A trio of earnings reports indicate that although the trucking industry suffered a weaker freight environment, not all companies saw an erosion in the bottom line in the first quarter.
Non-asset freight transportation provider Landstar System Inc. today logged a profit of $21.6 million for the first quarter compared with $24.4 million it earned in 1Q 2006. A severe accident that occurred in 1Q 2007 resulted in a $3.1 million dent in profits that quarter, which would have been slightly higher than 1Q 2006 at $24.7 excluding that event.
Landstar’s revenue excluding fuel remained stable at $424 million, less than 1% lower than the $428 in sales the same quarter last year. In 2006 Landstar received a windfall of business thanks to disaster relief freight that was hauled primarily under its contract with FAA following Hurricanes Katrina and Rita. In 2007, revenue generated by FAA-related business subsided.
“During the first month and a half of the 2007 first quarter, there was downward pressire on price caused by lower volumes and more available capacity,” stated Landstar president & CEO Henry Gerkens. “However, as we moved to the second half of the quarter, pricing began to stabilize and volume levels improved. In fact, as it relates to pricing, revenue per load in March of 2007 was higher than March 2006.”
Gerkens hopes to maintain this momentum in the second quarter, but anticipates that will be a challenge due to economic uncertainty.
Truckload carrier Knight Transportation Inc. actually saw sizable revenue and profit boosts in the first quarter, up 12% to $145 million and 11.5% to $16.6 million, respectively, compared to the same quarter last year. Its operating ratio was 81.2%--the third best 1Q operating ratio in the company’s history. Its net income was the third best first quarter result since the company went public.
“Our growth was accomplished through a combination of continued fleet expansion, our asset purchase of Roads West Transportation during the fourth quarter of 2006, and increased revenue per mile,” stated chairman & CEO Kevin Knight. “Also our brokerage line of business continues to expand.”
Knight said utilization decreased due to a softening of freight and a shortened length of haul.
Knight Transportation added four new service centers in 2007, bringing its combined network to 35 centers. The company intends to continue to expand its existing centers and add new ones, but doing so will be challenging based on current slack freight volumes.
“Our base expectation for the medium to longer term is to grow our fleet between 10% and 15% annually and continue to grow our brokerage business,” Knight said.
Truckload carrier USA Truck Inc. did not fare so well in the first quarter, seeing its earnings nearly erased. Although its revenue dipped 2.4% to $94.5 million compared to the same quarter last year, net income fell 98% to $80,000.
USA Truck president & CEO Jerry Orler said the company struggled with overcapacity caused by its fleet growth in 2006 and soft freight. The company said it added 4.3% of capacity during in the first quarter.
The company added that the freight environment firmed up in March, which indicates it anticipates better 2Q performance.
“We will now focus on freight selection in the coming quarters.” Orler stated.
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