Logistics Profits Help First-Quarter Earnings Rise at Three Companies
Logistics proved to be a profitable business in the first quarter as three prominent companies reported higher results.
C.H. Robinson Worldwide Inc., the largest broker, raised net income 12% to $119.0 million, or 83 cents per share, while Hub Group Inc.’s 75% improvement in first quarter net income to $18.0 million, or 51 cents, was the highest percentage growth among any company reporting so far in the quarter. Improved logistics and dedicated profits raised earnings at Ryder System Inc. by 5% to $56.2 million, or $1.05.
However, in the truckload sector, Heartland Express Inc. earnings fell 18% to $14.4 million, or 17 cents per share, citing “weaker freight volumes and downward pressure on rates.”
Robinson produced net revenue, or profit margin after transport costs are paid, of $563.3 million, a 7.3% increase. The company reported that its profit margins on truckload freight, the largest individual business, rose by two percentage points as North American shipments rose 4%. Ample capacity and a change in the mix of business helped the truckload unit. Truckload net revenue rose 8% to $321.4 million, while second-largest profit generator less-than-truckload climbed 6.9% to $91.3 million, helped by 10% higher volume.
Revenue was 6.9% lower at $3.07 billion due to lower fuel surcharges.
Hub Group, whose logistics services include intermodal and brokerage, improved profit margin by 20% to $108.4 million, even though revenue fell 4% to $805.9 million. Intermodal volume rose 1%, but revenue dipped 4% to $414 million. Revenue was affected by lower fuel surcharges.
Net income was reduced by $4.1 million for costs related to the closing of the company’s Los Angeles area truck terminal and severance costs.
Ryder reported 26% higher profit of $19.8 million before taxes at the logistics unit. Dedicated profit on that basis climbed 59% to $14.3 million. Revenue was 15% higher at dedicated and 8% greater at the logistics business. Profit at both units was tied to increased volumes and stronger pricing. Companywide, revenue rose 4% to $1.63 billion.
The fleet-management business, the largest unit with about 70% of revenue, saw profit before taxes slip 8% to $82.9 million, hurt by weaker utilization and declining used truck prices.
“The strong performance of our contractual businesses, as well as cost actions we took early in the year, enabled us to overcome a challenging used sales and rental market,” CEO Robert Sanchez said, noting that outsourcing was a key factor in the improved results.
At Heartland, gains from equipment sales plummeted to $1.3 million from $10.1 million. Excluding that drop, profit before interest and taxes rose to $18.9 million from $18.1 million.
Heartland revenue fell 13% to $162.8 million. About half of the drop resulted from lower fuel surcharge revenue.
Heartland is No. 39 on the Transport Topics Top 100 list of the largest U.S. and Canadian for-hire carriers. Hub is No. 8, while Ryder is No. 6 on TT’s Top 50 list of the largest logistics companies in the United States, Canada and Mexico and Robinson is No. 4.