Drivers, Fuel and Freight Volumes Key for Truckers

As carriers were rolling out third-quarter earnings reports, the key issues haven't changed. But for those carriers that have managed the challenges well, profits continued to climb.

Celadon Group (Indianapolis, www.celadontrucking.com) reported a 50% increase in year-over-year earnings per share in its fiscal first quarter ended September 30th. Revenues were $127.7 million, up 8.3% over the same period a year ago. Capacity increased 7% and rates per loaded mile were up 4.2%. Equity analyst Stifel Nicolaus (St. Louis) noted that a decline in utilization was the result of the company's success in recruiting drivers.

Forward Air Corp. (Greenville, Tenn., www.forwardair.com) grew consolidated revenues 6.6%, including results of its acquisition of the Xpress Global Systems' airport-to-airport business. Linehaul tonnage was actually down on a per week basis, but linehaul yield rose 5.5%. Although it declined from the same period a year ago, Forward Air still reported a 78.1 operating ratio for the third quarter of 2006.

Heartland Express (Coralville, Iowa, www.heartlandexpress.com) grew revenues 8% to $147.1 million in the third quarter and improved its operating ratio from 81.1 to 77.9. Stifel Nicolaus reported that excluding the impact of equipment sales, Heartland's operating ratio was 81.1 vs. 82.8 in the 2005 third quarter.

Heartland had reported a $0.02 after-tax gain on the sale of equipment, but most of its revenue gains likely came from freight rates (including fuel surcharges). Stifel Nicolaus estimated 65% to 75% of the gains were from rates, the remainder came from modest growth in capacity and expansion in its Phoenix-based operations.

J.B. Hunt Transport Services (Lowell, Ark., www.jbhunt.com) fell short of expectations in truckload revenues, but achieved better-than-expected margins in its inter-modal and dedicated divisions (now 77% of its operating income). Total operating revenue was $801 million, up 7%.

Knight Transportation Inc. (Phoenix, www.knighttransportation.com) achieved an improved operating ratio of 79.1 vs. 80.4 in the 2005 third quarter, in spite of unfavorable comparison in empty miles and utilization. Increased revenue per loaded mile and fuel surcharges helped Knight's performance.

Landstar System (Jacksonville, Fla., www.landstar.com) reported a 12% drop in earnings per share when current results are compared with unadjusted results from 2005, largely due to the hurricane recovery work it did in the third quarter of last year. When the hurricane recovery work is excluded, the operation margin showed a 7.5% improvement in the period.

Marten Transport Ltd. (Mondovi, Wis., www.marten.com) increased revenue per loaded mile (excluding fuel surcharges) 3.9% in the third quarter but its operating ratio dropped slightly to 91.4. Despite a 67% turnover rate, driver recruitment and retention issues affected utilization, causing a 4.4% decline in miles per truck. Demand for temperature-controlled truckload service was expected to remain solid, but driver availability is the principal limitation to Marten's growth.

Swift Transportation Company (Phoenix, www.swifttrans.com) reported revenues of $681.9 million for the third quarter. Revenues (excluding fuel surcharges) fell 3.3% from the same period a year ago. Swift improved revenue per loaded mile 3.5% but also saw a 4.6% reduction in average tractor count and a 4.3% decline in tractor utilization.

Universal Truckload Services (Warren, Mich., www.goutsi.com) increased revenues 27% to $171.9 million. Truckload revenue increased 18.2%, truck brokerage revenue was up 21.6% and intermodal revenue increased 96.9%, albeit from a small base.

U.S. Xpress Enterprises (Chattanooga, Tenn., www.usxpress.com) reported that truckload revenues rose 29% (excluding fuel surcharges) to $312 million. The financial consolidation of Arnold Transportation and Total Transportation of Mississippi in the first quarter of 2006 was a major factor.

Werner Enterprises (Omaha, Neb., www.werner.com) increased revenues per loaded mile 4.6% in its core truckload segment. Werner's Value Added Services division helped drive an overall 7.3% revenue gain. Net income for the quarter was $24.6 million on gross revenues of $541.3 million.

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