A load of publicly held trucking fleets released first quarter 2018 earnings – Forward Air, Knight-Swift, Landstar, Covenant, Echo Global, and Heartland – with all but one reporting better numbers than the same time a year ago.
Forward Air Profit Totals Nearly $18 Million
Forward Air Corp. reported income during the quarter of $17.7 million, or 60 cents per share, compared to $14.6 million, or 48 cents per share, in the prior year quarter. Revenue for the most recent quarter increased 15.5% to $302.6 million.
The first quarter results were ahead of the company’s earlier guidance, despite some adverse weather, according to Bruce Campbell, president and CEO.
“Expedited less-than-truckload drove strong volume growth amid a tight truckload market to deliver solid performance despite a higher use of brokered transportation,” he said. “Truckload premium services also faced a higher use of brokered transportation as it continued adjusting its customer contracts to market rates. Our intermodal group delivered broad-based growth that extended beyond its recently completed acquisitions. Pool distribution had a solid quarter driven by volume growth and new business wins.”
The company said it expects second quarter year-over-year revenue growth to be 16% to 20% and for income per share to be up over last year.
Knight-Swift Profit Surges
At Knight-Swift Transportation Holdings Inc., both net income and revenue swelled greatly compared to a year ago, which was before Knight Transportation and Swift Transportation merged into one powerhouse operation last September.
Net income was $70.4 million, a 373% increase from a year earlier, or 39 cents per share versus 18 cents per share a year earlier. The results do not include the operations of Abilene Motor Express, which Knight-Swift acquired in March of this year.
Revenue increased by nearly as big a margin, totaling $1.27 billion.
"Our results for the first quarter were encouraging, reflecting further progress on synergy opportunities across our brands and continued strength in freight demand and pricing, a marked improvement over the difficult first quarter of last year,” said Dave Jackson, CEO. “Freight demand was generally strong across our network on a better than seasonal basis throughout the quarter.”
However, due to tight unemployment in the U.S., the company has faced its most difficult driver-sourcing challenge, resulting in a headwind when it comes to its unseated truck count and utilization metrics.
“We expect this driver environment will persist, and as a result, sourcing and retaining drivers remains a top priority across our fleets,” Jackson said. “We are increasing our efforts and our investment in recruiting and retaining professional drivers for our asset-based businesses.”
The company’s average tractor counts in the first quarter were down 1.9% at Knight and 8% at Swift year-over-year, though on a sequential basis it achieved a slight increase in the Knight fleet, prior to acquisitions, and slowed the decline in the Swift fleet.
Landstar Reports Record Revenue, Earnings Per Share
Landstar System Inc. had record first quarter earnings per share of $1.37, on record first quarter revenue of $1.05 billion. This compares to earnings per share of 77 cents on revenue of $781 million in the 2017 first quarter.
Net income jumped to $57.5 million in the most recent quarter compared to $32.4 million a year earlier.
The number of Landstar loads hauled via truck in the 2018 first quarter increased 12% over the 2017 first quarter, driven by a 13% gain in the number of loads hauled via van equipment, an 8% hike in the number of loads hauled via unsided/platform equipment, and a 12% improvement in less-than-truckload volume, according to the company. The number of loads hauled via railroads, ocean cargo carriers and air cargo carriers jumped 20% higher, primarily due to a 25% increase in rail intermodal volume.
“As expected, the pricing environment for our truckload services continued to be very strong in the 2018 first quarter, as industry-wide truck capacity continued to be very tight,” said Jim Gattoni, president and CEO. “Revenue per load on loads hauled via van equipment increased 24% over the 2017 first quarter, and revenue per load on loads hauled via unsided/platform equipment increased 17% over the 2017 first quarter. As a result, revenue per load on loads hauled via truck was 21% higher than the 2017 first quarter.”
He said through the first few weeks of April, load growth on a year-over-year basis in loads hauled via truck was consistent with the load growth experienced in the first quarter.
“I expect that trend to continue and, therefore, expect the number of loads hauled via truck in the 2018 second quarter to increase in a 10% to 12% range over the 2017 second quarter,” Gattoni said. “My expectation is that pricing conditions for truck services in the 2018 second quarter will continue to be very strong, with little change in the level of available truck capacity.”
