over-year, “even though the collective intermodal market experienced pricing deterioration.”

Swift's numbers follow reports from carriers such as J.B. Hunt, Covenant, Landstar, Heartland and Werner reporting lower profits from a year ago, by varying degrees. Marten is the only other publicly traded carrier so far not to report lower earnings. 

Paccar Profit Falls as Market Share Moves Higher

Paccar, the parent to truck brands Kenworth, Peterbilt and DAF, reported its profit declined to $346.2 million, or 98 cents per share, for the third quarter of 2016 compared to $431.2 million, or $1.21 per share a year earlier. The per share missed a consensus estimate from analysts by 1 cent.

Revenue for Paccar in the most recent quarter totaled $4.25 billion compared to $4.85 billion for the same period last year.

Net income for the first nine months of the year is down considerably, hitting $232.9 million, versus $1.26 billion in the first nine months of 2015.

Despite lower numbers, Paccar CEO Ron Armstrong described the company as having reported good revenues and net income for the third quarter of 2016.

“Paccar’s third quarter results reflect strong truck markets in Europe, increased heavy-duty truck market share in North America and Europe, and good aftermarket parts and financial services results worldwide,” he said.

According to the Washington state-based company, Peterbilt and Kenworth’s record third quarter U.S. and Canada Class 8 retail sales market share of 31% increased their year-to-date market share to 27.9%. Despite this hike, Paccar revenue from its truck, parts and other operations fell to $3.95 billion in the most recent quarter from $4.5 billion a year earlier.

The earnings report follows those from rivals Daimler Trucks reporting increased profits while Volvo Group saw its earnings decline.

Paccar noted that Class 8 truck industry retail sales for the U.S. and Canada are expected to be 215,000-225,000 vehicles in 2016, and 200,000-230,000 in 2017.

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