Earnings reports are starting to trickle in for trucking, with USA Truck and JB Hunt reporting lower second-quarter earnings for 2009 while Heartland Express posted a slight gain. Troubled giant YRC Worldwide is expected to report its earnings at the end of the month.
YRC has reached agreement with the Teamsters on wage concessions. According to reports, the union is reviewing that agreement, which calls for a 5% pay cut and the elimination of pension contributions for 18 months.
USA Truck and Heartland both said they don’t foresee any meaningful pickup of freight for the remainder of the year. “This extended downturn is the worst experienced in the history of the company,” Heartland wrote in its earnings statement. “There continues to be excess capacity in our industry combined with the continued decline in available freight resulting in extreme pressure on freight rates. The company has not seen any strong indicators of improvements in the demand for freight services that would increase our levels of business in the near future.”
Despite that, Heartland reported a 5.6% increase in earnings per share on slightly higher net income. The company reported income of $17.6 million, up from $17.2 million in the second quarter of 2008. Operating revenues down, falling 28.9% to $117 million, due in part to reduced fuel surcharge revenues.Heartland noted that its cash, cash equivalents, short-term and long-term investments of $205 million is down from $228 million reported at Dec. 31, 2008. This was impacted by the purchase of 416 new tractors in the second quarter and the repurchase of approximately 3.5 million shares of common stock worth $45.4 million. The company said it remains debt-free.
USA Truck reported lower second-quarter earnings, posting a net loss of $1.1 million, or 11 cents per share, compared to profit of $2.1 million or 21 cents per share a year ago. Revenue was down 22% to $81.2 million as compared to $103.8 million in the second quarter of 2008. Revenue for the previous two quarters is down 18% to $164.1 million from $201 million in the same time period a year ago.“Freight availability remains at historically low levels and pricing competition has been fierce as excess tractor capacity, buoyed by lenient lenders and lower fuel prices, continues to exist in the marketplace,” CEO Clifton Beckham said in a statement.
Beckham reported the company continues to cut costs where possible, slicing off 24%, or 200 employees, of its non-driving staff since the beginning of the year, and parked more than 6% of its fleet in the second quarter. “We believe we have now implemented the broad organizational changes necessary to reposition our business model to produce more robust earnings and growth in the future,” he said. “We are confident that the progress we have made on our strategic plan will serve our customers, our employees and our shareholders well when economic conditions improve.”
Beckham noted that positive free cash flow has improved and the company lowered its outstanding debt approximately $10.6 million to $87 million year-to-date.
JB Hunt also reported lower earnings in the second quarter. The company said second-quarter 2009 net earnings came in at $24 million, or 19 cents per share, vs. $50.6 million or 39 cents per share a year ago. The earnings included a pretax charge of $10.3 million to write down the value of certain tractors held for sale.
Total operating revenue for the quarter was $770 million, down 21% from $977 million last year. JB Hunt attributed the decline to lower fuel surcharge revenues, reflecting lower fuel costs. Minus the fuel surcharges, operating revenue dropped 8%, the company said.
"We saw evidence in the current quarter of gradual improvement in demand which has been soft for three years,” Kirk Thompson, president & CEO, said. “While current quarter volumes did show seasonal improvements across our four business segments, pricing has been challenging following the implementation of various bids and proposals submitted earlier in the year from intermodal and truck customers. We are not pleased with the resulting pricing in these two segments. While some in the industry have described the pricing environment as irrational and unsustainable, it is reflective of the sharp contractions in freight volumes this year. We would expect pricing to show some improvement with increased demand or as capacity continues to exit the market.”
The company reported intermodal revenue of $425 million, down 14%, dedicated contract services revenue down 28% to $174 million and truck revenue down 44% to $108 million.