Copyright 2002, Traffic World Magazine
Roadway Corp., in a positive sign that the beleaguered long-haul national LTL sector has ditched the doldrums, surged past analysts'' consensus earnings expectations by 20 percent in its second quarter.
The parent of Roadway Express, New Penn Motor Express and Arnold Transportation Services, a truckload carrier, reported net income of $5.7 million on $697.1 million revenue. That compared with year-ago earnings of $4 million on $642.1 million revenue.
The earnings bounce comes after Roadway reported a $1.7 million loss in its 12-week first quarter, its first quarterly loss since it was spun off by the former Roadway Services Inc. holding company six years ago.
For the 24 weeks constituting Roadway''s first half, net income was $3.9 million, still a decrease of 56 percent compared with net income of $9 million for the first half of 2001. For the first half of 2002, Roadway revenue was $1.33 billion, up 3.2 percent when compared with revenue of $1.29 billion for the first half of last year.
Roadway Chairman and CEO Michael W. Wickham complimented his employees'' "continuing focus on quality service and cost management," along with "stable rate levels" for the improved quarter.
Roadway Next Day''s solid profitability more than covered the interest expense associated with last year''s acquisition of Arnold Industries and contributed to earnings improvement, Wickham added. He said he expected improvement later in the year as the peak freight season hits.
"Coming out of a January trough, Roadway Express'' LTL volumes showed steady but slow-paced improvement in every accounting period of our first two quarters." Wickham said.
Aided by industry consolidation in the Northeast (rival A-P-A Transport closed in late February), New Penn Motor Express already has seen its business volumes return to 2001 levels, Wickham said. Its truckload subsidiary, Arnold Transportation Services, showed year-over-year improvement. All three companies were "solidly profitable," Wickham stated.
"Although we are seeing freight levels trend in the right direction, we still characterize this growth as slow and steady," he said. "However, coming out of these difficult economic times, we have the capacity in place and the ability to meet our customers'' needs as the economy picks up or the transportation landscape shifts. Additionally, the leanness of our organization will allow us to perform quite well as the recovery accelerates."
Looking ahead, Wickham said he expects year-over-year comparisons to turn positive in the second half. This is partly due to the depressed volumes experienced during the second half of last year and current expectations of continued volume improvement going forward. More specifically, for the third and fourth quarters, Wickham said he expects margin improvement of between 0.5 and 1 percent.
Roadway Express had a 98.5 operating ratio in the quarter, New Penn had an 88.8 and Arnold had a 95.9 while all segments reported a combined 97.6 OR for the 12 weeks ended June 15.