Most Fleets, Logistics Firms Record Weaker 1Q Earnings
This story appears in the May 9 print edition of Transport Topics.
Five more trucking and logistics companies have announced weaker results, capping a first-quarter earnings season when the slow freight market led more than two-thirds of publicly traded companies to produce lower results year-over-year.
XPO Logistics slightly reduced its first-quarter loss, excluding one-time costs, to $9.3 million, or 8 cents per share, while earnings at Expeditors International of Washington slipped 9% to $96.6 million, or 53 cents, as airfreight and ocean forwarding results weakened.
ArcBest Corp.’s first-quarter loss widened to $6.1 million, or 24 cents per share, hurt by weaker less-than-truckload unit and logistics performance. USA Truck lost $1.8 million, or 19 cents, reversing a year-earlier profit, due to restructuring costs. Roadrunner Transportation Systems Inc.’s first-quarter net income plunged 77% to $3.1 million, or 8 cents per share, as profits were undercut by the weak freight market.
Deutsche Bank analyst Robert Salmon in reports last week described LTL operators’ results as generally disappointing, largely due to cost issues at some carriers. On the truckload side, he said, the immediate outlook was cautious because “rates remain under pressure as shippers are seeking rate relief in bids and spot [market] usage.
Revenue more than quadrupled to $3.54 billion at XPO, which ranks No. 14 on the Transport Topics Top 100 list of the largest for-hire carriers in the United States and Canada. The results included acquisitions of Con-way Inc. in October and Norbert Dentressangle in June. Combined, those companies’ ann-ual revenue exceeded $10 billion in 2014. XPO’s first-quarter 2015 loss was $9.9 million, or 13 cents.
LTL was a bright spot at XPO as operating income, which excludes interest and taxes, rose 54% and the operating ratio improved to 92.9 from 95.6, prompting CEO Brad Jacobs to say that business was “a big win.”
Transportation revenue, including LTL, reached $2.3 billion, producing operating income of $75.4 million. Logistics revenue totaled $1.3 billion, with $31.9 million of operating income.
Expeditors, which ranks No. 5 on the Transport Topics Top 50 list of the largest logistics companies in North America, reported revenue fell 15% to $1.42 billion from the first quarter of last year, when earnings were $106.7 million, or 55 cents.
The results reflected a 3% decline in ocean freight volume and a 9% drop in airfreight business.
Net revenue, or the amount left after paying for transportation, fell nearly 30% on ocean business and almost 25% on airfreight, signaling a weaker rate environment.
ArcBest, No. 12 on the for-hire TT100, raised revenue 1% to $621.5 million as logistics unit revenue improved. In the year-earlier period, the loss was $5.9 million, or 23 cents, including one-time costs, and earnings of $1 million, or 4 cents, when those costs are excluded.
“Ongoing economic weakness continued to impact our business, consistent with trends that began in the fall of 2015,” ArcBest CEO Judy McReynolds said.
ABF Freight LTL revenue fell less than 1%, leading to a $9 million operating loss. Revenue per 100 pounds of freight fell 1.2%, reflecting lower surcharges. Shipments and tonnage rose.
ArcBest’s logistics unit raised revenue 6%, but operating income fell 70% to $1.15 million as mostly premium logistics results worsened.
At No. 50 USA Truck, restructuring costs were $5.2 million for steps such as closing facilities, cutting jobs and devoting more assets to its asset-light services. Trucking revenue slumped more than 20% to $75.7 million, producing a $4.4 million operating loss. Logistics operating income dipped more than 30% to $2 million as revenue fell 6% to $34.9 million. Companywide revenue fell 20% to $119.6 million. Earnings were $1.6 million, or 16 cents, in the prior-year period.
Revenue slipped 4.8% to $465.6 million at No. 17 Roadrunner, which earned $13.6 million, or 35 cents, in last year’s first quarter.
Truckload and logistics revenue rose less than 1% to $273.8 million, but operating income fell more than 60%.
Less-than-truckload operating income plummeted 86%, hurt by weak industrial freight demand. Tonnage fell 14%, and shipments dipped 8%. Revenue dropped 14% to $113.4 million.
