Covenant hits records despite 'softening'
Covenant (CCJ Top 250, No. 38) posted record earnings despite acknowledging market headwinds from several sources. "These results were achieved despite unprecedented cost inflation, unusually high insurance costs, minimal gain on sale of used equipment and a softening in the freight market," Chairman and Chief Executive Officer, David R. Parker said. Parker predicted that "softening" would continue throughout the second half of 2022, and that the company would buy $30 million of its own shares in the meantime.
Notably, the company's truckload operations saw a big jump in revenue, largely bolstered by record fuel surcharges, which grew by $26 million during the quarter. Despite having fewer tractors than last year, the company saw a 19.9% increase in average freight revenue per tractor. The company attributed the lower fleet size to "the constraints of an extremely tight equipment market.”
Revenue: 2022 Q2: $317.4 million vs. 2021 Q2: $256.3 million
2022 YTD: $608.9 million vs. 2021 YTD: $477.2 million
Income: 2022 Q2: $26.8 million vs. 2021 Q2: $18.3 million
2022 YTD: $52.8 million vs. 2021 YTD: $31.1 million
Forward Air Corporation sets profit record
Forward Air Corporation (CCJ Top 250, No. 50) reported its most profitable quarter ever, with second quarter revenue growth of 23%, beating estimates that topped out at 22%. The company "fully replaced the cleansed inefficient freight with higher quality freight, resulting in the same tonnage in the second quarter of 2022 as the prior year quarter with 14.5% higher weight per shipment and 39.8% higher revenue per shipment or 25.8% higher revenue per shipment even when excluding fuel," according to Tom Schmitt, Forward's Chairman, President and CEO.
“Momentum continues in the first weeks of the third quarter with tonnage 3.0% higher than the same period of the prior year and strong revenue growth across all lines of business driven by continued growth strategies, strong demand for our services and higher fuel surcharges," Schmitt continued.
Revenue: 2022 Q2: $515.2 million vs. 2021 Q2: $420.7 million
2022 YTD: $982.1 million vs. 2021 YTD: $782.9 million
Income: 2022 Q2: $75.5 million vs. 2021 Q2: $42.1 million
2022 YTD: $132.9 million vs. 2021 YTD: $64.8 million
Heartland Express grows bigger than ever
"The operations of Smith Transport were immediately accretive to consolidated earnings in June 2022, the first month of operations with Heartland Express. The second quarter was also positively impacted by the sale of a terminal property that generated a $73.2 million gain on sale of the terminal asset. We have an extensive network of terminals and are continually reviewing opportunities for the acquisition or disposition of terminals in response to the real estate market and operational needs," Heartland Express Chief Executive Officer Mike Gerdin said.
Like other fleets, Heartland saw a freight demand soften against the unprecedented levels earlier in the pandemic, and predicted continued volatility throughout the year, but Gerdin said "we continue to have significantly more opportunities to haul freight than we are able to cover with our existing fleet and available drivers."
Revenue: 2022 Q2: $187.8 million vs. 2021 Q2: $154.1 million
2022 YTD: $339.1 million vs. 2021 YTD: $306.5 million
Income: 2022 Q2: $105.1 million vs. 2021 Q2: $27.4 million
2022 YTD: $127.5 million vs. 2021 YTD: $45.6 million
J.B. Hunt rakes in cash over fuel surcharges
J.B. Hunt (CCJ Top 250, No. 3) saw revenue jump 32% year-over-year with all segments contributing to the boost. Income increased by more than $110 million, which the company attributed to "higher volumes, customer rate, cost-recovery efforts, and further scaling into our people and technology investments," which presumably includes the J.B. Hunt Marketplace, which saw a 11% increase in transactions.
Interestingly, this quarter J.B. Hunt spent a lot on both capital expenditures and share buybacks. "Our net capital expenditures for the six months ended June 30, 2022 approximated $598 million compared to $261 million for the same period 2021. At June 30, 2022, we had cash and cash equivalents of approximately $124 million. In the second quarter 2022, we purchased approximately 979,000 shares of common stock for approximately $164 million," the company said in its earnings release.
