LTLs Due to Report 2Q Revenue Growth, Yields; Execs Pleased With First Half of 2017

Brad Jacobs
XPO Logistics

Less-than-truckload companies benefited from a robust second quarter with revenue growth and stronger volumes and yields year-over-year, according to industry analysts and executives.

Out of the publicly traded LTL carriers, the Bloomberg News consensus forecast has all posting growth in and around 10% compared with last year. Old Dominion Freight Line Inc., ArcBest Corp. and Saia Inc. also are expected to announce that earnings surged double-digit percentages. XPO Logistics also is due to report that earnings skyrocketed during the past quarter compared with 2016.

XPO, Old Dominion, ArcBest, and Saia rank Nos. 3, 11, 12 and 28, respectively, on the Transport Topics Top 100 list of the largest for-hire carriers in North America.

“We believe that the [LTL] environment saw improvement throughout [second quarter 2017] with an acceleration in tonnage finally playing out given the positive industrial data we have seen consistently the last several quarters,” Stephens Inc. analyst Brad Delco wrote in a note to investors. “On the pricing side, we believe the rate environment remained rational, supported by recent general rate increases, which should help to support June yield trends.”

YRC Worldwide, No. 5 on the for-hire TT100, will likely report earnings dropped by more than one third, but the carrier also released some positive data in a filing to persuade lenders to extend the deadline to repay $637 million in debt from February 2019 to July 2022.

The Overland Park, Kan., carrier estimated that operating income will be between $150 million and $170 million in 2017 compared with $124.3 million last year. YRC projects revenue should be between $4.8 billion and $5 billion this year compared with $4.7 billion in 2016.

For the quarter, YRC forecasted an operating income between $46 million and $56 million, compared with $57.2 million one year ago. Revenue should be between $1.2 billion and $1.3 billion, compared with $1.21 billion a year ago.

“While 2Q results appear relatively in line with our above consensus [earnings per share] view, the upside that management is implying into the second half of this year was above even our expectations,” Aegis Capital Corp. analyst Jeffrey Kauffman wrote in a note. “This leads us to believe three factors are playing out above our expectations: (1) fuel prices are abating as a headwind and might even be a modest tailwind; (2) the company’s freight mix is improving, based on a strengthening industrial economy; and (3) the company’s recent pricing initiatives are bearing fruit.”

Estes Express Lines, No. 14 on the for-hire TT100, told Transport Topics that load counts grew by mid to upper single-digit percentages, yield was up low single digits and weight per shipment eked out a small year-over-year gain. Revenue grew almost 10%.

The Richmond, Va., LTL previously said that business grew in the first quarter, marking for a strong first half to the year.

“We’re racing forward as fast as we can with a very solid second quarter. And when you put the peak season on top of strong growth, it’s doubly strong. We feel pretty good about where we are and I think we’ll have a record year easily in 2017. It’s great news and it’s fun being in our business right now,” said Billy Hupp, Estes Express chief operating officer.

Hupp credited the strong peak season to growth in manufacturing and construction and the normal uptick in home improvement projects and spending time outdoors, necessitating the movement of lawnmowers, barbecues, grass and weed products, patio furniture and construction materials.

Bill Ward, chairman and CEO of Ward Transport & Logistics Corp., told Transport Topics that load counts grew 3.7% year-over-year, revenue increased 6.4% and weight per shipment was flat to slightly down year-over-year.

The Altoona, Pa., LTL generates a significant amount of its business from the industrial sector, benefiting from positive numbers in the Institute for Supply Management manufacturing index for the last 10 months.

“Seasonality helped this past quarter, but it’s a small piece. The other piece is that we’ve gained additional customers, too. I don’t attribute the growth too much to the core customers, but more on new business we’ve received from other LTL carriers,” Ward said.

He continued, “The first half of the year was very good for us, and we’re very optimistic about the second half. January and February were slightly better than last year and then in March it began to take off and we’ve never looked back. I don’t see that changing in the third quarter.”

Pitt Ohio, No. 50 on the for-hire TT100, told Transport Topics that load counts, revenue and weight per shipment grew modestly, although the company declined to provide percentage ranges. Like Ward, the Pittsburgh-based carrier serves many industrial clients and pays attention to the ISM and Federal Reserve indexes on industrial production and manufacturing.

“We’re pleased with where we are and we’re hopeful about the rest of the year,” said Geoffrey Muessig, Pitt Ohio’s chief marketing officer.