CHATTANOOGA, Tenn. — U.S. Xpress Enterprises Inc. reported overall improvements for the second quarter of 2020, according to a report released July 28.
“I am very pleased with our second-quarter results, as we are beginning to see the tangible, financial benefits of our strategic initiatives focused on utilizing technology to improve our processes, accelerate the velocity of our business, improve our customers’ and drivers’ satisfaction, and lower our costs,” said Eric Fuller, the company’s president and CEO.
“The approximate 500 basis points of sequential margin improvement we achieved exceeded normal seasonality,” he continued. “The successful launch of our digital fleet, ongoing success in reducing overhead costs, better safety performance and lower fuel costs more than offset a sequential decrease in revenue per mile in our over-the-road division as there continued to be excess tractor capacity relative to freight demand in the market for a majority of the quarter due in part to COVID-19.”
The company’s operating revenue was $422.5 million, an increase of $8.6 million compared to the second quarter of 2019. The increase was primarily attributable to increased revenues in the company’s truckload division of $16.2 million, an increase of $6.6 million in brokerage revenue and decreased fuel surcharge revenues of $14.2 million. Excluding the impact of fuel surcharges, second-quarter revenue increased $22.8 million to $394.0 million, an increase of 6.1% as compared to the prior year quarter.
Operating income for the second quarter of 2020 was $16.3 million, which compares favorably to the $8.8 million in the second quarter of 2019. Operating ratio for the second quarter of 2020 was 96.1% compared to 97.9% in the prior year quarter.
Net income attributable to controlling interest for the second quarter of 2020 was $9.5 million compared to $2.7 million in the prior year quarter. Adjusted net income attributable to controlling interest for the second quarter of 2020 was $9.5 million, compared to $2.9 million in the 2019 quarter. Earnings per diluted share were $0.18 for the second quarter of 2020 and adjusted earnings per diluted share1 were $0.18.
The company’s truckload segment achieved an operating ratio of 94.6% and an adjusted operating ratio of 94.1% for the second quarter of 2020, a 340 and 350 basis point improvement, respectively, compared to the operating ratio of 98% and the adjusted operating ratio of 97.6% achieved in the second quarter of 2019. This improvement was achieved despite a 3.2% decline in average revenue per mile as U.S. Xpress continued to execute on its digital initiatives while maintaining a focus on reducing fixed and variable costs.
In the over-the-road division, the oversupply of tractors relative to market demand continued to pressure spot pricing lower compared to the 2019 quarter. Contract revenue per mile was down year over year by approximately 5%. Average revenue per tractor per week declined 1.8% compared to the second quarter of 2019. Average revenue per mile decreased 5.2% compared with the 2019 quarter.
“The over-the-road division experienced substantial improvement in the second quarter driven by the conversion of an additional 300 of our lowest performing tractors into our digital fleet,” Fuller said. “This conversion helped drive our OTR utilization up by 3.5%, as compared to the first quarter of 2020, while contributing to a reduction in both our fixed and variable costs.”
The company’s dedicated division’s average revenue per tractor per week increased $104 per tractor per week, or 2.6% compared to the second quarter of 2019 on relatively flat average revenue per mile and higher miles per tractor. According to the report, the fluctuations in volume in the general freight market and in specific industries related to COVID-19 have not negatively impacted the volumes of the company’s major dedicated accounts, which are concentrated in the discount retail and grocery market sectors.
“Our dedicated division continued to perform very well in the second quarter having delivered its fifth consecutive quarter of record productivity. Average revenue per tractor per week expanded from the first quarter, to $4,122, while we grew the truck count in this division by 1.3%,” Fuller said. “I continue to be very pleased with our team’s execution and we remain focused on organically growing the Dedicated division given the stability that we believe this business provides through economic cycles.”
The brokerage segment continues to provide additional selectivity for the company’s assets to optimize yield while at the same time offering more capacity solutions to customers. Brokerage-segment revenue increased to $46.0 million in the second quarter of 2020 compared to $39.5 million in the second quarter of 2019, primarily as a result of increased load count partially offset by decreased revenue per load. Brokerage operating loss was $4.2 million in the second quarter of 2020 as compared to operating income of $1.3 million in the year ago quarter. Management will continue to focus on improving margins in this segment over the next few quarters.
At the end of this year’s second quarter, U.S. Xpress had $140.4 million of liquidity (defined as cash plus availability under the company’s revolving credit facility), an increase of approximately $45 million from the first quarter, $381.6 million of net debt (defined as long-term debt, including current maturities, less cash balances) and $240.2 million of total stockholders’ equity.
The company expects its net capital expenditures to approximate $100 to $120 million for the full year of 2020, which includes an approximate $20 million transaction that carried over from the fourth quarter of 2019. Through June 30, 2020, net capital expenditures were $65.0 million including the carryover $20 million from 2019.
The company’s baseline assumptions for the balance of 2020 include a general sequential economic recovery that may be volatile nationally or by region at times, a muted increase of capacity and a relatively benign cost inflation, which should allow for a more favorable rate environment over the next several quarters.
The Trucker News Staff produces engaging content for not only TheTrucker.com, but also The Trucker Newspaper, which has been serving the trucking industry for more than 30 years. With a focus on drivers, the Trucker News Staff aims to provide relevant, objective content pertaining to the trucking segment of the transportation industry. The Trucker News Staff is based in Little Rock, Arkansas.
U.S. Xpress’ second-quarter report shows $8.6 million increase in operating revenue over same time period last year
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