Revenue: 2022 Q2: $3.84 billion vs. 2021 Q2: $2.91 billion
2022 YTD $7.33 billion vs. 2021 YTD: $5.53 billion
Income: 2022 Q2: $353.1 million vs. 2021 Q2: $241.5 million
2022 YTD: $687.4 million vs. 2021 YTD: $449.2 million
Knight-Swift Transportation succeeds despite 'softening'
David Jackson, CEO of Knight-Swift, commented, "We achieved double-digit revenue growth and expanded margins in each of our reportable segments during the quarter. Although the spot market softened during the quarter, the Truckload segment operated with a sub-80% Adjusted Operating Ratio, while our Logistics segment grew load count 48.2% and continues to provide significant value to our customers through our power-only and traditional brokerage service offerings."
Revenue: 2022 Q2: $1.96 billion vs. 2021 Q2: $1.32 billion
2022 YTD: $3.79 billion vs. 2021 YTD: $2.54 billion
Income: 2022 Q2: $325.8 million vs. 2021 Q2: $191.1 million
2022 YTD: $623.7 million vs. 2021 YTD: $353.4 million
Landstar sees profit records, no 'softening'
Landstar (CCJ Top 250, No. 9) set a gross profit record for the second quarter with $208.1 million, 19% above 2021's second quarter gross profit of $174.8 million. The company spent $103 million repurchasing its own shares as part of its buyback program. Interestingly, the fleet did not cite any weakening in demand.
“Customer demand for our freight transportation services remained strong during the 2022 second quarter,” said Landstar President and CEO Jim Gattoni. “The number of loads hauled via truck in the 2022 second quarter increased 10 percent over the 2021 second quarter.
Revenue: 2022 Q2: $1.98 billion vs. 2021 Q2: $1.57 billion
2022 YTD: $3.95 billion vs. 2021 YTD: $2.86 billion
Income: 2022 Q2: $150.4 million vs. 2021 Q1: $122.2 million
2022 YTD: $313.3 million vs. 2021 YTD: $225.5 million
Marten Transport boosts recruiting and income jumps nearly 50%
Marten Transport (CCJ Top 250, No. 40) delivered its best operating revenue in history and improved its operating income by 47.8% in a first quarter, notably triumphing over what it described as a serious driver shortage.
“The unrelenting national shortage of qualified drivers is a long-term double-edged sword for our industry, simultaneously tightening the freight market while limiting fleet size," Marten's Executive Chairman Randolph L. Marten said. Marten added 123 drivers this quarter and 422 in the last calendar year thanks to an "approach to overcoming the driver shortage" with "heightened emphasis on structurally improving our drivers’ jobs and work-life balance by collaborating with our customers, while also increasing our driver compensation."
Additionally, the company said fuel surcharge revenue more than doubled from $28.8 million in Q2 2021 to $60.4 million in Q2 2022.
Revenue: 2022 Q2: $329.6 million vs. 2021 Q2: $232.4 million
2022 YTD: $616.8 million vs. 2021 YTD: $455.5 million
Income: 2022 Q2: $40.9 million vs. 2021 Q2: $28.5 million
2022 YTD: $76.8 million vs. 2021 YTD: $52.5 million
Old Dominion Freight Lines sets records
Old Dominion (CCJ Top 250, No. 10) set revenue, profit, and operating ratio records in Q2 of 2022 thanks to what it characterized as strong demand. The company saw a boost in LTL revenue per hundredweight that helped offset diesel prices while sticking to its strategy of "increasing our yield to offset cost inflation and to support our ongoing investments in capacity, which we believe are necessary to achieve our long-term market share initiatives."
