Truckload Profits Lackluster as Quarterly Reports Begin

This story appears in the April 24 print edition of Transport Topics.

Marten Transport Ltd. posted a slight increase in quarterly profits, among the few major truckload carriers recently reporting results to record a gain as the earnings season gets underway.

The other carriers reporting were Werner Enterprises Inc., Covenant Transportation Group and J.B. Hunt Transportation Services Inc.

• J.B. Hunt announced $102.7 million in first-quarter profits, or 92 cents per share, a 2.6% increase year-over-year. However, the company saved $21.5 million in taxes through one-time credits and deductions.

Revenue grew 6.6% to $1.63 billion, although when fuel surcharges were excluded, the net gain was up 2.5% to $1.46 billion.

The Lowell, Ark.-based carrier’s profit benefited from paying an income tax rate of 28% — as opposed to the usual 35% to 38% — due to “the claiming of research and development tax credits and domestic production tax deductions incurred during the 2012 through 2016 tax years,” the company said. If J.B. Hunt had paid the same tax rate as one year ago, its net income would have declined more than 10%.

Analysts’ forecast for the quarter was $97 million, or 86 cents, according to Bloomberg News estimates. Excluding the tax benefit of 12 cents per share, J.B. Hunt fell 6 cents short.

The company ranks No. 4 on the Transport Topics Top 100 list of the largest U.S. and Canadian for-hire carriers.

The Intermodal unit generated $937 million in revenue for the first quarter, but the operating income fell 8% to $95 million versus 2016 levels. J.B. Hunt’s dedicated contract services reported a 10% increase in revenue to $392 million, but operating income was flat at $45 million. The freight brokerage division reported a 14% increase in revenue to $209 million, but a 59% drop in operating income to $4.5 million. The truck division, the smallest unit, had a 2% drop in revenue to $94 million and a 46% decline in operating income to $4.9 million.

• Werner Enterprises saw profits drop 20% to $16 million, or 22 cents, compared with the same period in 2016. The outcome beat the 21-cent forecast by Bloomberg News. Last year, Werner earned $20.1 million or 28 cents.

Revenue improved 4% to $501.2 million companywide. Werner Logistics revenue increased 3% to $99.8 million year-over-year. But after expenses were deducted, the remaining operating income dropped 27% in the truckload division to $23.5 million and 39% to $3.05 million in the logistics unit.

The amount of money Werner generated from the sale of equipment and other assets dropped to $1.4 million from $3.4 million on year ago. The company also said it increased the depreciation costs to compensate for the weak used-truck market, adding an additional $2.6 million in expenses in the first quarter versus last year.

“We expect additional depreciation expense for these trucks to continue to decline in the second-quarter 2017 as the remaining trucks are sold,” the company said.

The Omaha, Neb.-based carrier ranks No. 15 on the for-hire TT100.

• Covenant Transportation reported $470,000 in profits, or 3 cents, plummeting 89% year-over-year due to higher expenses.

Revenue was up 1.5% to $158.7 million, but when fuel surcharges were removed, the remaining freight revenue fell 3.1% to $140.1 million.

The bottom line was hurt from a 12% jump in insurance expenses to $7.8 million, which the company blamed on “the increased severity of casualty insurance claims” and its impact on overall policy rates. Depreciation and amortization costs also increased 12% due salvage values for the equipment and the soft used-truck market, the company said.

Revenue from the trucking business dropped 3.1% to $127 million, while freight brokerage dropped 3.4% to $13.1 million year-over-year.

The Southern Refrigerated Transport subsidiary experienced a fifth consecutive quarter of operating at a loss.

The Chattanooga, Tenn.-based company, which ranks No. 43 on the for-hire TT100, met analyst estimates on earnings per share.

• Marten Transport’s profits increased 0.2% to $8.21 million, or 25 cents, eking out a gain from slightly higher revenues per tractor, which went up 1.8% in the truckload segment and 2.5% in the dedicated segment.

Loads increased 10% in the intermodal division and 3.1% in the freight brokerage unit.

The results beat the 21-cent Bloomberg News consensus forecast of industry analysts. Last year, Marten earned $8.19 million, or 25 cents in net income.

Revenue rose 6.9% year-over-year to $173.2 million.

Operating income fell 13.9% to $5.97 million in the truckload division. However, it increased 3.8% to $4.48 million in the dedicated unit, 11.4% to $2.15 million in the intermodal division and 42.5% to $1.33 million in the brokerage unit.

The Mondovi, Wis.-based carrier ranks No. 47 on the for-hire TT100.