Earnings Watch: Schneider, Saia, USA Truck, YRC Worldwide

February 2, 2018

By Evan Lockridge

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The string of trucking companies reporting better fourth-quarter and 2017 earnings has finally been broken. While Schneider National Inc. and Saia Corp. reported better numbers, USA Truck Inc. returned to only partial profitability and YRC Worldwide Inc. reported losses in both time frames.

Tight Capacity, Tax Law Boost Schneider Earnings

Net income for Schneider totaled $283.9 million in the final quarter of last year, or $1.60 per share – a nearly six-fold increase from $47.8 million, or 30 cents per share, in the same quarter in 2016. It was pushed higher by net deferred tax liability of $229.5 million due to the Congressional tax legislation passed and signed into law in December, according to the company.

Total revenue for the quarter was nearly $1.2 billion, compared to a little less than $1.1 billion a year earlier.

"A tight supply and demand environment existed in the fourth quarter and our price improved across the board – contract, tier and spot – as customers responded to driver capacity constraints in the market,” said Chris Lofgren, CEO. “The actions we took in the third quarter to build our driver fleet favorably impacted fourth quarter results.”

For all of 2017, Schneider saw net income more than double, hitting $389.9 million, or $2.28 per share, compared to $156.9 million, or $1 per share, a year earlier. Revenue for last year was nearly $4.4 billion, versus a little more than $4 billion in 2016.

Truckload revenues in the fourth quarter, excluding fuel surcharge, were up 6% from the fourth quarter of 2016, totaling $570.6 million, primarily due to productivity and price, according to the company. Improved truck productivity and effective freight selection resulted in revenue per truck per week of $3,797, an increase of 5.3% over a year earlier. Despite these gains, income from operations was flat at $63.4 million.

Intermodal revenues, excluding fuel surcharge, were 5% higher in the fourth quarter of 2017 than a year ago, rising to $208.6 million, due to a 3.9% increase in orders and a 1.5% increase in revenue per order, according to Schneider.

Logistics revenues, excluding fuel surcharge, increased 26% in the fourth quarter of 2017 compared to the same quarter in 2016, totaling $249.5 million. Income from operations increased 48% to $13.4 million.

Saia Benefits From Expansion, Strong Freight, Pricing

At the mainly less-than-truckload carrier Saia Inc., fourth quarter 2017 net income more than quadrupled from the same time a year ago, totaling $47.8 million, or $1.82 per share. Revenue increased to $353.3 million, a 17% increase.

During the fourth quarter of 2017, the company recorded a reduction in deferred income tax liability due to federal tax reform, benefitting Saia by  $1.29 per share.

LTL shipments per workday increased 8.7% during the quarter. LTL tonnage per workday increased 8.3%. LTL revenue per hundredweight increased 8.7%.

“Fourth quarter results reflect not only significant growth from our expansion into new markets this past year, but are also indicative of continuing strong freight activity and disciplined pricing,” said Saia President and CEO Rick O’Dell.

For all of 2017, Saia reported record revenue of $1.4 billion compared to $1.2 billion in 2016. Net income last year totaled $91.2 million versus $48 million in 2016.

LTL shipments per workday increased 5.6% in 2017 over 2016 as LTL tonnage per workday moved 5.2% higher. There was an 8% increase in LTL revenue per hundredweight.

“In 2018 we plan to open terminals in four to six new markets, as we continue to execute on our plan to provide 48-state coverage for our customers over the next few years,” said O’Dell.

In December the Georgia-based Saia announced it had opened its sixth Northeast terminal in the last eight months.

Meantime things were a different for two other carriers.

USA Truck Back In The Black For The Quarter, Reports Yearly Loss

USA Truck reported net income of $14.8 million, or $1.84 per share, for the fourth quarter of 2017, compared to a net loss of $3.8 million, or 48 cents per share, the same time a year ago.

Revenue in the most recent quarter totaled $123.3 million, up from $103.1 million.

The company said changes in federal tax laws, which reduced its federal income tax rate, lowered its income tax expense during the quarter by approximately $12 million, or $1.49 per share.