But with new trucks hard to get, Old Dominion did find another way to spend its money. The company plans in 2022 to spend $835 million on real estate and service center expansion projects for $300 million; $485 million for tractors and trailers; and $50 million for information technology and other assets. So far this year, the company has spent $731.9 million on share repurchases and $68.0 million of cash dividends for shareholders.
Revenue: 2022 Q2: $1.67 billion vs. 2021 Q2: $1.32 billion
2022 YTD: $3.16 billion vs. 2021 YTD: $2.45 billion
Income: 2022 Q2: $508.7 million vs. 2021 Q2: $366 million
2022 YTD: $914.3 million vs. 2021 YTD: $635.7 million
P.A.M. Transport sees equipment troubles but keeps trucking
P.A.M. Transport (CCJ Top 250, No. 58) saw revenue and income jump 47% and 74% year-over-year despite some significant challenges and an aging fleet as equipment deliveries lag. "There continued to be significant disruptions in the quarter from customer down time, supplier parts/labor challenges and the well-publicized changes to the overall trucking freight market. Even with those challenges, our people did a solid job of navigating through the quarter," Joe Vitiritto, President of the Company, commented.
The company said it only received 30% of its 2022 equipment order, but that it anticipates the remainder later this year. "The average ages of our truck and trailer fleets were 2.1 years and 6.2 years, respectively, at the end of the second quarter of 2022, compared to 1.8 years and 5.5 years, respectively, at the end of 2021," the earnings release said.
Also in Q2, P.A.M. Transport bought Metropolitan Trucking, Inc., a "a 320-truck dry van truckload carrier headquartered near New York City, New York, with the east coast serving as its primary operating territory."
Revenue: 2022 Q2: $237.2 million vs. 2021 Q2: $161.3 million
2022 YTD: $456.6 million vs. 2021 YTD: $310.1 million
Income: 2022 Q2: $36.7 million vs. 2021 Q2: $21 million
2022 YTD: $68 million vs. 2021 YTD: $34.6 million
Schneider National takes nearly a quarter billion in fuel surcharges
Schneider (CCJ Top 250, No. 8) saw its income from fuel surcharges more than double, from $110 million in Q2 2021 to $249 million in Q2 2022, and otherwise saw almost 20% growth across all segments. That said, the company did say it was starting to notice some "moderation" in what's been a historically expensive freight market.
“As strong as the second quarter was, we did observe signs of moderation in freight market conditions as the quarter progressed, consistent with industry narrative,” said Mark Rourke, Chief Executive Officer and President of Schneider. “However, we continue to expect a constructive freight environment for the remainder of 2022, including a return of seasonality, starting with fourth of July holiday and back-to-school demand.
Revenue: 2022 Q2: $1.75 billion vs. 2021 Q2: $1.36 billion
2022 YTD: $3.37 billion vs. 2021 YTD: $2.59 billion
Income: 2022 Q2: $176.6 million vs. 2021 Q2: $125.8 million
2022 YTD: $311.7 million vs. 2021 YTD: $202 million
U.S. Xpress has Variant making a u-turn
U.S. Xpress (CCJ Top 250, No. 16) continues to right the ship after the collapse of Variant, beating it's Q2 2021 revenue by more than $78 million due to "a combination of increased revenue in the Company’s Truckload segment of $49.6 million and an increase of $37.0 million in fuel surcharge revenue partially offset by a decrease in Brokerage segment revenue of $7.9 million."
“Second quarter highlights included sequential overall fleet growth and improved margins in our Brokerage segment and Dedicated division,” said Eric Fuller, President and CEO. “However, these positive accomplishments were partially offset by higher net fuel and claims expense in the quarter, particularly in our OTR division. While our Variant fleet grew to approximately 1,900 tractors, its results continued to lag due to lower utilization and higher turnover. Looking ahead to the third quarter, our immediate priorities remain improving utilization in our Variant fleet, lowering our fixed costs per tractor and growing our overall fleet size.”
