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May 1, 2017 4:00 AM, EDT

TL Profits Mostly Down

Swift, Knight Among Those Reporting Declines
John Sommers II for Transport Topics

This story appears in the May 1 print edition of Transport Topics.

Truckload companies continue to struggle in the first quarter, with executives in the industry assigning blame to continued excess capacity, bad weather and a weak used-truck market.

Profits dropped at five of the six companies year-over-year, including double-digit percentage declines at Swift Transportation and Knight Transportation Inc., which recently announced a deal to merge that now goes before the shareholders.

• Swift profits plunged 84% to $5.2 million, or 4 cents per share. One year ago, it was $31.9 million, or 23 cents.

However, Swift noted that a tentative deal to settle a class-action lawsuit required the company to add $11.7 million in legal reserves, or 6 cents.

Revenue fell 0.4% to $963.8 million, but expenses rose 3.6% to $948.2 million. Swift attributed the results to higher costs for maintenance and insurance claims from severe winter weather, along with the soft used-truck market and higher depreciation charges.

Revenue in the truckload division dropped 5.7% to $429.6 million after excluding fuel surcharges. Total miles declined 3.2% year-over-year.

Operating income — or the amount remaining after expenses were deducted from revenue — fell 56% to $15.9 million.

Revenue in the dedicated unit revenue grew 2.3% to $136.8 million, but operating income dropped 38% to $11.6 million.

Swift Refrigerated revenue declined 0.7% to $161.8 million after removing fuel surcharges. Swift Intermodal load counts dropped 0.8% year-over-year, and the division ended up with a $109,000 operating loss.

The Phoenix-based carrier ranks No. 6 on the Transport Topics Top 100 list of the largest U.S. and Canadian for-hire carriers.

• Earnings at TFI International Inc., formerly known as TransForce Inc., dropped 7.8% to C$14.1 million in profits or $0.15, measured in Canadian dollars, compared with $15.3 million or $0.15 in the first quarter of 2016.

Revenue rose 22% to $1.06 billion after removing fuel surcharges. Truckload revenue increased 44% to $486.6 million. Package and courier went up 2.6% to $320 million. Less-than-truckload revenue rose 12% to $199.2 million. Logistics revenue increased 24% to $67.6 million.

Operating income increased in each division except truckload, which dropped 28% to $14.7 million.

TFI International ranks No. 10 on the for-hire TT100.

• Knight Transportation Inc. profits dropped 35% to $14.9 million or 18 cents, which was anticipated after company executives lowered their earnings forecast for the first quarter in April.

One year ago, Knight generated $23 million or 28 cents per share. Revenue decreased 3.4% to $245 million after fuel surcharges were removed.

CEO Dave Jackson attributed the results to a weak freight environment in January and February, particularly in California due to that region’s drought.

Trucking revenue fell 3.5% to $192.5 million, and operating income was $20.3 million, or 44% lower than a year ago.

Logistics revenue dropped 3% to $52.5 million, and operating income shrunk 15% to $2.4 million year-over-year.

Jackson said lower rates per loaded mile and fewer miles per tractor cost the company a nickel per share. Higher maintenance and driver recruiting costs them 2 cents, and professional fees to assist in the deal to merge with Swift lowered earnings by a penny.

The Phoenix carrier ranks No. 29 on the for-hire TT100.

• Forward Air Corp. was one of the few bright spots with 8.7% profit growth to $14.2 million or 47 cents. One year ago, the company generated $13.1 million in profits or 43 cents.

Revenue increased 7.6% to $247 million.

Truckload revenue rose 8.3% to $41.8 million, but operating income only rose to $1.7 million from $1.6 million after expenses.

Less-than-truckload revenue rose 4.6% to $140.6 million, and operating income grew 7.6% to $18.4 million. Tonnage rose 0.5%, and yield increased 3.7%.

Intermodal revenue increased 15% to $28.3 million and operating income went up to $2.6 million from $2.4 million.

The Greenville, Tenn., carrier ranks No. 35 on the for-hire TT100.

• Heartland Express Inc. reported profits fell 2.3% after a sharp decline in revenue due to the soft freight environment and poor weather in the western United States.

The North Liberty, Iowa, carrier generated $14 million in profits, or 17 cents per share. Last year, the numbers were $14.4 million or 17 cents.

Revenue fell 23% to $115 million, excluding fuel surcharges, due to lower miles driven during the first quarter compared with the same period in 2016.

But Heartland, which ranks No. 41 on for-hire TT100, was able to slash expenses to $110.5 million from $142.5 million to compensate, but not fully offset, the hit on top-line revenue.

“I am extremely pleased with the execution of our team and our ability to stay the course and deliver these results during a very difficult environment for the first two months of the quarter,” Heartland CEO Michael Gerdin said.

• Tanker carrier Patriot Transportation saw year-over-year profits plunge 70% to $260,000 or 8 cents, and revenue fell 5.7% to $27.4 million. Florida Rock & Tank Lines Inc., a subsidiary, ranks No. 16 on the Transport Topics sector list of top U.S. and Canadian tank and bulk carriers.