Big fleets' outlook grim despite stellar earnings

truck speeding

Covenant hits records despite 'softening'

Covenant (CCJ Top 250, No. 38) saw strong profits overcoming market head winds, with asset-based Expedited and Dedicated segments contributing 85% of operating income while Managed Freight and Warehousing brought in just 15% on 32% of all revenue. 

Chairman and Chief Executive Officer, David R. Parker said the "results were achieved despite unprecedented inflation cost headwinds and a softening freight market. We expect both cost inflation and lower demand to continue for the remainder of this year and in to 2023." 

Revenue: 2022 Q3: $311.8 million vs. 2021 Q3: $274.6 million

                  2022 YTD: $920.8 million vs. 2021 YTD: $751.7 million

Income: 2022 Q3: $59.1 million vs. 2021 Q3: $20.1 million

                2022 YTD: $75.2 million vs. 2021 YTD: $52.4 million

Forward Air Corporation picks winners

Forward Air Corporation (No. 50) set all-time records for third quarter revenue and income thanks to "collaboration with customers on selecting, handling, and pricing higher quality freight," according to Tom Schmitt, Forward's chairman, president and CEO.

“We are winning in a softer environment. While tonnage is down through the first few weeks of October, our performance levers work - from more live events business to near record low levels of outside miles. We therefore expect the fourth quarter to be more profitable than the third quarter, and 2023 net income per diluted share to be higher than 2022 net income per diluted share.”

Revenue: 2022 Q3: $510 million vs. 2021 Q3: $419.6 million

                  2022 YTD: $1.49 billion vs. 2021 YTD: $1.2 billion

Income: 2022 Q3: $71.6 million vs. 2021 Q3: $42.4 million

                2022 YTD: $204.6 million vs. 2021 YTD: $107.3 million

Heartland Express' acquisitions pay off

Heartland Express (No. 42) set an all-time revenue record this quarter,  which it in part credited to acquiring CFI on August 31, just a few months after acquiring Smith Transport on May 31. The company in the first three quarters of 2022 has already done more revenue than all of 2021, despite softening rates. 

"Freight demand in the third quarter of 2022 softened sequentially compared to the first and second quarters of 2022. While the current levels are down compared against the unprecedented levels experienced in the later months of 2021, we continue to have more opportunities to haul freight than we are able to cover with our existing fleet and available drivers. Given what we have experienced and based on feedback from our strong group of customers, we expect volatile freight demand for the remainder of 2022, along with minimal incremental lift from the peak holiday season typically experienced during the fourth quarter," said Heartland Express Chief Executive Officer Mike Gerdin.

Revenue: 2022 Q3: $273.9 million vs. 2021 Q3 $152.6 million

                  2022 YTD: $613 million vs. 2021 YTD: $459.1 million

Income: 2022 Q3: $34.7 million vs. 2021 Q3: $33.3 million

                2022 YTD: $16. million vs. 2021 YTD: $45.6 million

J.B. Hunt profits off of higher volumes

J.B. Hunt (No. 3) saw income jump 22% year-over-year while operating income jumped by nearly $90 million from $273 million last year to $362 million this year. The company credits this to a 17% increase in intermodal revenue per load and a 13% bump in truckload volume, as well as its dedicated segment finding 18% more revenue producing trucks. 

Revenue: 2022 Q3: $3.16 billion vs. 2021 Q3: $2.81 billion

                 2022 YTD $9.36 billion vs. 2021 YTD: $7.8 billion

Income: 2022 Q3: $362.2 million vs. 2021 Q3: $273.8 million

               2022 YTD: $11.16 billion vs. 2021 YTD: $8.67 billion

Knight-Swift Transportation makes less profit on more revenue

Knight-Swift (No. 4) saw profitability dip that defied seasonal patterns. David Jackson, the company's CEO, attributed much of that dip to inflation and supply chain irregularities catching up to customers. 

"Our operating results remained strong across each of our reportable segments, despite a changing freight environment that muted typical seasonal patterns toward the end of the third quarter. These muted trends have continued into October as supply chains appear to be catching up and adjusting for uncertainty in consumer demand. These conditions have begun to reduce supply, particularly with small carriers, who have experienced materially declining spot rates combined with significant inflationary operating costs. If these trends continue, we expect truckload supply to rapidly exit the market. When comparing year-overyear, Adjusted EPS was negatively impacted $0.03 from higher interest expense, $0.04 from a higher tax rate, and $0.03 from lower gain on sale," said Jackson. 

Revenue: 2022 Q3: $1.89 billion vs. 2021 Q3: $1.62 billion

                  2022 YTD: $5.68 billion vs. 2021 YTD: $4.18 billion

Income: 2022 Q3: $265.4 million vs. 2021 Q3: $270.1 million

                2022 YTD: $889.3 million vs. 2021 YTD: $623.5 million

Landstar sets Q3 record revenue

Landstar (No. 9) saw loads hauled via truck increase just one percent over Q3 2021, with much of that demand in unsided/platform services rather than vans. Despite the strong quarter, Landstar President and CEO Jim Gattoni gave a someone bleak outlook for the months ahead. 

