How Did Less-than-Truckload Carriers’ 2Q17 Earnings Growth Trend?
LTL’s earnings per share
In this section, we’ll take a look at the 2Q17 earnings of the main LTL (less-than-truckload) carriers (XLI) in the US. Note that we aren’t considering the reported earnings here. Instead, we’ll look at adjusted earnings. Reported earnings are adjusted for any non-recurring expense loss or gains. Investors should normally look into adjusted or non-GAAP earnings, which provide a clear year-over-year comparison.
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Why ArcBest saw the most adjusted EPS growth
The above graph shows that Arkansas-based ArcBest (ARCB) topped in adjusted EPS growth in 2Q17. The company’s adjusted EPS was $0.57 per share, up 50% from $0.38 per share in the same quarter last year. A quick look into its 10-Q reveals that the company’s operating income rose ~48% on a year-over-year basis in 2Q17. The rise was negatively impacted by a 30% rise in ARCB’s net interest expenses in that quarter.
ARCB was followed by XPO Logistics (XPO), which registered a 43% rise in 2Q17 adjusted per-share earnings. XPO’s 2Q17 contained a foreign currency translation loss of $28.3 million, which was offset by lower interest expenses of ~$20.0 million.
Georgia-headquartered SAIA (SAIA) ranked third in the discussed less-than-truckload group on the above parameter. The company’s adjusted EPS rose 31% in 2Q17. A solid rise in operating income was the primary driver in SAIA’s EPS gains. However, it was negatively offset by a 21.7% increase in interest expenses.
The US’s dominant LTL carrier, Old Dominion Freight Line (ODFL), witnessed a 21.4% rise in 2Q17 adjusted EPS. ODFL mainly gained on account of a 23% higher operating income. Plus, significantly lower net interest expenses also boosted the company’s adjusted EPS in 2Q17.
Why was YRCW the exception?
Among our discussed LTL carriers, YRC Worldwide (YRCW) was the only carrier to report negative adjusted EPS growth. The company’s EPS was 31.3% lower compared to $0.57 with $0.83 in 2Q16. YRC’s lower operating income in 2Q17 resulted in reduced earnings. Plus a 1.5% rise in diluted shares also led to the fall in adjusted EPS year-over-year.
Keep reading for a cash flow analysis of the major less-than-truckload carriers.