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U.S. Xpress Reports $475 Million Revenue for Q2
U.S. Xpress Enterprises posted gains in earnings and revenue growth during the second quarter, the company reported.
The Chattanooga, Tenn.-based truckload carrier on July 22 reported net income attributable to controlling interest of $19.1 million, or 37 cents per diluted share, for the three months ending June 30. That compared with $9.5 million, 18 cents, during the 2020 period. Total operating revenue increased 12.4% to $475 million from $422.5 million.
“We hit the low point of our seated tractor fleet in the first week of June and have since increased our total seated tractor count by 130 units, and our orientation pipeline continues to grow,” U.S. Xpress CEO Eric Fuller said during a call with investors July 22. “This is a very exciting time at U.S. Xpress as we believe we have hit the inflection point within our digital initiatives and are set to see improved results as we look forward.”
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U.S. Xpress also provided an update on its digitally dispatched and managed asset-based fleet, Variant. The platform — which launched in Q2 2020 — during Q2 2021 grew to 1,160 tractors and generated 15.5% of total U.S. Xpress truckload revenue. It remains on track to meet a goal of 1,500 tractors by the end of this year, the company said. Fuller focused much of his comments on it.
“I am pleased with the significant progress that we made in the second quarter as we grew the tractor count by more than 20%, exiting the quarter with 1,160 tractors, remaining on track to exit 2021 with 1,500 or more tractors in the Variant fleet,” Fuller said. “We believe the second quarter marked a low point of our total fleet size, and each incremental tractor added to Variant will positively impact total company profitability going forward.”
Fuller
Despite the strong Q2 results amid the overall robust freight market, Fuller noted financial performance is being impacted by a lower overall tractor count, tight driver market and the duplicative cost structure required to build and develop Variant. He believes that the company is now at a point where the buildup of Variant will outpace the intentional attrition of the legacy over-the-road fleet.
The company’s results surpassed expectations by investment analysts on Wall Street, who expected 13 cents EPS and quarterly revenue of $457.09 million, according to Zacks Consensus Estimate.
The U.S. Xpress truckload segment saw Q2 revenue decrease 2% to $341.1 million compared with $347.9 million last year. Operating income for the segment decreased 57.2% to $8.7 million from $20.4 million during the prior-year quarter. The truckload segment includes over-the-road and dedicated operations.
The over-the-road segment saw average revenue per tractor per week increase $279, or 7.8%, compared with Q2 2020. This improvement primarily reflected a 22.8% increase in average revenue per mile, which was partially offset by a 12.2% reduction in average miles per tractor.
The dedicated segment reported average revenue per tractor per week increased $214, or 5.2%, from the prior year. This reflected 4.1% higher average revenue per mile and 1.1% higher revenue miles per tractor.
The brokerage division saw Q2 revenue increase 109.6% to $96.5 million compared with $46 million during Q2 2020. Operating income recovered to a profit of $161,000 from an operating loss of $4.2 million last year.
Wolfe Research said in a report to investors that there was strong pricing but weak utilization. It noted utilization declined more than 12% year-over-year. The Variant fleet has shown better utilization but that is not impacting overall utilization or profitability yet.
“USX is trying to build a story outside of the TL cycle with the growth of its Variant fleet,” Wolfe Research analyst Scott Group said in the report. “The company has noted significantly better margins and utilization at Variant, but it’s not clear to us how sustainable this will be as the fleet matures through a cycle. And once the fleet really starts growing again, the pricing cycle could be over.”
Morgan Stanley said in a report the company missed expectations as the labor issues plaguing the industry were compounded by Variant rollout costs, which offset favorable pricing conditions. U.S. Xpress management said results should improve going forward. But the investment banking company warns the market may not wait much longer.
“But at least the Variant rollout seems to be on track,” Morgan Stanley analyst Ravi Shanker said in the report. “Amid all the labor issues, it was impressive that tractor count in Variant grew to nearly 1,200 trucks in the quarter while peers are seeing fleet sizes decline.”
U.S. Xpress ranks No. 21 on the Transport Topics Top 100 list of the largest for-hire carriers in North America and No. 47 on the TT Top 50 list of the largest logistics companies in North America.