Fleets' 2022 Q4 earnings show the pandemic party might be over

Screen Shot 2021 06 28 At 3 39 52 Pm Headshot
Updated May 11, 2023

The end of 2022 felt like the end of the party at many major carriers, where corporate earnings reported a weak fourth quarter that lacked the normal seasonal bump the holiday season typically brings. Additionally, unusual movements of equipment caused some fleets to want for trucks while others couldn't get rid of them fast enough. Even fleets who did well here had some trouble meeting 2021 numbers, which now look like something of a heyday. Below find reports on the earnings of major publicly traded carriers. 

Covenant takes a hit on too many tractors

Covenant (CCJ Top 250, No. 38) capped off a great year with record annual earnings per share and saw a 15.3% return on invested capital, but still saw less revenue and income than the previous quarter and Q4 of 2021. This partially owned to an "aggressive" effort to "improve our driver experience" with newer equipment, which ended up running the company into some early lease abandonment and disposal charges as well a glut of equipment thanks to a "large number of new tractors combined with delays in removing existing leased tractors." The overall hit from the equipment churn was $10 million. 

Chairman and Chief Executive Officer, David R. Parker, said "our fourth quarter results undoubtedly reflect sequential softening in the freight market, continued inflationary pressure and the cost of significant excess equipment. While we anticipate improved equipment related costs in 2023, we believe the freight market, as a combination of freight rates and volumes, will remain unfavorable compared to the prior year for the next several quarters."

Revenue: 2022 Q4: $296.1 million vs. 2021 Q4: $294.2 million

                  2022 YTD: $1.22 billion vs. 2021 YTD: $1.05 billion

Income: 2022 Q4: $10.9 million vs. 2021 Q4: $18.8 million

                2022 YTD: $120.7 million vs. 2021 YTD: $67.1 million

Forward Air Corporation misses target but posts a record year

Forward Air Corporation (No. 50) grew revenue at 5%, slower than the targeted 7% to 11%, but still part of what President and CEO Tom Schmitt called "a record year by a mile." Schmitt particularly focused on Forward's success in picking up high-value freight. 

Partner Insights
Information to advance your business from industry suppliers

Changes in our freight mix continue to showcase our precision execution focus on high value freight. From 2021 to 2022, industrial and electronics shipments are up over 50%, medical is up almost 25% and live events business up by 120%. Our top four high value verticals went from 18% of our freight mix in 2021 to 29% in 2022, resulting in fourth quarter of 2022 weight per piece up by 12.1% over the same period in the prior year. In addition to the positive changes in our freight mix, our fourth quarter 2022 revenue per hundredweight is up by 13.1% including fuel surcharge revenue and 3.8% excluding fuel surcharge revenue over the same period in the prior year," said Schmitt. 

Revenue: 2022 Q4: $481.2 million vs. 2021 Q4: $459.9 million

                  2022 YTD: $1.97 billion vs. 2021 YTD: $1.66 billion

Income: 2022 Q4: $61.3 million vs. 2021 Q4: $51.9 million

                2022 YTD: $193.2 million vs. 2021 YTD: $116.1 million

Heartland Express: How did those acquisitions work out?

Heartland Express (No. 42) set an all-time revenue record in Q4 of 2022 thanks to a spree of acquisitions (Smith Transport, CFI and Millis Transfer), but the consolidation of fleets came at some expense. Hearland Express CEO Mike Gerdin talked up having "one of the newest fleets of tractors and trailers" in the industry, but pointed out that wasn't exactly uniform across the organization. 

While we are excited by the recent and significant growth in our organization, we are also mindful that in the periods immediately following acquisitions we face additional operating headwinds. These challenges result from the revaluation of equipment which drives elevated depreciation expense with minimal opportunities to recognize gains from the sale of these acquired fleets of revenue equipment, along with elevated fixed costs and certain contractual commitments. Following these impacts during the full year of 2022, Heartland Express delivered an operating ratio of 68.6% (which includes a gain on sale of a terminal property of $73.2 million), Millis Transfer delivered an operating ratio of 82.4%, Smith Transport delivered an operating ratio of 93.5% (seven months of ownership), and CFI delivered an operating ratio of 98.1% (four months of ownership). Given the scale of the two most recent acquisitions relative to the consolidated company, this had a meaningful negative impact on our legacy operating results during the fourth quarter of 2022, the first full quarter of CFI operating results, and we expect that to continue in early 2023. However, we have identified many areas of opportunity that we believe will improve both of these acquired organizations in the months ahead, even though we will likely be facing a challenging operating environment in 2023," said Gerdin. 

