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Earnings Watch: Swift, Marten, Heartland Report Lower Profits

January 26, 2017

By Evan Lockridge

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Earnings reports from three more trucking fleets rolled in late Thursday afternoon, with all showing lower earnings in the fourth quarter compared to the same time a year ago and lower annual profits compared to 2015. But all managed to stay well in the black.

Swift Transportation Co. reported net income fell a little more than 30% to $50.4 million, or 38 cents per share, from $72.5 million, or 51 cents per share, in the final quarter of 2015. Total revenue declined $1.039 billion from $1.090 billion.

For all of 2016 Swift reported total revenue fell to $4.03 billion from $4.23 billion in 2015. Net income last year totaled $149.3 million compared to $197.6 million in 2015 and $161.2 million in 2014.

“The fourth quarter capped a very challenging 2016, as rising fuel prices and a weak used truck market compounded the negative impact of the pricing and freight volume headwinds prevalent within the market,” Swift said in its letter to shareholders. “Our results for the fourth quarter were further impacted by higher than expected insurance and claims expense related to development on certain prior and current year claims.”

In the fourth quarter of 2016, Swift cut its tractor count by 210 trucks from the previous quarter, mainly its truckload and Swift Refrigerated divisions. That made for 746 fewer trucks than a year earlier, “which helped drive year over year improvements in our loaded miles per tractor per week in each segment," said the company.

In contrast, Swift's dedicated operation grew by 86 trucks in the fourth quarter compared to the third quarter of 2016.

“This growth represents additional units assigned to both our existing dedicated customer base and seasonal surge business,” Swift said. "Our dedicated sales pipeline remains healthy, and we are optimistic further growth and operational improvements will be achieved in 2017."

Swift also reported in its truckload segment revenue less fuel surcharges for the fourth quarter of 2016 was $472.7 million, compared to $503.3 million in the fourth quarter of 2015.

This change resulted from a 3.8% reduction in loaded miles driven within the period, and a 2.3% year-over-year decrease in revenue excluding fuel surcharge per loaded mile, according to the company. Weekly revenue excluding fuel surcharge per tractor fell 2.2% to $3,577, driven by the decrease in revenue excluding fuel surcharge per loaded mile, partially offset by a slight increase in loaded miles per tractor per week.

Dedicated segment revenue excluding fuel surcharge grew 6.7% to $241 million in the fourth quarter of 2016 compared to the fourth quarter of 2015. This growth was attributed to a 6.5% increase in weekly revenue excluding fuel surcharge per tractor and a slight year-over-year increase in its average operational truck count, according to Swift.

Swift refrigerated revenue excluding fuel surcharges for the fourth quarter of 2016 totaled $73.8 million, versus $82.7 million in the fourth quarter of 2015.

“This change was primarily driven by a 8.4% reduction in loaded miles driven within the period, and a 2.3% decrease in revenue excluding fuel surcharge per loaded mile,” the company said. “The lackluster refrigerated freight market, prevalent throughout 2016, persisted for the majority of the fourth quarter.”

However, the segment’s weekly revenue excluding fuel surcharge per tractor increased 3.8% year over year to $3,578, primarily due to a 6.5% year-over-year increase in the number of loaded miles per tractor per week, according to the company.

Intermodal revenue excluding fuel surcharge was $85.1 million in the fourth quarter of 2016 compared to $90 million in the fourth quarter of 2015.

“This change was primarily driven by a 4.1% reduction in load counts and a 1.3% decrease in revenue excluding per load,” Swift said. “These trends were largely anticipated due to the discontinuation of our trailer-on-flat-car service offering and an extremely competitive pricing environment, which persisted throughout the quarter.”

For all of 2016, Swift reported total revenue fell to $4.03 billion from $4.23 billion in 2015. Net income last year totaled $149.3 million compared to $197.6 million in 2015 and $161.2 million in 2014.

Heartland Express Fourth Quarter Profit Declines 23%

Heartland Express Inc. saw its fourth quarter profit move 23% lower compared to a year earlier, totaling $13.1 million, as earnings per share were 16 cents versus 20 cents in the final quarter of 2015.

Revenue in the most recent quarter also declined, registering $140.1 million versus $174.6 million a year earlier. Fuel surcharge revenues totaled $14.7 million compared to $18.2 million in the same period of 2015, a $3.5 million decrease.

"We delivered solid operating results as evidenced by our mid-80's operating ratios and cash generated from our operations for the three and twelve months ended Dec. 31, 2016,” said Heartland Express CEO Michael Gerdin. “In addition, our operating ratio has improved year over year before the effects of the decrease in gain on disposal of property and equipment. In addition, our operating ratio has improved year over year before the effects of the decrease in gain on disposal of property and equipment.”

He said gains on disposal of property and equipment declined $25.8 million year over year as a result of less trade activity in 2016 following a fleet upgrade in 2015.

“These results were achieved even though our top-line revenue was challenged by significant pricing pressure from shippers attempting to capitalize on short-term excess capacity in the industry,” Gerdin said.

For the full year of 2016 Heartland reported net income of $56.4 million, compared to $73.1 million in 2015, earnings per share were 68 cents compared to 84 cents a year earlier. Revenue was $612.9 million compared to $736.3 million in 2015.

Marten Transport Income Falls A Little, 2016 Revenue Higher

Marten Transport Ltd. reported net income of $8.3 million, or 25 cents per diluted share, for the fourth quarter of 2016 compared with $8.8 million, or 26 cents per diluted share, for the fourth quarter of 2015.

Net income was $33.5 million, or $1.02 per share, for, 2016 compared with $35.7 million, or $1.06 per share, a year earlier. Results for 2015 included a gain on the disposition of facilities of $392,000 for the fourth quarter and $4.1 million for the year. Net income improved to $33.5 million in 2016 from $33.3 million, or 99 cents per share, in 2015 excluding the facilities gain.

Revenue improved 2.3% to $172.7 million for the fourth quarter of 2016 from $168.8 million for the fourth quarter of 2015, and improved 0.9% to $671.1 million for 2016 from $665 million for 2015, despite lower fuel surcharges due to decreased fuel prices in 2016, according to the company.

Revenue, net of fuel surcharges, improved 2.2% to $157.4 million for the 2016 quarter from $154 million for the 2015 quarter, and increased 4.3% to $617.9 million for 2016 from $592.6 million for 2015. 

Fuel surcharge revenue increased to $15.3 million for the fourth quarter of 2016 from $14.7 million for the 2015 quarter, and decreased 26.4% to $53.2 million for 2016 from $72.3 million for 2015.

“Despite persistent softness in the freight market, which has challenged our truckload segment, we have continued to demonstrate the strength of our unique multifaceted business model by achieving our eighth consecutive year-over-year increase in quarterly operating income within each of our dedicated, intermodal and brokerage segments,” said Chairman and CEO Randolph "Randy" Marten.

He noted the company increased its average number of truckload and dedicated tractors by 226 tractors, or 9.1%, in 2016 over 2015 with the expansion of its dedicated operations.

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