“There continues to be a lot of unease regarding U.S. economic conditions as we head into the fourth quarter. On a macroeconomic level, continuing inflation concerns along with possible further action by the Federal Reserve to address these concerns at the risk of causing further recessionary pressure, as well as current geopolitical tensions and the corresponding volatility in the international energy markets, add significant uncertainty to the performance of the overall domestic freight environment. Moreover, high inventory levels being reported by large retailers corresponds with what we anticipate will be decreased seasonal demand for freight services in connection with the 2022 holiday shipping season. Additionally, comparisons to the 2021 fourth quarter results will be challenging for Landstar, given the unprecedented strength our business experienced during the 2021 fourth quarter," he said. 

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 up across the board

Marten Transport (No. 40) saw revenue jump 20% and income jump 18% year-over-year in what's shaping up as a strong year for the carrier thanks in part to its ability to bring on new drivers. 

“We continue to drive strong fleet growth with our approach to overcoming the national shortage of qualified drivers of applying a heightened emphasis on structurally improving our drivers’ jobs and work-life balance by collaborating with our customers, while also increasing our driver compensation. This growth provides momentum to the coming quarters as we began this year’s fourth quarter with 199 more of the industry’s top drivers than we employed at the beginning of the third quarter – and have now increased our number of drivers by 621, or 22.6%, since June 30, 2021," Executive Chairman Randolph L. Marten said. 

Revenue: 2022 Q3: $324.4 million vs. 2021 Q3: $251.3 million

                  2022 YTD: $941.3 million vs. 2021 YTD: $706.8 million

Income: 2022 Q3: $33.7  million vs. 2021 Q3: $28.5 million

                2022 YTD: $110.6  million vs. 2021 YTD: $81 million

Old Dominion Freight Lines grows income, revenue double digits

Old Dominion (No. 10) boosted revenue 14.5%, mostly due to a 17.4% increase in LTL revenue per hundredweight despite an 2.6% decrease in LTL tons. The company also appeared to have some success in flighting inflation.

"Our salaries, wages and benefit costs as a percent of revenue improved to 42.1% from 46.4% in the third quarter of 2021, and our purchased transportation costs improved 160 basis points to 2.1% of revenue. These improvements more than offset the increase in operating supplies and expenses as a percent of revenue that primarily resulted from the significant increase in the cost of diesel fuel and other petroleum-based products during the quarter," said Greg C. Gantt, President and Chief Executive Officer of Old Dominion.

Revenue: 2022 Q3: $1.6 billion vs. 2021 Q3: $1.4 billion

                  2022 YTD: $4.77 billion vs. 2021 YTD: $3.79 billion

Income: 2022 Q3: $496 million vs. 2021 Q3: $383.4 million

                2022 YTD: $1.05 billion vs. 2021 YTD: $755.6 million

P.A.M. Transport sees equipment troubles but keeps trucking

P.A.M. Transport (No. 58) fought through troubles with its biggest customer to get ahead in Q3, posting substantial gains in both revenue and income. Truckload revenue and revenue per truck both went up more than 30%. 

“We have had another record quarter for revenue and operating statistics at PAM. I am excited to see the work that continues to go into making PAM what our customers and employees expect from a growing transportation company,”  said President Joe Vitiritto. “We continued to see significant disruptions from some of our biggest customers in the third quarter and it accelerated quarter-over-quarter, but we are getting better at navigating the disruptions and that shows in our results this quarter,” he said.

Revenue: 2022 Q3: $252.6 million vs. 2021 Q3: $183 million

                  2022 YTD: $709.2 million vs. 2021 YTD: $493.2 million

Income: 2022 Q3: $35.5 million vs. 2021 Q3: $30.8 million

                2022 YTD: $103.5 million vs. 2021 YTD: $65.5 million

Schneider National sets third quarter record

Schneider (No. 8) saw a strong quarter in terms of revenue and income, but did warn of softening and "balance" returning to the freight market as rates drop. 

“In the third quarter, shifting freight fundamentals resulted in a more balanced supply and demand condition,” said Mark Rourke, Chief Executive Officer and President of Schneider. “The enterprise grew revenues 8% over the prior year, representing the highest third quarter in our history. In our Truckload segment, we experienced softer network volumes, while our dedicated fleet increased 42% over the prior year. Our Intermodal segment grew volumes while navigating several supply chain and network challenges, mostly short-term in nature, that compressed margin. Our Logistics segment continued to improve volumes and net revenue per order year over year, driven by increasing traction of our Power Only offering and Schneider FreightPower® platform.”