Revenue: 2022 Q4: $354.9 million vs. 2021 Q4 $148.1 million

                  2022 YTD: $967.9 million vs. 2021 YTD: $607.3 million

Income: 2022 Q4: $26.2 million vs. 2021 Q4: $26.5 million

                2022 YTD: $188.4 million vs. 2021 YTD: $105.4 million

J.B. Hunt sees 'atypical' headwinds in Q4

J.B. Hunt (No. 3) saw revenue climb 4% over last quarter, but operating income paired down 13% during a decline in volume in Integrated Capacity Solutions (ICS) and 22% fewer transactions in the Marketplace for J.B. Hunt 360, as third-party dray capacity dropped 31% YoY on the platform. 

ICS actually operated at a loss of $2.9 million on $496 million in revenue, significantly down from the $24 million it brought in Q4 of 2021. "Transactional or spot truckload volume was down year-over-year, but contractual volume was up slightly year-over-year. We experienced additional pressure on our transactional and contractual business in the fourth quarter as demand and volume were unusually soft during what is normally considered peak season," said Brad Hicks - Executive Vice President, People and President, Highway Services.

"Maybe said differently, there was no peak and demand was actually weaker in the fourth quarter versus the third quarter, which is atypical. As we've discussed in the past, our goal remains to leverage our platform and make investments that will allow us to scale our business by outpacing the market."

Revenue: 2022 Q4: $3.65 billion vs. 2021 Q4: $3.49 billion

                 2022 YTD $14.81 billion vs. 2021 YTD: $12.17 billion

Income: 2022 Q4: $281.9 million vs. 2021 Q4: $322.5 million

               2022 YTD: $1.33 billion vs. 2021 YTD: 1.05 billion

Knight-Swift Transportation's revenue, income drops

Knight-Swift (No. 4) saw revenue drop by 4% while operating income dropped 40% compared to Q4 of 2021. Like other fleets, this one saw Q4 break normal seasonal patterns and deliver surprisingly weak numbers. 

David Jackson, CEO of Knight-Swift, commented, "We did not experience the typical seasonal strength associated with the last three months of the year, in fact it was the most benign peak shipping season in recent memory. The muted volumes appear to have been driven by the holiday goods pull-forward earlier in 2022, an existing inventory overhang dating back to last year where some products arrived too late for last year’s season, and general caution around what retailers could expect from consumer demand. In the face of this challenging environment, our three largest segments performed very well, with Adjusted Operating Ratios of 82.7% in Truckload, 85.5% in Less-thanTruckload, and 86.4% in Logistics. We believe a number of shippers will still be working to bring their inventories in line through the first half of 2023, which we expect will extend this soft environment and increase the pressure on carriers, especially smaller and less-well-capitalized operators. We do anticipate improvement later in the year, as excess inventories are worked through, which we believe will allow demand to normalize, and as carrier supply continues to give way under the pressure of softening rates and ongoing inflation.”

Revenue: 2022 Q4: $1.74 billion vs. 2021 Q4: $1.82 billion

                  2022 YTD: $7.43 billion vs. 2021 YTD: $5.99 billion

Income: 2022 Q4: $202.5 million vs. 2021 Q4: $342.2 million

                2022 YTD: $1.09 billion vs. 2021 YTD: $965.7 million

Landstar sees soft demand, challenging comparisons 

Landstar (No. 9) saw its revenue and income come in weaker than last year. 2022 will go down as a great year in the company's history, but Q4 didn't exactly pull its weight. 

“The current macroeconomic environment made for challenging comparisons against our record 2021 fourth quarter performance despite the extra week of operations in the 2022 fourth quarter,” said Landstar President and Chief Executive Officer Jim Gattoni. “Softer demand during a weaker than typical peak season resulted in more readily available truck capacity and truck rates and volumes below the record prior year levels. The number of loads hauled via truck decreased 5.5% as compared to the 2021 fourth quarter, below the low end of our fourth quarter guidance issued in our 2022 third quarter earnings release on October 19, 2022. Revenue per load on loads hauled via truck decreased 7% as compared to the 2021 fourth quarter, at the low end of the 2022 fourth quarter guidance. In addition, revenue generated in the aggregate via rail, air and ocean cargo carriers was below the estimated amount included in the fourth quarter guidance.”

