Not As Bad As Feared: ECHO Beats On Earnings And Revenue

Echo Global Logistics ECHO reported its financial results for the third quarter of 2019 after markets closed on October 23. Echo posted adjusted earnings per share of $0.39 against a Street consensus expectation of $0.37/share and revenues of $561.4 million, beating estimates of $548.1 million.

The Chicago-based freight brokerage, which sources both truckload (TL) and less-than-truckload (LTL) capacity, performed well in what continues to be a tough freight environment. Net revenue margin compressed sequentially, from 18.2% in the second quarter to 17.3% in the third quarter, but margins actually expanded year-over-year by 10 basis points.

Across the freight brokerage industry, revenue growth has slowed and margins have narrowed as contract trucking rates continue to fall against relatively flat spot rates, which represent a broker's cost. 

A slightly richer mix of LTL freight to TL freight (29.9% to 65.7% this quarter versus 25.8% LTL and 69.1% TL a year ago) helped Echo beat revenue expectations. In a slowing macroeconomy, LTL volumes and prices are typically more resilient than truckload.

Still, it's hard to make money when shippers have lowered their rates and margins are getting squeezed. Net income was slashed nearly in half, down 48.4% to $4.8 million on a year-over-year basis. Gross revenues were down 12.9% year-over-year, but not as bad as the -15% Wall Street analysts expected.

(Table: Echo Global Logistics financial statements)

Stay tuned for FreightWaves' coverage of the analyst conference call.

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