Market Overview

Weak Earnings Reported Across The Industry, But Investors Are Buying Into The Recovery Story

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Weak Earnings Reported Across The Industry, But Investors Are Buying Into The Recovery Story

During earnings season, FreightWaves will be covering many companies across all modes, as well as shippers and retailers. Each week, we will recap the most interesting company earnings and any merger-and-acquisition activity from the preceding seven days. Take a look at the past week's finance recap:

Earnings

Logistics

Echo Global Logistics (NASDAQ: ECHO)

Echo beats on revenue and earnings in ‘challenging freight market'

Echo Global Logistics reported non-GAAP earnings per share of 26 cents, beating the Street's estimate of 16 cents; Echo's revenue of $531.7 million beat estimates of $522 million. After a year of a weak spot market and contract prices de-rating, Echo managed to protect its net revenue margins, which compressed by only 70 basis points year-over-year to 16.9%. Still, gross revenue fell 8.8% compared with the fourth quarter of 2018, and net revenue dropped 12.4% year-over-year. Although gross revenue fell by double digits, sales, general and administrative expenses were cut by only 5.3%, so they consumed a larger portion of net revenues. Commission expense stayed fairly constant as a percentage of net revenue.

Net income fell 79.7% to $1.4 million.

Hub Group (NASDAQ: HUBG)

Hub Group makes its numbers, sees a stronger year in 2020

Intermodal carrier Hub Group (NASDAQ: HUBG) posted fourth-quarter 2019 earnings in line with the consensus forecast of 82-85 cents per share, on a revenue decline of 11.5%. For the company as a whole, total revenue dropped to $900.68 million, from $1.018 billion in the fourth quarter of 2018. Operating income was down to $27.95 million from $33.67 million, a drop of 19.5%.The drop in revenue and earnings did not prevent the company from actually increasing its gross margin as a percent of revenue to 14% from 13.6%. However, gross margin as a whole did not improve. It declined to $125.86 million, from $138.58 million in the fourth quarter of 2018. 

Less-than-truckload

ArcBest Corp. (NASDAQ: ARCB)

ArcBest's tough times extending into early 2020

The fourth quarter was the most challenging of 2019 for less-than-truckload (LTL) and logistics provider ArcBest Corp. The good news, at least relative to analysts' expectations, is that fourth-quarter adjusted earnings per share of 56 cents came in well above consensus estimates of 44 cents per share. Operating income was $20.2 million, up from the $17.9 million consensus. Revenue was $717.4 million, slightly below consensus, as revenue for its LTL and "asset-light" units were lighter than in the 2018 period, a much better macro environment for providers. LTL operating ratio, the ratio of revenues and expenses, went the wrong way last quarter, rising to 96% from 93.3% in 2018.

Old Dominion Freight Line Inc. (NASDAQ: ODFL)

Weak industrial economy hurts Old Dominion's Q4 numbers; EPS beats estimates

Old Dominion Freight Line Inc. reported across-the-board declines in its fourth-quarter financial and operating metrics, although its diluted earnings per share of $1.80 came in a bit above analysts' consensus estimates of $1.78. The weaker numbers were expected given the downturn in industrial production that has plagued the LTL industry's top line since the fourth quarter of 2018. Old Dominion executives highlighted the macro headwinds throughout most of 2019 and gave no indication as the year progressed that the near-term outlook would improve. For the quarter, revenue came in at $1.009 billion, down from nearly $1.027 billion in the 2018 quarter, and the second consecutive quarter of year-over-year declines. Operating income dropped by more than $30 million to $188.2 million. Operating expenses rose across virtually every line item, especially in labor costs and in the "insurance and claims" category, where costs almost doubled year-over-year.

SAIA Inc. (NASDAQ: SAIA)

Saia fourth-quarter EPS comes in light; operating income falls nearly 18%

SAIA Inc. (NASDAQ: SAIA) posted on Monday mixed fourth-quarter results, but analysts and investors chose to focus on more favorable news ahead for 2020, helping send shares up more than 8% by the close of trading. The Johns Creek, Georgia-based company posted a near 9% increase in fourth-quarter revenue, but operating income declined 17.7% due to the high costs of the company's U.S. expansion, increased labor costs, a rise in depreciation and amortization expenses, and a spike in insurance claims due to several severe accidents. For the year, revenue hit a record $1.8 billion, an 8% increase over 2018. Operating income was $152.6 million, an 8.1% increase. Daily volume rose 4.3%, but tonnage dipped 0.4%. Revenue per shipment rose 3.4%.

Acquisitions

Regional Rail acquiring Carolina Coastal Railway 

Regional Rail to acquire Carolina Coastal Railway

Short line operator Regional Rail will be acquiring Carolina Coastal Railway, a 180-mile freight rail line located primarily in North Carolina. The short line provides freight rail and car storage services to over 45 customers, including aggregates, food and agriculture, chemicals, and metals. Carolina Coastal's North Carolina assets include a 142-mile line between Raleigh and Plymouth and a 17-mile line between Belhaven and Pinetown. It interchanges with Norfolk Southern (NYSE: NSC) at Raleigh and Chocowinity and with CSX (NASDAQ: CSX) at Wilson and Greenville.

C.A.T. acquiring Penner International

C.A.T. acquires Penner International in big boost for fleet and Canadian network

C.A.T.  acquired Penner International on Monday in a bold acquisition that expands the cross-border carrier's footprint in western Canada and increases its fleet by about 50%. C.A.T. aims to ramp up its east-west moves in Canada with the addition of the Manitoba-based truckload carrier. The acquisition also will improve C.A.T.'s cross-border network with Penner's business in the Western United States.Purchasing Penner represents a major expansion of C.A.T.'s fleet, adding more than 300 tractors to the existing 600.

For more in-depth research on earnings, finance and freight dynamics, check out FreightWaves Research offerings here.

Image Sourced from Pixabay

 

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