Revenue: 2022 Q4: $1.67 billion vs. 2021 Q4: $1.95 billion

                  2022 YTD: $7.44 billion vs. 2021 YTD: $6.54 billion

Income: 2022 Q4: $124.3 million vs. 2021 Q4: $148.7 million

                2022 YTD: $571.1 million vs. 2021 YTD: $505.6 million

Marten Transport up across the board

Marten Transport (No. 40)  saw big gains in revenue (20.9%) and income (6.9%) while closing out a banner year for the fleet. Importantly, operating expenses as a percentage of operating revenues went down – 86.4% from 87%, making this the best ratio Marten has posted since going public in 1986. 

“Our talented, disciplined people earned our 16th consecutive quarter of year-over-year profit growth, overcoming a freight environment made more challenging with additional pressure from rail service weakness and severe weather. In 2022, we attained our fifth consecutive year with each of our then-highest operating revenue and operating income – and our third consecutive year with our then-best operating ratio, net of fuel surcharges, since Marten became a public company in 1986," said Executive Chairman Randolph L. Marten. 

Revenue: 2022 Q4: $322.6 million vs. 2021 Q4: $266.9 million

                  2022 YTD: $1.26 billion vs. 2021 YTD: $973.6 million

Income: 2022 Q4: $32.8  million vs. 2021 Q4: $30.7 million

                2022 YTD: $143.3  million vs. 2021 YTD: $111.7 million

Old Dominion Freight Lines sets annual profit, revenue records

Old Dominion (No. 10) held itself to a lean operating ratio of 71.2%, despite a decline in freight volumes during the quarter, by lowering compensation costs and purchased transportation costs around 2% each.

“Our revenue growth in the fourth quarter included a 16.7% increase in LTL revenue per hundredweight, which more than offset the decrease in LTL tons. LTL revenue per hundredweight, excluding fuel surcharges, increased 8.7% and reflects the continued execution of our long-term pricing initiatives. As part of our pricing philosophy, we focus on continuously improving the profitability of each customer account through yield increases that are designed to offset our cost inflation and support further investments in our capacity and technology. We must continue to provide our customers with superior service to support this approach, however, and we were proud to deliver 99% on-time service during the fourth quarter with a cargo claims ratio of 0.1%," Greg C. Gantt, President and Chief Executive Officer of Old Dominion, commented.

Revenue: 2022 Q4: $1.49 billion vs. 2021 Q4: $1.41 billion

                  2022 YTD: $6.26 billion vs. 2021 YTD: $5.26 billion

Income: 2022 Q4: $430.2 million vs. 2021 Q4: $372.5 million

                2022 YTD: $1.84 billion vs. 2021 YTD: $1.39 billion

P.A.M. Transport grows fleet faster than profit

P.A.M. Transport (No. 58) had a solid quarter, reporting Q4 operating revenues up by 11.1% over last year, and 2022 revenue up 33.9% over 2023, but income only ticked up 23% over that period as the fleet itself grew 28%, with 17% of that growth coming from the acquisition of Metropolitan Trucking.

“I am proud of our team’s results and how we navigated 2022’s challenges. Our driving associates have my utmost respect and admiration. Without them we couldn’t have achieved these results. We did not see a traditional peak in the fourth quarter as we anticipated, but our entire team stepped up to the challenge and navigated a challenging environment well. We continue to remain focused on continually improving and delivering value to our customers, our team members and our shareholders in 2023," said Joe Vitiritto, President of the Company.

Revenue: 2022 Q4: $252.6 million vs. 2021 Q4: $194.6 million

                  2022 YTD: $818.8 million vs. 2021 YTD: $641.3 million

Income: 2022 Q4: $20.2 million vs. 2021 Q4: $34.7 million

                2022 YTD: $123.8 million vs. 2021 YTD: $100.2 million

Schneider National's profitability falls after axing China operations

Schneider (No. 8) saw strong revenue and results in Q4 and the year, but saw profitability take a dive as the company axed its China operations. Otherwise, the company reported smooth sailings in its move to Union Pacific for its Western rail operations. 

"Enterprise fourth quarter 2022 income from operations was $143.3 million, a decrease of $34.7, or 19% compared to the prior year. It included a $5.0 million net loss attributed to costs associated with a management buyout of 100% of the Company’s China-based logistics operations, backed by certain members of the Company’s Tianjin management team, which closed in the quarter. Considering this item, adjusted income from operations for the fourth quarter of 2022 was $148.3 million, a decrease of $28.7 million, or 16%, compared to the prior year," the company's earnings release said. 

