U.S. Xpress reported that revenue for the third quarter ended Sept. 30 increased 3.1 percent to $297.2 million compared with $288.4 million in the third quarter of 2004. The Chattanooga, Tenn.-based company reported net income for the third quarter of $4.0 million, or $0.25 per diluted share, compared with net income of $5.4 million, or $0.38 per diluted share, in the third quarter of 2004.
For the nine months ended Sept. 30, revenue increased 6.7 percent to $846.3 million from $793.3 million in the prior-year period. For the first nine months of 2005, net income was $3.8 million, or $0.24 per diluted share, before a one-time pretax charge of $2.8 million related to the sale and exit of the company’s airport-to-airport business. After the one-time charge, the company reported net income of $2.4 million, or $0.14 per diluted share, compared with net income of $10.5 million, or $0.73 per diluted share, for the prior-year period.
During the quarter, truckload revenue, excluding the effect of fuel surcharges, increased 3.1 percent to $241.1 million from $233.9 million a year ago. The increase in truckload revenue was driven by an 8.2 percent increase in rate per loaded mile and an increase in expedited rail revenue. These gains were offset by a 4.5 percent decline in average tractors and a 4 percent reduction in revenue miles per tractor. Truckload operating income for the quarter decreased to $11.5 million in the 2005 quarter from $13.6 million in the 2004 quarter due primarily to an approximate 40 percent year-over-year increase in fuel costs that, after fuel surcharges, negatively impacted operating income by about $2.5 million, or $0.08 per share, and truckload operating ratio by about 100 basis points when compared with the prior-year quarter.
During the third quarter, the equity in earnings of the company’s 49 percent interest in Arnold Transportation and Total Transportation was about $550,000. These entities, on a combined basis, reported revenues of $75.3 million and achieved an operating ratio of about 95 percent. Together, these two affiliated companies currently operate about 2,000 tractors providing regional and medium length of haul and dedicated dry van truckload services.
“The supply-and-demand fundamentals in our business are currently very favorable,” says Patrick Quinn, U.S. Xpress co-chairman. “Growth in capacity continues to be constrained by a tight supply of available drivers and independent contractors, as well as by high fuel costs. Freight demand strengthened throughout the quarter, particularly in September when we approached levels experienced in 2004.
“Looking ahead, we are encouraged by the trends we have experienced in our operations over the last 45 days,” Quinn says. “Strong demand in truckload has enabled us to improve pricing and yields. Consistent with others in our industry, we are also aggressively pursuing a more rational fuel surcharge program which we expect to help mitigate the impact from high fuel prices. Assuming the current strong freight demand continues during the fourth quarter, fuel prices do not increase significantly from current levels, and we achieve modest success in our ongoing initiatives of raising truck utilization and improving freight mix, we expect to improve our margins sequentially in the fourth quarter compared with our third quarter.”
U.S. Xpress also announced that it repurchased about 762,000 shares of common stock during the third quarter for a total investment of $10.2 million. The company has about $4.8 million remaining under its repurchase authorization approved by the board of directors in August 2005.