Parcel and trucking giant FedEx posted a big gain in profits during its most recent quarter, while Daseke, the owner of several flatbed and specialized carriers, moved from a loss to a profit in both the final quarter of 2017 and for all of last year.

FedEx Corp. reported net income compared to a year ago more than tripled in its fiscal third quarter ending Feb. 28, totaling $2.07 billion, as earnings per share rose to $7.59 from $2.07.

Revenue in this most recent quarter grew to $16.5 billion from $15 billion a year earlier.

The net results include a tax benefit of $1.53 billion, or $5.60 per share, due to the Tax Cuts and Jobs Act passed by Congress late last year.

FedEx said it benefited from higher base rates, increased volume at FedEx Ground and FedEx Freight, and favorable fuel prices. The results were negatively affected by significantly higher variable compensation accruals, increased peak-related costs at FedEx Express, and adverse weather.

The FedEx Freight segment saw operating income improve 34% from a year ago to $55 million as revenue increased 14% to $1.69 billion.

Revenue increased due to less-than-truckload revenue per shipment growth of 8% and average daily LTL shipment growth of 6%, according to the company. Operating results improved primarily due to the benefit from higher LTL revenue per shipment, partially offset by higher variable compensation accruals.

The FedEx Express segment saw operating income decline 24% to $424 million despite higher revenue. This was attributed to an additional $170 million in costs in several forms, including its integration of TNT Express, adverse weather, and increased peak-related costs.

FedEx Ground reported revenue increased 11% to $5.22 billion as operating income moved 23% higher to $634 million. Strong revenue growth was driven by average daily package volume growth of 6% and higher base rates.

FedEx has raised its fiscal 2018 outlook, due to foreign tax benefits, U.S. tax reform and the company's improved operating performance. The company now expects full-year earnings, before certain pension accounting adjustments, to be between $17.90 and $18.30 per share.

Daseke Moves Back into Black

Daseke Inc. posted net income of $38.8 million, or 82 cents per share, in the final three months of 2017, compared to a net loss of $10.8 million, or a loss of 57 cents per share, a year earlier. Net income in the fourth quarter of 2017 included a $46 million tax benefit as a result of the Tax Cuts and Jobs Act.

Revenue in the most recent quarter increased 71% to $257.2 million. The gain was driven by the acquisition of seven operating companies during 2017, according to Daseke. Excluding the acquisitions, revenue increased 14% due to higher freight rates.

For all of 2017, net income was $27 million, or 59 cents per share, compared to a net loss of $12.3 million, or a loss of 81 cents per share, in 2016.

Revenue last year improved 30% from 2016, totaling $846.3 million. Excluding the acquisitions made by the company in 2017, revenue increased 6% due to higher rates and higher fuel prices, which increased fuel surcharge revenue, according to Daseke.

“Acquisitions remain a key tenet of our growth strategy and in 2018 we will focus on three areas,” said Don Daseke, chairman, president and CEO. “First, we will look at specific market niches where we would expect to generate higher margins, such as our entrance into the high-security cargo market in 2017. Second, we will seek small, highly accretive tuck-in acquisitions that benefit from our scalable platform. Finally, we will continue our general stated strategy of flatbed and specialized transactions, but with a sharper focus on organic growth once integrated."

n 2018, Daseke Inc. expects to grow revenue on an organic basis to approximately $1.35 billion compared to $846.3 million in 2017. Also, it expects to grow organic adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) to approximately $150 million compared to $91.6 million in 2017.

From the HDT archives (2015) – Q&A: Don Daseke on Building a Nationwide Flatbed Carrier

Evan Lockridge

Evan Lockridge

Business Contributing Editor

Trucking journalist since 1990, in the news business since early ‘80s.