In its first earnings report since going public, U.S. Xpress reported substantial improvements in revenue, operating income, and operating ratio compared to a year earlier.
Total revenue for the second quarter of 2018 rose $79.4 million year over year to $449.8 million, primarily a result of an 11.4% increase in the company’s average revenue per loaded mile (excluding fuel surcharge revenue), a 56.2% increase in brokerage revenue to $58.4 million, and a $15.1 million increase in fuel surcharge revenue.
Excluding the impact of fuel surcharges, second quarter revenue increased $64.3 million to $402.8 million, an increase of 19% compared to the prior year quarter. Operating income for the quarter was $20 million, compared to $2.7 million achieved in the second quarter of 2017. Excluding one-time costs related to the company’s IPO transaction completed in June of 2018, second quarter adjusted operating income looks even better at $26.5 million.
The second quarter 2018 adjusted operating ratio was 93.4%, a 510-basis-point improvement over the second quarter of 2017 and the company’s lowest operating ratio in 20 years. Transportation analysts at Stifel, in an email report to investors, said they expect improvements in operating ratio to continue, “as the company's technology and process initiatives continue to be rolled out across the organization - aimed mainly at increasing the productivity of the company's drivers, while reducing their daily hassle factor as well to improve retention.”
Eric Fuller, U.S. Xpress president and CEO, said the company experienced improving rates and volumes through the second quarter, but limited driver availability is a situation that is only becoming more challenging. Its driver recruiting and retention initiatives, Fuller noted in a press release, have helped the company offset these difficult conditions, and the company will continue to focus on those efforts.
U.S. Xpress was able to slightly increase its tractor count during the second quarter of 2018 through an 11% reduction in its driver turnover percentage. Stifel reported that even so, the average tractors in the over-the-road segment dropped 6.8% year over year, but noted that the company has done a good job recruiting owner-operators to join the fleet. In the dedicated segment, there was a decline in utilization due to some customer network changes.
“The environment in the third quarter of 2018 remains strong from a rate and volume perspective,” Fuller said, “and we are currently anticipating rates to further increase on a sequential basis as we continue to implement contract rate increases in both our over the road and dedicated divisions.”