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Earnings Watch: Landstar, Forward Air, Hub Group, TFI, Patriot and Echo Global

At a time when many publicly held trucking companies are reporting lower, if not sharply lower, first quarter profits, one stood out among the herd of numbers released Wednesday while another saw a slight improvement in earnings.

Evan Lockridge
Evan LockridgeFormer Business Contributing Editor
April 26, 2017
Earnings Watch: Landstar, Forward Air, Hub Group, TFI, Patriot and Echo Global

 

7 min to read


At a time when many publicly held trucking companies are reporting lower, if not sharply lower, first quarter profits, one stood out among the herd of numbers released Wednesday while another saw a slight improvement in earnings.

Landstar System Inc. reported a couple of records on Wednesday as it announced first quarter profits amid what it described as a soft freight rate environment

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Record first quarter earnings per share were 77 cents compared to 66 cents a year earlier while first quarter revenue also set a record of $781 million versus $711.6 million a year earlier.

Net income in the first three months of 2017 totaled $32.4 million, a 11% improvement from the same time last year.

The number of loads hauled via truck during the 2017 first quarter was also higher than any first quarter in Landstar history. The asset-light company also moves freight via railroads, ocean cargo carriers and air cargo carriers.

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“As expected, the pricing environment for our truckload services continued to be soft in the 2017 first quarter, as industry-wide truck capacity continued to be readily available,” said Jim Gattoni, president and CEO. “However, the percentage change in year-over-year revenue per load on loads hauled via truck improved each month.  Moreover, in February, the company experienced its first year-over-year monthly increase in truck revenue per load in two years.”

He said Landstar has experienced consistent load growth in loads hauled via truck throughout the 2017 first quarter and into the first several weeks of April.

“I expect that trend to continue and therefore expect the number of loads hauled via truck in the 2017 second quarter to increase in a mid to upper single digit range over the 2016 second quarter,” Gattoni said.

He said he also expects pricing conditions for truck services in the 2017 second quarter will continue to be soft with little change in the level of available truck capacity.

“Assuming those truck conditions remain, I expect 2017 second quarter truck revenue per load to be higher than the 2016 second quarter in a low single digit percentage range,” Gattoni said.

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The company is forecasting second quarter 2017 revenue to be in a range of $820 million to $870 million and earnings per share to be in a range of 84 cent to 89 cent per share.

Forward Air Profit Inches Higher

Meantime, a provider of trucking and related logistics services to the North American air freight and expedited LTL market, Forward Air Corp., reported its first quarter profit edged 8.4% higher and better than its expectations.

Net income during the period was $14.2 million, or 47 cents per share, compared to $13.1 million or 43 cents per share, in the first quarter of 2016. Revenue for the period increased 7.6% to $247 million.

“Our Expedited LTL group drove strong volume growth towards the end of March and maintained its operating efficiencies to deliver a great quarter,” said Bruce Campbell, chairman, president, and CEO. “Truckload Premium Services grew its revenue but incurred higher broker utilization as it recruited owner operators to support new business. Our Intermodal group performed well, continuing to benefit from the integration of Triumph Transport while announcing the acquisition of Atlantic Trucking Co. Pool Distribution also had a great quarter driven by its recent new business wins and solid cost controls.”

The acquisition of Atlantic was made earlier in April while Triumph was purchased in August 2016.

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Looking ahead, Forward Air said it expects second quarter year-on-year revenue growth to be up 6% to 10% with net income per diluted share to be between 55 cents and 59 cents compared to a 33 cents net loss per share in the prior year quarter.

Hub Group Net Income Falls by Double Digits

In contrast, the trucking, intermodal and logistics provider Hub Group Inc. announced that first quarter 2017 net income declined 42.8% from a year earlier to $10.3 million, or earnings per share of 31 cents compared to 51 per share a year earlier.

Revenue for the current quarter was $893.4 million, compared with $805.9 million for the first quarter 2016.

According to the company, the primary factors negatively affecting earnings in the first quarter were within its intermodal business. 

“We are experiencing a soft pricing environment due primarily to excess truck capacity and extraordinarily aggressive intermodal pricing, particularly in the West.  At the same time, our rail transportation costs continue to increase, further compressing earnings,” Hub said in a statement.