Covenant Transportation Rebounds With Profit
Covenant Transportation Group Inc. turned its fortunes around in the first quarter of the year, reporting net income of $4.4 million, or 24 cents per share, compared with a net loss of $39,000 in the first quarter of 2017.
The loss a year ago was attributed to a $600,000 charge resulting from a cargo claim judgment stemming from a cargo loss in 2008.
Total revenue in the first quarter of 2018 was $173.6 million, an increase of 9.3% compared to a year earlier, while freight revenue moved 7.4% higher to $150.5 million.
The company reported operating income of $6.4 million and an operating ratio of 95.7%, compared with operating income of $300,000 and an operating ratio of 99.8% in the first quarter of 2017.
“We were pleased that each of our three asset-based units (expedited, dedicated, and solo refrigerated) generated an improved operating margin compared with the 2017 quarter,” said Chairman and CEO David Parker. “The expedited and solo refrigerated units improved by approximately 500 basis points each, while the more consistent dedicated unit improved by approximately 100 basis points.”
Average freight revenue per tractor per week for this parent to Covenant Transport, Southern Refrigerated Transport, and Star Transportation increased to $3,993 during the 2018 quarter from $3,755 during the 2017 quarter.
Average freight revenue per total mile increased by 15.4 cents per mile, or 9.5%, compared to the 2017 quarter. However, average miles per tractor dropped by 2.9%, thanks to a lower average seated truck percentage and a drop in the percentage of team trucks. The fleet dropped to an average of 894 teams (35% of the total fleet) in the first quarter of 2018 compared to 1,003, or 39%, in the first quarter of 2017.
The company is looking to add at least another 100 teams, as more customers affected by the ELD mandate are asking for them.
Looking ahead, CTG is forecasting sequential operating income improvement in each of the remaining quarters of 2018.
“Based on our expectation of a continuation of recent U.S. economic growth, as well as continued regulatory and demographic capacity constraints on driver availability, we expect year-over-year average freight revenue per total mile to be positive over the remainder of the year by a high single digit percentage,” said Richard Cribbs, executive vice president and chief financial officer. “All in all, we expect meaningful year-over-year improvements in earnings per share each quarter of 2018.”
Echo Global Logistics Moves Back into Black
Another fleet that rebounded in the first quarter of 2018 is Echo Global Logistics Inc.
It reported net income of $4.7 million, or 17 cents per share, compared to a net loss of $2.9 million in the first quarter of 2017. Revenue increased 38.8% to $577.1 million from the first quarter of 2017.
"Continued tight capacity and higher rates drove another record quarter for Echo," said Doug Waggoner, chairman and CEO. "While revenue growth rates accelerated for the fifth consecutive quarter, we were able to maintain margin and deliver record earnings by continuing to leverage our access to capacity, technology, and our talented people across all segments of the market."
The Illinois-based company also reported truckload and what it calls “partial truckload” revenue increased 42.9%, while less-than-truckload revenue increased 29.3% from the first quarter of 2017.
“We expect revenue for the second quarter to be between $580 million and $620 million and we are increasing our full year 2018 revenue guidance range to $2.25 billion to $2.40 billion,” said Kyle Sauers, chief financial officer.
Heartland Express Profit Declines Slightly
While most publicly held fleets reported increased profits, Heartland Express Inc. recorded a small drop, although it was still in the black.
The Iowa-based operation had first quarter net income of $13.4 million, or 16 cents per share, compared to $14 million, or 17 cents per share, in the first quarter of 2017.
Revenue increased to $156.7 million from $129.9 million. Revenue for the quarter included fuel surcharge revenues of $21.5 million compared to $14.9 million in the same period of 2017.
According to the company, revenue increased 17.5%, excluding fuel surcharge revenues, during the first quarter of 2018 as compared to the same period in 2017. That was primarily due to more miles driven following the Interstate Distributor Co. acquisition.
Operating income for the three-month period decreased $6.4 million to $12.9 million, primarily due to lower gains on the sale of equipment, combined with the negative operating impacts from the consolidation of IDC financial results when compared to the prior period, according to Heartland.