Revenue: 2022 Q2: $553.7 million vs. 2021 Q2: $475 million
2022 YTD $1.07 billion vs. 2021 Q2: $925.8 million
Income: 2022 Q2: 6.5 million vs. 2021 Q2: $8.9 million
2022 YTD: 6.3 vs. 2021 YTD: $16.9 million
Werner breaks quarterly record for 8th time despite litigation
Werner (CCJ Top 250, No. 13) put up a strong quarter despite having to pay up for a May, 2020 accident. “Our second quarter results showed progress, but did not meet our expectations. We achieved our eighth consecutive quarter of record quarterly earnings per share, despite unusually large insurance and claims expense in the quarter, with the majority of the increase related to recent unexpected and unfortunate developments related to two prior year accidents,” said Derek J. Leathers, Chairman, President and Chief Executive Officer.
Cash flow and net capital expenditures at the company nearly doubled, and the company said it plans to continue to "invest in new trucks and trailers and our terminals to improve our driver experience, optimize operational efficiency and more effectively manage our maintenance, safety and fuel costs. The average ages of our truck and trailer fleets were 2.3 years and 4.7 years, respectively, as of June 30, 2022."
Furthermore, Werner cashed in on high used equipment prices, with the release saying "we sold fewer trucks and trailers and realized substantially higher average gains per truck and trailer due to the significantly stronger pricing market for our used equipment." Much of Werner's capital expenditures targeted share repurchase, spending $65.9 million on that in the quarter.
Revenue: 2022 Q2: $836.3 million vs. 2021 Q2: $649.8 million
2022 YTD: $1.6 billion vs. 2021 YTD: $1.27 billion
Income: 2022 Q2: $74.9 million vs. 2021 Q2: $76.9 million
2022 YTD: $158.4 million vs. 2021 YTD: $139.3 million
XPO Logistics raises 2022 outlook again
XPO (CCJ Top 250, No. 6) had a strong quarter while spinning off its brokerage business with its best operating ratio in LTL ever. As such, the company raised its full year targets for adjusted EBITDA, adjusted diluted EPS and free cash flow.
"[W]e reported the highest adjusted EBITDA of any quarter in our history, and raised our 2022 full year guidance. Our company has a 38% return on invested capital, net leverage of 1.8x, and multiple catalysts for value creation largely independent of the macro. Following the planned fourth quarter spin-off, we’ll become two strong, standalone companies with long runways for earnings growth.”
Revenue: 2022 Q2: $3.23 billion vs. 2021 Q2: $3.19 billion
2022 YTD: $6.7 billion vs. 2021 YTD: $6.18 billion
Income: 2022 Q2: $230 million vs. 2021 Q2: $191 million
2022 YTD: $855 million vs. 2021 YTD: $330 million
Yellow Corporation benefits from high fuel surcharges
Yellow Corporation (CCJ Top 250, No. 5) did well in the LTL space with fuel surcharges helping to bump LTL revenue per hundredweight 29.7% and LTL revenue per shipment 27.8% compared to the same period in 2021.
“Strong yield and efforts to manage the use of purchased transportation helped Yellow achieve its highest quarterly operating income in 15 years,” said Darren Hawkins, chief executive officer. “Elevated demand for LTL capacity continued during the quarter which drove the favorable pricing environment. On the cost side, purchased transportation expense was down to 14.5% of revenue in the second quarter compared to 16% a year ago."
Furthermore, because of "limited tractor and trailer production capacity" at OEMs, Yellow lowered its capex guidance "to be in the range of $250 million to $300 million compared to the previous range of $325 million to $400 million,” concluded Hawkins.
Revenue: 2022 Q2: $1.42 billion vs. 2021 Q2: $1.31 billion
2022 YTD: $2.68 billion vs. 2021 YTD: $2.51 billion
Income: 2022 Q2: $99.2 million vs. 2021 Q2: $27 million
2022 YTD: $108.4 million vs. 2021 YTD: ($0.6 million)