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The company’s truck brokerage revenue increased 31% to $107 million in the most recent quarter compared to last year as it handled 19% more loads while fuel, price and mix combined were up 12%. 

Hub expects full-year 2017 diluted earnings per share will range from $1.60 to $1.80.

CFI Parent’s Net Income Slips 7.8 Percent

The Canadian owner of truckload carrier CFI and other operations, TFI International Inc., reported net income totaled $14.1 million, or 15 cents per diluted share, in the first quarter of 2017, versus $15.3 million, or 15 cents per diluted share, a year ago. All figures are in Canadian dollars.

Total revenue was $1.17 billion, up 25% from last year. The increase reflects the contribution from business acquisitions -- mainly the former Con-way truckload division owned by XPO Logistics -- completed in October 2016 and rebranded as CFI.

“As anticipated, TFI International’s first quarter results were affected by difficult conditions in the U.S. truckload market and certain integration costs related to the CFI acquisition,” said Alain Bédard, chairman, president and CEO. “This overshadowed significant profitability increases in all other business segments, reflecting our commitment to improve efficiency and to focus on niches generating superior returns.”

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He said TFI is cautiously optimistic about the North American economy given low unemployment and healthy consumer spending while it’s also seeing a modest rebound in the level of investment in the energy sector.

“These factors should, over time, improve market conditions, but we do not expect any significant improvement before the end of 2017,” Bédard said.

TFI International, he added, will also“continue to execute its selective acquisition strategy, targeting profitable and well-managed companies that offer synergies, reinforce existing operations and further expand its geographic footprint.”

Patriot Transportation Profit Tanks

The parent company to bulk tank carrier Florida Rock & Tank Lines Inc. saw its first quarter profit fall by 70% as revenue also declined.

Patriot Transportation Holding Inc. reported net income of $260,000, or 8 cents per share compared to net income of $863,000, or 26 per share, in the same quarter last year.

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Total revenue was $27.4 million, down $1.7 million from the same quarter last year while revenue miles this quarter declined by 1,371,000, or 12.8%. According to the company this happened as U.S. average weekly demand for gasoline was down roughly 3%-5% versus the same period a year ago. Also, Patriot said it experienced a reduction of its average driver force down to 645 from 724 in the same quarter last year.

In a statement the company said, “as a result of improved pricing and effective utilization of our equipment, our transportation revenue per mile increased by 3.3% over the same quarter last year. Fuel surcharge revenues were up $1,166,000 to $1.7 million due to higher diesel prices and the positive benefits of renegotiating fuel surcharge tables with several key customers last year.”

It noted while the demand for gasoline has been lower for most of the first half of our fiscal year, which started in October, it has seen volumes picking up during the month of March as the company heads into its typically busy season. 

“We continued to see improvement in our per mile transportation revenue as well as our net fuel expense following the implementation of more neutral fuel surcharge tables last year,” Patroit said. “The shortage of qualified drivers is the biggest headwind we face today and is a concern as we head into the seasonally busier months ahead.”

Echo Global Logistics Slips into the Red

Finally, Echo Global Logistics, which provides trucking, freight brokerage, and supply chain services, reported a loss in the first quarter of the year despite reporting record high revenue.

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The net loss was $2.9 million in the most recent quarter compared to net income of $0.3 million in the first quarter of 2016. The loss per share was 10 cents versus a earnings of 1 cent per share a year earlier.

Total revenue increased by 3% to $415.8 million from the first quarter of 2016 while net revenue, which excludes transportation costs, fell 7.8% to $74.5 million.

The company offered little insight into the numbers in a news release, except about the increase in revenue.

"Our record first quarter revenue was led by strong growth in our managed transportation business. We signed another $56 million of new contracts during the quarter," said Doug Waggoner, chairman of the board of directors and CEO. "Many of these wins are a strong reflection of the combined benefits of our integration with Command Transportation [purchased in 2015]. We have now achieved more than $70 million of our revenue synergy goal through additional modes and offerings to the Command client base."

Echo said it expects total revenue for the second quarter of 2017 to be between $455 million and $485 million and also reiterated full year 2017 total revenue guidance of $1.85 billion to $1.97 billio

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