Revenue: 2022 Q3: $1.67 billion vs. 2021 Q3: $1.44 billion

                  2022 YTD: $5.04 billion vs. 2021 YTD: $4.03 billion

Income: 2022 Q3: $145.4 million vs. 2021 Q3: $153.7 million

                2022 YTD: $457.1 million vs. 2021 YTD: $355.7 million

U.S. Xpress dragged into the red by lawsuits

U.S. Xpress (No. 16) succeeded in growing the fleet and making 12% more tractors available during the quarter in a boost to revenue, but profitability suffered as the result an "incremental claims expense of $25.7 million." Also during the quarter, U.S. Xpress absorbed its Variant division and shuttered its Atlanta headquarters

“During the third quarter, we were successful growing our overall fleet size, sequentially improving utilization in our OTR division and taking actions to reduce costs throughout the Company,” said Eric Fuller, President and CEO. “However, quarterly progress on our initiatives was outweighed by elevated claims expense primarily due to recent unexpected and adverse developments in two claims from prior years, along with certain one-time costs in the quarter. As we exit the year, our priority is to get back to the basics and service our customers at a high level. In addition to the $28.0 million in annualized costs we have already taken out of the business, we will continue to identify additional cost takeout opportunities, while allocating capital in a disciplined manner targeting projects that we believe will drive the Company forward.”

Revenue: 2022 Q3: $547.8 million vs. 2021 Q3: $491.1 million

                  2022 YTD $1.62 billion vs. 2021 YTD: $1.42 billion

Income: 2022 Q3: ($22.7 million) vs. 2021 Q3: $6.6 million

                2022 YTD: ($16.5 million) vs. 2021 YTD: $23.5 million

Werner posts strong quarter, but breaks record streak

Werner (No. 13) saw revenues jump 18% and profits up 7% from a year ago, but broke an eight quarter long streak of record-breaking revenues. The fleet saw some decline in profitability in its Logistics and One-Way trucking segments, and projects a weaker fourth quarter than last year. 

“Even though operating conditions have become more challenging due to macroeconomic changes that are softening the freight market, we produced good financial results,” said Derek J. Leathers, Chairman, President and Chief Executive Officer. “Strong and resilient performance from our durable Dedicated fleet more than offset moderating results in our One-Way Truckload fleet and Logistics segment. We are expecting a more subdued peak freight market in fourth quarter compared to a very strong peak freight market in fourth quarter a year ago.”

Revenue: 2022 Q3: $827.6 million vs. 2021 Q3: $702.9 million

                  2022 YTD: $2.43 billion vs. 2021 YTD: $1.97 billion

Income: 2022 Q3: $76.3 million vs. 2021 Q3: $71.3 million

                2022 YTD: $234.7 million vs. 2021 YTD: $210.7 million

XPO Logistics streamlines

XPO (No. 6) saw a year-over-year revenue bump of 3%, if you take into account the company's Intermodal business it sold off in March 2022. Overall, the company seemed pleased with its renewed focus on LTL.

“Our plan for LTL 2.0 is showing tangible results. We reported third quarter LTL records for revenue and adjusted EBITDA. Our year-over-year tonnage accelerated every month through the quarter and inflected positive in September, with more improvement in October. Importantly, our third quarter tonnage trend outperformed typical seasonality, bucking industry trends," said Brad Jacobs, chairman and chief executive officer of XPO.

Revenue: 2022 Q3: $3.04 billion vs. 2021 Q3: $3.27 billion

                  2022 YTD: $9.75 billion vs. 2021 YTD: $9.45 billion

Income: 2022 Q3: $185 million vs. 2021 Q3: $112 million

                2022 YTD: $1.04 million vs. 2021 YTD: $916 million

Yellow Corporation builds super-regional network 

Yellow Corporation (No. 5) posted another strong quarter despite seeing a 18.7% drop in total tonnage per workday and almost a 15% drop in total shipments per workday thanks to increased revenues per hundredweight. a $1.1 million net gain on property disposals helped, as did the company consolidating freight terminals.

"While demand for capacity is moderating compared to the elevated levels over the past several quarters, the LTL pricing environment remains favorable," Darren Hawkins, chief executive officer of Yellow said. "“In September, we successfully implemented phase one of the network optimization in the western United States. Phase one included integrating 89 legacy YRC Freight and Reddaway terminals to operate as a super-regional network. The early results are meeting expectations and customers benefit by having one driver pick up and deliver both regional and long-haul shipments. We remain focused on applying lessons learned from phase one and integrating the rest of the network around the end of the year. We expect the network optimization to lead to improved asset utilization, enhanced network efficiencies, cost savings and to create capacity without the need to add new terminals."

Revenue: 2022 Q3: $1.36 billion vs. 2021 Q3: $1.3 billion

                  2022 YTD: $4.04 billion vs. 2021 YTD: $3.81 billion

Income: 2022 Q3: $49.1  million vs. 2021 Q3: $48.4 million

                2022 YTD: $157.5  million vs. 2021 YTD: $47.8 million