U.S. Xpress (NYSE: USX) turned an operating loss in the first quarter of 2020 into an almost $8 million operating profit in the first quarter of this year, boosted by improvements in the company’s truckload operations but also a sharp improvement in the performance of its brokerage activities.
On a relatively muted 6.3% increase in operating revenue net of fuel, the company turned an operating loss from Q1 2020 of $3.66 million into an operating profit of $7.998 million. That drove earnings per share to 5 cents from a loss of 19 cents per share last year.
According to SeekingAlpha, the 5-cents-per-share earnings performance was in line with what was expected. Revenue was $1.65 million more than Wall Street forecasts.
The improvement in the truckload operating ratio was 150 basis points, to 98.2%, improved from 99.7%. But the brokerage operating ratio, which CEO Eric Fuller has said on earlier earnings calls was a focus of the company’s restructuring initiatives, improved more than 1,100 basis points, to 98.4% from 109.6%.
The overall operating ratio for the company climbed to 98.2% from 100.8% under generally accepted accounting principles. But the adjusted OR, considered more significant, rose a bit more, to 98.1% from 100.9%, for a 20-point additional improvement compared to under the GAAP comparison.
U.S. Xpress’ statistics on its Variant initiative, which is a digitally based overhaul of its truckload operations, came in about where Fuller had forecast. At the end of the quarter, 951 tractors were operating as Variant tractors, and they provided 11.8% of truckload revenues.
The tractor count between Variant and the legacy OTR division is an important benchmark on how the company is doing making that switch. In the prepared statement accompanying the earnings, Fuller said the company had reduced its “underperforming legacy OTR tractors” by approximately 1,050 during the quarter while growing Variant tractors by about 630 during that time.
The end result was about 400 fewer tractors in the overall fleet in the quarter compared to the first quarter of 2020. Fuller said in the statement that the shift will ultimately result in growing fleet count by the end of the year.
Although the company’s financial statements do not break out Variant, the press release on the earnings did give several key numbers. Variant, along with the legacy OTR, was hit hard by February weather, Fuller said. But he said Variant’s utilization was 1,815 revenue miles per tractor per week, down from 1,863 in the fourth quarter of 2020.
That was higher than the 1,715 reported for all OTR trucks and more than the 1,736 for the Dedicated division.
Variant revenues for the quarter were $39.5 million against the total revenue figure of $450.7 million. That was up 407% from the prior quarter; there is no year-on-year comparison for Variant because it was not launched until midyear.
“Looking forward, we remain on track to grow Variant to at least 1,500 tractors representing approximately 25% of Truckload revenues through year end 2021,” Fuller said in the statement. “At this scale Variant would generate a revenue run rate of approximately $300 million.”
The brokerage numbers recorded a significant improvement and Fuller’s statement cited a technology acquisition made during the year as a key reason. Revenue rose to $81.8 million from $50.5 million, and income was $1.3 million compared to an operating loss of $4.9 million in last year’s first quarter.
The U.S. Xpress earnings call is Thursday afternoon.
Disclosure: FreightWaves founder and CEO Craig Fuller retains ownership of U.S. Xpress shares through his family trust.
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