Overnite Transportation emphasized a 6.4% increase in first quarter revenue compared to last year and a turnaround from the previous quarter's losses when it reported its first-quarter financial results yesterday, but the Teamsters union attacked the report as "creative bookkeeping."
Overnite reported first quarter operating income of only $500,000, compared to $10.3 million in the first quarter of 1999.
This is a big turnaround from the company's $13.7 million operating loss in the fourth quarter of 1999. Overnite's revenue increased 6.4% to $269 million, but operating expense increased 10%, due mainly to $8.6 million in costs associated with the Teamsters strike. Net income for the first quarter was $2.3 million, down $6.2 million from the same period in 1999.
The Teamsters, who have been engaged in an unfair labor practices strike against the less-than-truckload company for six months, said that compared to competing companies, Overnite is doing poorly.
"Everybody's going gang-busters except Overnite," said Mike Conyngham, economist and director of research for the union. "Overnite's first-quarter earnings … show that the company has missed the boat on the greatest economic boom in the country's history."
Conyngham compared Overnite's results with unionized Arkansas Best Corp., an LTL comparable in size to Overnite. ABF announced net income of $13.2 million for the first quarter of 2000, up 93% from $6.8 million in the first quarter of 1999.
"For Overnite to claim, with any credibility whatsoever, that it is doing well despite the strike, it would have to post a profit of at least $15 million," said Conyngham.
Overnite spokesman Ira Rosenfeld points out that ABF is the leader in the industry. He notes that unionized carrier CF announced on Wall Street that it expects lower earnings when it announces its first quarter financials in a few days.
With the turnaround from losing $13.7 million in the previous quarter to showing a profit this quarter, Rosenfeld says, "The momentum is clearly on Overnite's side. Did we make as much as we wanted to? Is there a company in America that made as much as it wanted to?"
Without the expense of the Teamsters strike Rosenfeld says, the financials would have looked a lot better. "We've never denied that we're spending money because of the Teamsters," he says. "What we've also said is that they're not affecting our day-to-day operations. And they're not. We're delivering a record 98% on time. I think our customers and the shipping public realizes this, and the number of shippers is actually increasing. And we're making money. That's the bottom line. Last year the Teamsters said they were doing to put us out of business. They're not putting anybody out of business."