Earnings Watch: Old Dominion, Covenant Transport, Knight Swift Report Higher Profits

Old Dominion, Covenant Transport, and Knight Swift all reported higher profits for the second quarter.

Higher Revenue, Profits at ODFL

Less-than-truckload carrier Old Dominion Freight Line Inc. reported significant gains in both revenue and profitability due to increases in both freight volume and yield.

Total second quarter revenue increased 23% from a year earlier to $1.03 billion as net income surged 66.1% to $163.4 million. Earnings per share increased to $1.99 from $1.19 in the second quarter of 2017.

“Our financial results reflect the positive yield environment as well as ongoing strength in the domestic economy,” said Greg C. Gant, president and CEO. “The 23% growth in revenue during the second quarter included balanced increases in both volume and yield, which supported our ability to improve our operating ratio by 220 basis points and grow earnings per diluted share by 67.2%.”

He said revenue growth for the quarter was primarily due to a 14.6% increase in LTL tons and a 7.4% increase in LTL revenue per hundredweight, “which reflects our continued focus on yield-improvement initiatives that increase individual account profitability.”

The increase in LTL tons included increases in LTL shipments and LTL weight per shipment of 11.2% and 3.1%, respectively. LTL revenue per hundredweight, excluding fuel surcharges, grew 4.1% for the second quarter, despite the increase in LTL weight per shipment and a 0.2% decrease in length of haul.

Covenant Transportation Improves Due to Better Operating Ratio

Covenant Transportation Group Inc. (CTG), the holding company for several trucking companies, including Covenant Transport, Southern Refrigerated Transport and others, reported big upturn in its net income due in part to improvements in the operating ratio for its truckload business.

The company reported second quarter total revenue of $196.3 million, an increase of 19.5% compared with the second quarter of 2017.

Net income totaled $10 million, or $0.54 per share, compared with net income of $1.5 million, 8 cents per share a year earlier.

“Our truckload operations’ 91.9% operating ratio for the second quarter of 2018 represents 620 basis points of improvement on a year-over-year basis and 400 basis points of sequential improvement as compared to the first quarter of 2018, said David R. Parker, chairman and CEO.

The company also reported improvements in total revenue and operating income for its non-asset based managed freight subsidiary Covenant Transport Solutions.

Total operating income for CTG was $14.1 million, with an operating ratio of 91.8%, compared with operating income of $4 million and an operating ratio of 97.3% in the second quarter of 2017.

Knight-Swift Profit Jumps More Than 400%

Knight-Swift Transportation Holdings Inc. owns the truckload fleets Knight Transportation and Swift Transportation, which merged last fall. It noted that its year-over-year combined revenue growth was achieved despite shedding some underperforming business and implementing more stringent driver hiring requirements at Swift. Officials said it was a "remarkable" quarter for Knight Transportation, with a 77.7% operating ratio in its trucking business

Total revenue increased 387.4% to $1.3 billion for the second quarter of 2018 from $273.2 million for the second quarter of 2017. Revenue, excluding fuel surcharge, increased 373.5% to $1.2 billion for the second quarter of 2018 from $247 million a year earlier.

Net income increased more than 408.2% to $91.3 million as earnings per share increased by a smaller margin, totaling 56 cents, up from 25 cents in the second quarter of last year. Helping the company was that the second quarter effective tax rate decreased to 22.9%, compared to 37.6% in 2017.

Knight Trucking, Swift Truckload, and Swift Dedicated comprised approximately 80% (or 15,300 tractors) of the operation’s asset-based trucking business and “are performing well, operating on a combined basis at an 83.8%" operating ratio, the company said in a statement.

It also said Swift Intermodal continues to show sequential and year-over-year improvements since the merger between Knight and Swift. Additionally, Knight Logistics continues to grow load count as well as operating income.

Swift's refrigerated segment, however, did not fare as well, with a 98% operating ratio. Average revenue per tractor in Swift's refrigerated segment decreased 6.7% in the second quarter, as higher revenue per mile was more than offset by a drop in miles per tractor because of unmanned trucks.