Fleet earnings reported this week so far are varying widely, ranging from record numbers at one carrer to another barely eking out a profit, and one carrier delayed in reporting due to an investigation into its accounting practices.
Landstar Reports Record Revenue, Earnings Per Share
Landstar System Inc. reported net income of $39.6 million, or 94 cents per share, in its fiscal 2016 14-week fourth quarter period on revenue of $893 million. This compares to net income of $37.9 million, or 88 cents per share, on revenue of $849 million in the 2015 13-week fiscal fourth quarter.
Revenue and earnings per share for the 2016 fourth quarter are the highest in Landstar history, according to the asset-light company, while earnings per share beat a consensus estimate from analysts by 7 cents.
Gross profit, which the company defines as revenue less the cost of purchased transportation and commissions to agents, was $132.8 million in the 2016 fourth quarter compared to $126.4 million a year earlier. The company says that's the highest of any quarter in the last 10 years.
Operating income was $63.8 million in the 2016 fourth quarter compared to $62.6 million in the 2015 fourth quarter
“I am very pleased with Landstar’s performance in the 2016 fourth quarter given the challenges of a low growth macro environment and more readily available capacity,” said President and CEO Jim Gattoni. The number of loads hauled via truck in the 2016 fourth quarter increased 11% over the 2015 fourth quarter, while the number of loads hauled via railroads, ocean cargo carriers and air cargo carriers increased 6% over the 2015 fourth quarter, he said.
Truck transportation revenue hauled by independent contractor drivers and truck brokerage carriers in the 2016 fourth quarter was $832.2 million, or 93% of revenue. That compares to $786.4 million in the 2015 fourth quarter, still 93% of revenue.
Revenue hauled by rail, air and ocean cargo carriers was $48.7 million, or 5% of revenue, in the 2016 fourth quarter compared to $50.6 million, or 6% of revenue, a year earlier.
For all of fiscal 2016, however, Landstar net income slipped to $137.4 million from $147.7 million in fiscal 2015. Revenue fell to $3.17 billion from $3.32 billion.
Gattonia said during the first three weeks of the 2017 first fiscal quarter, the company is experiencing growth in the number of loads hauled via truck, but at a somewhat lower rate than the quarter-over-quarter volume growth experienced during the 2016 fourth quarter.
“I expect the number of loads hauled via truck in the 2017 first quarter to increase in a mid to high-single digit range over the 2016 first quarter,” he said. “As it pertains to revenue per load on loads hauled via truck, rates appear to have stabilized over the last several months and I do not expect a significant change in the rate environment over the balance of the 2017 first quarter.”
He is forecasting Landstar will report first quarter revenue of $725 million to $775 million with earnings per share in the range of 70 cents to 75 cents.
Celadon Profit Tumbles
In sharp contrast, Celadon Group Inc. barely managed to make a profit in the final quarter of the year, reporting $1.3 million, or 5 cents per share, compared to $6.6 million, or 24 cents a year earlier. Revenue during the quarter fell 3.5% to $265.7 million
Year-over-year figures were not released because the company operates on a fiscal year that ends on June 30. However, revenue for the six months ended Dec. 31, 2016, fell 2% to $530.8 million and the company saw a net loss of $1.6 million versus an $18 million profit a year earlier.
The poor December 2016 performance was due to several factors, the company said, the main one relating to selling equipment, accounting for approximately $5 million, or 12 cents per diluted share. "This decline related to discontinuing sales of equipment by our Quality Companies subsidiary, sale of fewer tractors and trailers formerly used in our trucking operations, and lower gain on sale per unit due to a weak market for used revenue equipment," said the company in a statement.
Weaness in its irregular-route dry van trucking business was another culprit.
“Our more specialized businesses, such as short-haul regional, bulk, and dedicated, produced solid profitability during the quarter. However, our irregular route, dry van trucking business experienced an operating loss due to weak demand, rate pressure from customers, and increasing costs,” Celadon said.
The company also said it decreased the size of its fleet by 540 trucks compared to a year earlier, due to what it called “weak freight demand. It plans to cut another 200 trucks once the current quarter is over.
For 2017 Celadon said it plans to maintain or grow the specialized businesses, increase its allocation of assets to dedicated contracts, “right size” the irregular route fleet, and handle non-core irregular route lanes through its non-asset based logistics unit.
C.H. Robinson Squeezes Out Slightly Higher Yearly Profit
Third-party logistics provider C.H. Robinson Worldwide Inc. reported net income slipped 3.4% from a year earlier to $122.3 million. Earnings per share fell to 86 cents from 88 cents, but that was 2 cents better than a consensus estimate from analysts.
Total revenue increased 6.4% to $3.41 billion, which the company attributed to “volume growth across all of our services.”
For all of 2016, C.H. Robinson reported a 0.7% increase in net income compared to 2015, totaling $513.4 million. Revenue dipped 2.5% to $13.14 billion.
According to a statement, in the fourth quarter its total operating expenses increased 3.3%. Total other selling, general, and administrative expenses increased 22.3%, driven by growth in claims, bad debt provision, and costs related to the APC Logistics acquisition last September.
Total revenue in what the company calls its North American surface transportation unit, which primarily provides truckload, less than truckload and intermodal offerings, increased 5.1% to $2.28 billion, while income from operations fell 14.3%, due in part to an 8.8% decline in net revenue. Part of this was attributed to 3.5% drop in the rate per mile charged to customers for truckload movements, while intermodal net revenue fell 15.8% In contrast, LTL net revenue increased 5.1%.
The company’s global forwarding business saw income from operations increase 31.5% to $24.6 million as revenue jumped 26.3% to $476 million.
Roadrunner Earnings Delayed Due To Accounting Investigation
Roadrunner Transportation Systems Inc. is expected to be greatly delayed in reporting its fourth quarter and 2016 earnings after announcing it will be restating some of its earnings for all 2014 and 2015 and through the third quarter of 2016 following a recommendation from its audit committee.
Last November the company said it was as made aware of various potential accounting discrepancies at two of its subsidiaries following earlier acquisitions.
The investigation into these discrepancies is still ongoing. Based on the investigation to date, Roadrunner has identified various accounting errors that it estimates will require prior period adjustments to Roadrunner’s results of operations of between $20 million and $25 million.
According to the company, these errors principally relate to unrecorded expenses from unreconciled balance sheet accounts, including cash, driver and other receivables, and linehaul and other driver payables.
“As the investigation is ongoing, the estimated amount is preliminary and could change materially. The investigation to date has disclosed that the accounting discrepancies may also affect periods prior,” Roadrunner said.
In a note to investors, the investment firm Stifel said the adjustment numbers Roadrunner has given are preliminary, and, “in our view, subject to downward, not upward, revision once the investigation is concluded.
“We expect more to be uncovered in the ongoing investigation, which the company believes should be concluded in March, at which time it can report fourth quarter 2016 and full year 2016 earnings and restated prior period results,” Stifel said.
You can get a complete look at what other fleets have reported for the fourth quarter of last year as well as for all of 2016 by following this link.