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January 30, 2012 5:45 AM, EST

4Q Earnings of Five Truckload Carriers Rise

Firms Gain on Higher Rates, Improved Productivity
By Rip Watson, Senior Reporter

This story appears in the Jan. 30 print edition of Transport Topics.

Five publicly traded truckload carriers have reported higher quarterly earnings, helped by higher rates and improved productivity.

Swift Transportation Co., the largest of the carriers reporting quarterly results last week, posted net income of $36.8 million, reversing a loss of $48.3 million that was linked to a 2010 public stock offering.

The largest profit increases were posted by Celadon Group, whose profit nearly doubled to $5.4 million, and Marten Transport, which reported a 47% increase to $7.7 million.

Meanwhile, Knight Transportation’s earnings rose 23% to $17.5 million, and Heartland Express boosted profit by 11% to $17.1 million.

Marten, whose revenue rose 16% to $158.3 million, cited “a 6.5% increase over last year in our average truckload revenue per tractor week [to $3,219], net of fuel surcharge — our main measure of asset productivity.”

Swift said it saw potential for 2012 growth. “For the full year 2012, we are currently expecting a slow, steady growth environment similar to 2011,” the company’s Jan. 24 shareholder letter stated.

That growth helped Swift to boost revenue by 10% to $860.7 million in the fourth quarter and 14% for the full year to $3.33 billion. At Swift, revenue per loaded mile, excluding fuel’s effect, rose about 4%.

Revenue per loaded mile, excluding fuel surcharges, rose about 4% at Celadon, where revenue rose 6.3% to $141.5 million.

Paul Will, president of the carrier, said on a Jan. 26 conference call that he expected rate increases of 3% to 5% later this year, after the effect of holdover contracts from two acquisitions has diminished.

During its fiscal 2012 second quarter, which ended Dec. 31, Celadon bought dry van operations from Frozen Food Express and YRC Worldwide, moves that Will said would increase the company’s tractor capacity by about 8% in the current quarter over the prior period.

Building on the 2011 quarter — when revenue rose 19% to $224.1 million due to higher rates, volume and fuel surcharge collections — Knight CEO Kevin Knight voiced optimism during a Jan. 25 conference call, saying, “When the economy strengthens, the truckload industry is ready to boom again.”

To take advantage of potential growth, Knight plans to increase its fleet by 4% to 7% this year, building on a fourth quarter when revenue per tractor rose 6.8%.

Acquisitions also are being scrutinized at Knight.

“We would be comfortable doing a moderate-size transaction,” Kevin Knight said.

“I am optimistic we will get something done this year,” he said on the conference call before adding, “I think I said that last year too.”

The company evaluates multiple acquisitions every month or two, but has shied away from completing a deal in the past several years because target carriers are reporting what Knight termed “still thin margins.”

Knight’s operating ratio, a measure of profit margin, was 83.8, excluding fuel surcharge. That was the second-best among the reporting carriers on that basis, trailing only Heartland at 79.8.

Operating ratios for the other companies, also excluding fuel, included 91.8 at Marten, 92.5 at Celadon and 85.5 at Swift. In all cases, those carriers improved on a year-to-year basis.

Heartland’s results — and operating ratio — were helped by gains on equipment sales, which increased to $9.8 million from $2.8 million.

That gain enabled Heartland to increase operating income by 10% to $26.9 million, which was the smallest rise among the five carriers.

Revenue growth also was the smallest at Heartland, which reported a 2% increase to $131.2 million and also cited driver-related issues.

“Improved utilization is a primary focus as we continue to be challenged by tight driver capacity,” Heartland’s statement said.