By Connor Hart and Don Nico Forbes
Profits at Old Dominion Freight Line and Knight-Swift Transportation fell last quarter as a weak freight market and supply-chain disruptions took a toll on two of the country's biggest trucking companies.
Knight-Swift, the country's biggest operator in the truckload sector, said earnings fell by nearly half in the third quarter, dragged down by the effects of Hurricane Helene and the labor unrest that led to strikes at a swath of U.S. ports.
The Phoenix-based trucking company on Wednesday reported a net profit of $30.5 million, or 19 cents a share, compared with $60.2 million, or 37 cents a share, in the same quarter last year.
Stripping out one-time items, adjusted earnings were 34 cents a share, ahead of the 32 cents that analysts polled by FactSet expected.
Revenue fell 7.1%, to $1.88 billion. Wall Street expected $1.91 billion, according to FactSet.
"While we remain cautious on the market, we continue to observe positive signs, including a continuation of seasonal patterns with some project activity underway in the fourth quarter," said Chief Executive Adam Miller. The carrier has also seen rate increases in its latest bid awards, he said, following a long period of weak pricing for truckload carriers.
ODFLs profit and revenue slipped in the third quarter as declining freight demand offset improved pricing.
The Thomasville, N.C.,-based trucker posted a profit of $308.6 million, or $1.43 a share, down 9% from $339.3 million, or $1.54 a share, in the same quarter a year ago.
Analysts were expecting earnings per share of $1.43, according to FactSet.
Revenue fell 3% to $1.47 billion, coming in below analyst expectations of $1.49 billion.
The fall was driven by a 4.8% drop in less-than-truckload tons per day, and partially offset by a 4.6% increase in LTL revenue per hundredweight, excluding fuel surcharges, a key measure of pricing strength.
The result is the first annual decline in quarterly profit and revenue for ODFL this year. The company's less-than-truckload corner of the market -- in which shipments from multiple customers are combined on a single truck -- had earlier bucked negative trends in the broader trucking market due to tight capacity and relatively stable rates.
Revenue and shipments also declined slightly from the second quarter to the third quarter, a weak signal for goods demand heading into the crucial fall peak shipping season.
"Old Dominion's third-quarter financial results reflect ongoing softness in the domestic economy," said Chief Executive Marty Freeman. He said a challenging operating environment and strong comparable results last year, when the collapse of rival trucker Yellow pushed thousands of shipments into the LTL market, also dragged down results.
Chief Financial Officer Adam Satterfield said on an earnings conference call that ODFL is continuing to get price increases through bid renewals. "The environment has been pretty stable, all things considered, this whole year, and we've been able to continue to get our increases," he said.
Citi analyst Ariel Rosa said in a research note that although ODFL's earnings slipped, "this result hardly reflects the deterioration in the favorable LTL industry structure that some had feared."
The results set up ODFL "for more aggressive pricing actions (with corresponding margin gains)," when demand improves, Rosa said.
ODFL's stock price fell 5.5% in trading Wednesday, sliding nearly $11 a share to $188.67 a share.
Knight-Swift shares fell about 24 cents in after-hours trading, to $52.50 a share.
Write to Don Nico Forbes at don.forbes@wsj.com
(END) Dow Jones Newswires
October 23, 2024 17:57 ET (21:57 GMT)
Copyright (c) 2024 Dow Jones & Company, Inc.
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