Revenue: 2022 Q4: $1.56 billion vs. 2021 Q4: $1.57 billion

                  2022 YTD: $6.60 billion vs. 2021 YTD: $5.60 billion

Income: 2022 Q4: $143.3 million vs. 2021 Q4: $178 million

                2022 YTD: $600.4 million vs. 2021 YTD: $533.7 million

U.S. Xpress lost $22 million this year

U.S. Xpress (No. 16) brought in more revenue than Q4 of last year, but also lost more money. The fleet's "Realignment Plan," basically a big reshuffle of offices and assets after the death of Variant, saved it $8 million, but it still didn't fare well in the spot market. 

“For the full year, we generated record operating revenue, identified significant fixed costs that we are taking out of the business, and realigned our Truckload segment to improve operating profitability going forward,” said Eric Fuller, President, and CEO. “In the fourth quarter, sequential rate pressure from our spot market exposure and higher fuel costs more than offset the positive contributions from our Dedicated and Brokerage businesses as well as the progress made from our Realignment Plan. In 2023, we will continue to focus on execution, servicing our customers at a high level and reducing our spot market exposure. We believe the benefits from these initiatives combined with our lower fixed cost structure will become apparent as the market turns.”

Revenue: 2022 Q4: $542.5 million vs. 2021 Q4: $531.6 million

                  2022 YTD $2.16 billion vs. 2021 YTD: $1.94 billion

Income: 2022 Q4: ($5.6 million) vs. 2021 Q4: ($5.1 million)

                2022 YTD: ($22.2 million) vs. 2021 YTD: $18.4 million

Werner sees 'uncertain' and 'more difficult operating environment'

Werner (No. 13) saw revenues jump 13% but operating income drop 10% compared to Q4 last year. The company acquired ReedTMS Logistics, an asset-light logistics provider and truckload carrier, and Baylor Trucking during the quarter. The company lost nearly $2 million on equity investments in a rough market and saw truckload, logistics, corporate and other streams of income decline during the quarter. 

“As we look out into what remains an uncertain and more difficult operating environment, we remain laser focused on implementing our DRIVE strategy to deliver value to our customers, associates, shareholders, suppliers and carrier partners," said Derek J. Leathers, Chairman, President and CEO. "While changing macroeconomic conditions led to a lackluster truckload and logistics freight market in fourth quarter, the durability and resilience of our business model, combined with the efforts of our determined and talented team, produced strong fourth quarter results."

Revenue: 2022 Q4: $861.5 million vs. 2021 Q4: $765.2 million

                  2022 YTD: $3.29 billion vs. 2021 YTD: $2.73 billion

Income: 2022 Q4: $88.4 million vs. 2021 Q4: $98.5 million

                2022 YTD: $323.1 million vs. 2021 YTD: $309.1 million

XPO Logistics streamlines

XPO (No. 6) reported a net loss from continuing operations thanks to the RXO spin-off completed in November, which the company said included a "$64 million non-cash goodwill impairment charge related to European Transporation, which became a new segment of XPO."

Mario Harik, chief executive officer of XPO, said, “In the fourth quarter, we reported solid revenue growth and strong year-over-year increases in adjusted EBITDA, adjusted EPS and free cash flow. Our North American LTL business achieved a 26% increase in operating income and a 20% increase in adjusted EBITDA... In LTL, our employee satisfaction was up sharply to the highest rating in more than a decade. In Europe, the business is continuing to perform above expectations. We’re confident that we’ll achieve our long-term LTL outlook and deliver superior shareholder value." 

Revenue: 2022 Q4: $1.83 billion vs. 2021 Q4: $1.77 billion

                  2022 YTD: $7.71 billion vs. 2021 YTD: $7.2 billion

Income: 2022 Q4: $4 million vs. 2021 Q4: $66 million

                2022 YTD: $377 million vs. 2021 YTD: $312 million

Yellow Corporation  

Yellow Corporation (No. 5) saw solid revenue and income, but not enough to escape a net loss of $15.5 million due to nonoperating expenses after pension payments and legal settlements. CEO Darren Hawkins said that LTL capacity decreased in Q4 as manufacturing and retail began to waiver. The company plans to sell 17 "excess terminals" this year without sacrificing geographic service coverage. In Q4, the company sold one of those terminals for $31 million, which it used to pay down debt. Hawkins plans more of the same with the other terminals.

Revenue: 2022 Q4: $1.2 billion vs. 2021 Q4: $1.3 billion

                  2022 YTD: $5.24 billion vs. 2021 YTD: $5.12 billion

Income: 2022 Q4: $40.3  million vs. 2021 Q4: $55.8 million

                2022 YTD: $197.8  million vs. 2021 YTD: $103.6 million