Excluding the tax law reform impact, adjusted net income was $2.8 million, or 35 cents per share, representing a year-over-year improvement of $6.5 million, or 82 cents per share.

“The fourth quarter adjusted results represent the third highest adjusted earnings per share for USA Truck in the last 10 year,” said President and CEO James Reed. “We continue to be impacted by this increasingly tight driver and independent contractor recruiting environment, and increasing cost pressures in our logistics business that could threaten margins.”

Despite the better fourth quarter, for all of 2017 USA Truck reported a loss of $2.1 million, That’s smaller than its 2016 loss of $7.5 million. Revenue in 2017 climbed to $446.5 million from $429.1 million a year earlier.

USA’s trucking segment reported fourth quarter operating revenue increased 19.8%, to $83.8 million, compared to the fourth quarter of 2016. This increase was primarily due to a 20.1% increase in base revenue per loaded mile, according to the company.

Trucking operating income was $3.5 million for the 2017 period and an adjusted operating ratio of 95.2%, compared to a $6.2 million operating loss and an adjusted operating ratio of 109.8% for the 2016 period.

The company’s logistics operation also improved in the fourth quarter, with revenue of $39.5 million, representing a 19% year-over-year improvement, and a 4.5% improvement sequentially. Gross margin decreased to 17.9% compared to 18.6% in 4Q16.

“A tightening spot market in the fourth quarter drove up purchased transportation costs, making it increasingly difficult to preserve margins,” USA Truck said. “This was driven in part by the electronic [logging] device implementation in mid-December that led carriers to raise rates preemptively.”

YRC Worldwide Reports Annual Loss Following Profitable 2016

The story at less-than-truckload carrier YRC Worldwide Inc. was much different, with a loss of $7.5 million, or 23 cents per share in the fourth quarter of 2017, the same as it was a year earlier. This came despite revenue increasing to $1.2 billion from $1.15 billion.

For full-year 2017, the net loss was $10.8 million compared to net income of $21.5 million in 2016. The fourth quarter and full-year 2017 results were impacted by a $7.6 million non-union pension settlement charge, according to the company.

According to CEO James Welch, the fourth quarter results were lower than previously released projections, primarily due to purchased transportation expense being unfavorably affected by a shortage of revenue equipment and a demand for drivers.

“These factors contributed to an increase in local purchased transportation and short-term rental expense, including the impact from approximately 2,000 rented tractors and trailers,” he said. “Going forward these expenses can be mitigated by continuing to upgrade our fleet, hiring additional pick-up and delivery drivers and improving productivities.

During the fourth quarter YRC Worldwide said it took delivery of more than 450 tractors with approximately another 900 scheduled for delivery in the first two quarters of 2018. It also took delivery of more than 1,900 trailers with approximately another 450 expected to be delivered in the first half of 2018.

"As we enter 2018, positive pricing and demand trends suggest the outlook for the trucking industry remains positive. The dynamics of the industry, including the planned progression of electronic logging device enforcement and an ongoing shortage of qualified drivers, could restrict capacity further,” said Welch. “With the revenue equipment and technology investments that we are making plus our initiative to grow yield, we're excited about 2018 and the opportunity we have in front of us to improve the business.”

There were some positive nuggets in the results. At YRC Freight, including fuel surcharge, fourth quarter 2017 revenue per hundredweight increased 4.4% and revenue per shipment increased 4.9% compared to the same period in 2016. Excluding fuel surcharge, revenue per hundredweight increased 2.6% and revenue per shipment increased 3.1%.

Also, in the company’s regional segment, including fuel surcharge, fourth quarter 2017 revenue per hundredweight increased 1.2% and revenue per shipment increased 4.6% when compared to the same period in 2016. However, excluding fuel surcharge, revenue per hundredweight decreased 0.4% but revenue per shipment increased 2.9%.

Finally, as of the end of 2017, the company's outstanding debt was $926.1 million, a decrease of $84.2 million compared to $1.010 billion at the end of 2016. YRC Worldwide has struggled over the past decade to remain profitable, after having come close to filing for bankruptcy more than once.

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